Magic Quadrant for Communications Outsourcing and Professional Services

21 October 2013 ID:G00248352
Analyst(s): Eric Goodness, Christine Tenneson

VIEW SUMMARY

We examine 18 providers of IT and process services for corporate networks and communications systems worldwide. IT leaders should use this Magic Quadrant when looking for providers of ongoing managed services or outsourcing agreements, or for project-based services.

Market Definition/Description

The vendors in this Magic Quadrant provide IT services to support fixed and mobile connectivity, and related communications systems and technologies. They do not necessarily own or lease the hardware, software or connectivity service contracts. While all the vendors in this Magic Quadrant provide communications-centric IT services, their competencies and approaches to customer engagement and contracting practices vary. Generally, the vendors' approaches are dictated by their primary business models (in terms of revenue).

IT leaders are advised to base their communications outsourcing and professional services (COPS) vendor selection on:

  • A detailed evaluation of their requirements for operations and support services, and their ability to deliver in-house resources
  • A review of their sourcing goals for contract structure, cost-benefits, and technology and business transformation
  • A comparison of prospective vendors' Ability to Execute against expectations globally, and in the specific countries or regions where a vendor's services are required

In this research, COPS engagements may be project-based; however, the focus and weighting in the rating process are on multiyear agreements for the ongoing operation and support of communications systems and corporate connectivity (inclusive of wired and wireless services, hardware and systems). COPS contracts may include one or more of the communications-centric IT services considered in this Magic Quadrant:

  • IT management (on-site and remote)
  • Help desk
  • Operational services
  • Application management
  • Hardware maintenance
  • Software support
  • Development and integration
  • Process management
  • IT consulting
  • Hosted communications and related cloud services (e.g., unified communications as a service [UCaaS])

At their core, these contracts always include IT management services: operational, application management and help desk management. Asset and resource transfers (of technology or employees) may be included in the agreements, but are not required. The retention of employees and assets by user organizations while using a third-party manager is a driving force in the market, as many companies feel this gives them more control than they would have with traditional outsourcing contracts.

Some vendors, namely communications service providers (CSPs), bundle connectivity services with IT services and infrastructure. Bundling network services into contracts was not a requirement for vendors to be included in this Magic Quadrant.1

Communications IT Service Definitions

IT Management Services

Management services transfer all or part of the day-to-day management responsibility for a customer's network environment (including LAN hardware and software, WAN — voice and data — and voice network hardware and software) and, in some cases, the ownership of the technology or personnel assets to an outside vendor. These services may include system operation or support, capacity planning, asset management, availability management, performance management, administration, remote monitoring, technical diagnostics/troubleshooting, configuration management, system repair management, and generation of management reports. Network remote monitoring and management and backup and recovery services also fall into this category when some degree of management is included in the service. Managed security services may form part of a wider outsourcing arrangement, but are not considered in this Magic Quadrant.

Hardware Maintenance and Software Support Services

Hardware maintenance and software support services are preventive and remedial services that physically repair or optimize hardware, including contract maintenance and per-incident repair. Hardware support includes online and telephone technical troubleshooting and assistance for setup, and all fee-based hardware warranty upgrades.

Sales of all parts are included, exclusive of parts bundled with maintenance contracts. This segment includes only external customer spending on these services.

Software support services include long-term and pay-as-you-go (incident-based) contracts. Software support contracts include remote troubleshooting and support provided via the telephone and online, installation assistance and basic usability assistance. In some cases, software support services may include new product installation services, installation of product updates, migrations for major releases of software, and other types of proactive or reactive on-site services. Software products and technologies covered under this category include OSs and infrastructure software. Software support services do not include the purchase of subscriptions that provide entitlement and rights to use future minor versions (point releases) or future major releases of software.

Development and Integration Services

Development and integration services support the implementation and rollout of new network infrastructure, including consolidation of established network infrastructure. Activities may include hardware or software procurement, configuration, tuning, staging, installation and interoperability testing.

Process Management

Specific to the communications environment, the practice of telecom expense management (TEM) encompasses the business processes conducted by IT and finance departments to acquire the provision (and support) of corporate telecommunications assets. TEM is the build-out of services, or the acquisition of third-party services, to manage the supply chain for telecommunications. The component services of TEM are sourcing, ordering and provisioning, inventory management, invoice and contract management, use management, dispute management, and business intelligence.

