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Industry Facts and Figures
Worldwide Inventory and Provisioning Activation Spending Forecast for OSS
Note: Gartner breaks down OSS management spending into the following categories — inventory, network, planning & engineering, provisioning & activation and workforce management. Source: Gartner, Forecast: Operations Support Systems, Worldwide, 2000-2011 (June 2007)
Through 2011, Gartner estimates that the ITOM market, defined as "all the tools needed to manage the provisioning, capacity, performance and availability of the computing, networking and application environment", will grow at a rate (8.7% worldwide CAGR through 2011) above the software industry average. While IT spending was still tight in 2006, the continued pressure on IT departments to optimize use of existing infrastructure and thereby lower operations costs, improve quality of service and decrease business risk, has meant that ITOM software investment is a priority over other software expenditures. Geographically speaking, the U.S. and Europe remain the largest markets for ITOM software, accounting for more than 80% of total market share in 2006, but the most significant growth rates are in emerging markets such as Latin America or Eastern Europe. Also, the ITOM market itself is still being transformed by a consistent level of consolidation. M&As in 2006 and 2007 were the norm, as large vendors acquired smaller companies and more-established vendors were acquired by market leaders. This is likely to extend into 2008 and beyond. Underneath the general ITOM umbrella, the application management (11.8% CAGR), asset management (12.4% CAGR), configuration management (13.7% CAGR) disciplines rank among those with the most significant growth rates. Network management remains steady at 8.0% CAGR. It is clear that the implementation and adoption of Web services, service-oriented architectures (SOAs) and virtualization technologies will continue to increase the complexity of IT operations environments. It will also continue to attract new vendors with innovative solutions to solve, in some cases, known routine problems, while in other cases, it will provide truly transformational solutions. Source: Gartner, Forecast: IT Operations Management Software, Worldwide, 2006-2011,Update (July 2007)
Maximizing IT investments and minimizing corporate risks are two challenges that enterprises currently face. By combining IT asset management tools, people and process, these challenges can be overcome. Migration toward IP-based environments Through 2010, Gartner expects an annual 34% growth in IP-based PBX line shipment and a drastic decline in traditional PBX line shipment to only 8% of all shipments in 2010.
Source: Gartner, Dataquest Insight: How Providers Must Segment the IP Telephony Market (March 2007) On the carrier side, the worldwide decommissioning of legacy services like frame relay and ATM continues as they migrate their customer base to MPLS infrastructure. While MPLS adoption was originally spearheaded in Europe, their North American counterparts have been following suit. Gartner expects most carriers globally to discontinue frame relay and ATM by 2009.
Source: Gartner, It's Time to Migrate to MPLS or Pay the Price for Not Doing So (June 2006) Effective network management in this new environment is essential as revenue-generating applications for such critical functions as financial management and customer relationship management will also be integrated with the IP backbone to provide converged voice, data and video capabilities. Any changes to the network, if not well planned and executed, can disrupt business operations and undermine compliance, resulting in a loss of customers, revenue and reputation. Compliance Recent years have seen considerable increase worldwide in government regulations dictating how enterprises maintain both their data and infrastructure assets. In the short term, increased regulations such as Sarbanes-Oxley, Basel II and the Health Insurance Portability and Accountability Act, are driving additional IT spending across the different ITOM disciplines. As compliance with these regulations is now no longer a 'nice to have', enterprises are recognizing reliability as critical, an important factor in pushing IT spending across the board in the ITOM market. The disciplines most impacted by this will be configuration management and asset management. Without an asset management program in place, it is impossible for businesses to comply with these regulations. An effective ITAM program should identify what IT assets a business owns or has responsibility for, what data is being stored, who has access to which data, and where assets are located. Without having the basic ability to view and report on IT assets, it is impossible to verify that data is secure and that fiduciary and governance responsibilities are being met. Source: Gartner, Forecast: IT Operations Management Software, Worldwide, 2006-2011,Update (July 2007) Outsourcing of network management Enterprises are increasingly outsourcing their outgoing network management, applications delivery and security services to trim down internal IT services, help desk, network and asset management and application support.
