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CIOs Not Sold on Managed Service Value

Telecom service providers hoping to sell managed services need to do a better job convincing enterprise executives, particularly CIOs, that such services not only save money but can be secured. That's one primary finding of a study conducted by Datamonitor for BT Global Services .

The study, "Enterprise Intelligence: The Challenge for the CIO in 2010," also showed CIOs and senior executives are concerned that recent underinvestment in IT is harming their companies' ability to compete. Telecom service providers have a chance to capitalize on those concerns, says Neil Hendry, vice president of consulting at Datamonitor.

"There is a huge opportunity for managed service providers right now as we start to head into a recovery phase," Hendry said. "We see a real step change in the way organizations start to view their technology and how they use it."

But the degree of that step change will depend on how well service providers can prove to CIOs and other C-level executives that managed services are cost-effective, can improve productivity, and can be used safely, without the loss of proprietary data or intellectual property, Hendry says.

The survey showed that 53 percent of CIOs don't see how cloud computing will save them money, while 57 percent of CIOs and 53 percent of senior executives surveyed don't want their applications and data stored on servers outside their own country. (The study involved surveys of more than 2,400 IT users and 270 CIOs and senior executives globally.) While the survey specifically highlighted concerns about cloud computing, many of those concerns also apply to managed services, Hendry says.

"Providers of managed services still have a lot of work to do to get over some of the prejudices and inherent biases that people have, in order to get them to embrace the technology and therefore unlock the savings and the operational advantages that managed services can bring," Hendry says.

The greatest concern CIOs and chief executives have is that IT underinvestment is leaving them unprepared to compete as the global economy begins to recover, Hendry says. He believes that creates a point of opportunity for telecom service providers who can do a good job of delivering managed services and of promoting their value.

This is particularly true, Hendry says, when it comes to helping businesses organize, manage, and intelligently use the data they already have.

"Most organizations now have more information than they know what to do with," Hendry said. "Actually getting to the right information quickly and accurately and being able to turn this into actionable insights, that can make a substantive difference to the business, whether that is a tactical sales decision or a bigger strategic outcome."

If managed services can be designed to enable organizations to unlock the benefits of all that data, they will have great appeal, Hendry said.

"A lot of respondents said they had lost business because they haven't been able to get hands on information as quickly, and the information they have got has not been as accurate as they need it to be," Hendry said.

Enterprises may not be looking to service providers to offer solutions in this realm right now, he added, but "it is a really big opportunity for service providers to begin to start communicating beyond the pure technical and financial benefits" of cloud computing and other managed data warehousing offers.

— Carol Wilson, Chief Editor, Events, Light Reading

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