SLAs are introduced to manage contractor agreements. But in the absence of an automated process to discover and document technology assets and to reflect the changes made, the ability to accurately negotiate SLAs is almost impossible. Failure to meet SLA agreements has cost network outsourcers thousands of dollars in penalties. Network outsourcers who don't have the systems in place to manage the costs associated with contractual commitments cannot remain competitive in today's market place. Source:
Gartner, Dataquest Insight: Gartner's View of Enterprise Managed Communication Services (May 2007) Pay for Play - Triple play, Quad play, bundled or packaged Telephone, cable and satellite companies are competing to become the single provider for all the communications needs of consumers. Their marketing messages around "triple play" (wireline voice, data and entertainment), "quad play" (triple play with wireless voice), "bundled" and "packaged" offerings all underline one thing — they have a major desire to gain and retain subscribers.
Source: Gartner, Home Networking Is a Strong Driver of the Consumerization of IT (June 2007) To support whatever mix of services they offer, providers need to augment their existing networks. Needless to say, this is a capital-intensive process. While they need to build ahead of customer adoption to ensure that they can provision new services successfully, service providers also need to ensure they are not so far ahead of the curve that they incur excessive capital expenditures. More importantly, they need to reduce their risks in service rollouts and ensure positive customer experiences. To them, a lost customer doesn't mean the loss of a single revenue stream, but potentially, the loss of any future opportunity to sell the rest of the bundled services to that customer. Infrastructure consolidation Because IT infrastructure and operations (I&O) expenses account for more than 70% of an enterprise's overall operating budget, IT I&O leaders are under constant pressure to reduce costs. Gartner found that infrastructure consolidation is a top priority for enterprises worldwide. As companies embark on IT consolidation activities, effective infrastructure management tools will be key to meeting future automation and service delivery needs.
Gartner is quick to point out that infrastructure consolidation is an initial step towards I&O maturation. Beyond lowering both capital and operating expenditures, enterprises stand to gain substantive service, agility and disaster recovery benefits to as well. Source: Gartner Toolkit: Best Practices to Reduce I&O Costs (January 2007) Back
to top Ironically, the innovations introduced by the IT industry to reduce development and maintenance costs, such as with SOA, have driven up the costs associated with managing them. The rising complexity of objects to be managed and the fragmentation caused by technologies such as Web services will continue to drive spending on ITOM tools because they can act as the "glue" to unite the various components that make up an increasingly fragmented IT infrastructure.
Source: Gartner, Forecast: IT Operations Management Software, Worldwide, 2006-2011,Update (July 2007) For ITOM investments to deliver cost-efficient and timely business solutions requires the collaboration of all internal and external ecosystem components. If this isn't the case, buyers of ITOM solutions face a higher risk of non-compliance. Until the ecosystem works together proactively, ITAM implementations will struggle to deliver the expected benefits, and the ecosystem will continue to only meet the needs of the software vendors rather than the buyers. In terms of mobile standards, WiMAX can be regarded as the "new kid in town". It is the first true global all-IP standard. Based on 2G and 3G developments, it's a safe assumption that only two 4G standards will achieve scale of network deployments. Gartner sees Long-Term Evolution (LTE) as a clear front-runner (market share of higher than 70%), with WiMAX and Ultra Mobile Broadband (UMB) as vying for second.
Source: Gartner, Dataquest Insight: Fourth-Generation Networks: Long-Term Evolution Is in the Lead as WiMAX and Ultra Mobile Broadband Battle for Second Place (August 2007) However, issues around backwards compatibility, interoperability and roaming still remain unresolved. The majority of existing cellular networks and subscribers are GSM and UMTS, so many operators have already invested heavily to support these over the next five to seven years, which may make them are unlikely to choose WiMAX for their next-generation technology. Predictions for WiMAX Adoption
Source: Gartner, Forecast- WiMAX, Worldwide, 2005-2011 (November 2006)
Source: Dataquest Insight- Pre-WiMAX, Proprietary and Certified Wireless Broadband Contracts, Worldwide, 2006 (August 2007)
Source: Gartner, Findings From Research Community Discussion on Mobile WiMAX Form Factor Evolution (August 2007)
Source: Gartner, Dataquest Insight: North America Shows Potential for WiMAX Backhaul From Wi-Fi and Cellular Networks (January 2007) |