IT Consulting Services

IT consulting services are advisory services that help clients assess technology and methodology strategies, and thus align their network strategies with their business or process strategies. These services support customers' IT initiatives by providing strategic, architectural, and operational and implementation planning related to their networks:

  • Strategic planning includes advisory services that help clients assess their network requirements and formulate system implementation plans.
  • Architecture planning includes advisory services that combine strategic plans and knowledge of emerging technologies to create the logical design of the network environment and the supporting infrastructure to meet customer requirements.
  • Operational assessment and benchmarking include services that assess the operating efficiency and capacity of a client's network environment.
  • Implementation planning includes services aimed at advising customers about the rollout and testing of new network deployments.

Unified Communications as a Service

UCaaS is communications functionality that may include telephony, messaging, conferencing, presence and notification, based on assets owned, managed or colocated by third parties.

Technologies Under Management

This Magic Quadrant focuses on the third-party management of user- and provider-owned communications, hardware, software and systems. For more information, see:

  • Network services are defined in "Market Definitions: Enterprise Communications Markets" (Note: This document has been archived; some of its content may not reflect current conditions).
  • Communications applications are defined in "Market Definitions and Methodology Guide: Enterprise Communications Applications, Worldwide, 2011" (Note: This document has been archived; some of its content may not reflect current conditions).
  • Network equipment and software are defined in "Dataquest Research Catalog: Enterprise Network Infrastructure Worldwide" (Note: This document has been archived; some of its content may not reflect current conditions).
  • Mobile communications and technologies are defined in "Market Definitions and Methodology Guide: Mobile Services, Worldwide, 2013."

Magic Quadrant

Figure 1. Magic Quadrant for Communications Outsourcing and Professional Services
Figure 1.Magic Quadrant for Communications Outsourcing and Professional Services

Source: Gartner (October 2013)

Vendor Strengths and Cautions

Accenture

For COPS deals, Gartner considers Accenture to be a multisourcing service integrator (MSI), rather than a traditional outsourcer. Accenture is a large global outsourcer of IT management and business processes. Accenture's network service organization has nearly 3,000 professionals around the world and manages more than 4.5 million network and communications configuration items (CIs); 2 million of those CIs are cloud-based or hosted. Accenture can be considered an MSI for outsourcing and managed service engagements related to all network and communications technologies and services. The company is also considered a market-leading resource for related consulting and other project-based services. Accenture can handle midsize and large multinational corporations (MNCs) independent of geographic distribution of the communications systems or networks that require management.

Strengths
  • Accenture is a key provider of transformative consultative services related to networks and communications systems.
  • Accenture provides exceptional account management (e.g., people and processes to amend commercial agreements based on need).
  • Accenture helps clients aggressively pursue cost reductions and cost avoidance with gain-share agreements that put fees at risk.
  • Many of Accenture's customers praise the company's ability to translate complex network and communications technological issues and apply them to process and business transformation.
Cautions
  • Although Accenture is not considered a strong provider of TEM managed services by some of its customers, Accenture has made investments and is trending positive in its delivery capabilities.
  • Some customers have identified the need for more timely responses to moves, adds and changes (MAC) requests, including remote change and release management, as a concern.

AT&T

AT&T is a global CSP and supports a broad portfolio of communications-centric services covering a traditional outsourcing portfolio, as well as an ever-expanding cloud communications and managed mobility portfolio. The scope of AT&T's management responsibilities covers more than 4 million on-premises-based CIs, and nearly 6 million hosted or cloud-based unified communications and collaboration (UCC) configuration items, including nearly 1 million cloud-based or hosted CIs. AT&T should be considered an outsourcer or managed service provider in engagements related to all network and communications technologies and services. The company is a market-leading resource for related mobility and machine-to-machine (M2M) consulting and related project-based services. AT&T is strongest where the distribution of network services and assets are located primarily in North America and Western Europe. The company is seen as possessing more sector-based knowledge when serving the manufacturing, financial services, pharmaceutical and U.S. public-sector markets.

Strengths
  • AT&T's release and change management function is considered Positive (see Note 1) across voice communications, visual communications, data equipment, and WAN and remote-access solutions.
  • AT&T's event, incident and problem management function is considered Positive for voice communications, visual communications, data equipment, and WAN and remote-access solutions.
  • AT&T's multivendor maintenance and support are considered Promising for voice communications, visual communications, data equipment, and WAN and remote access solutions.
Cautions
  • Some customers have been concerned about slow responsiveness to MAC requests, including remote change and release management.
  • Many AT&T customers cite that AT&T's management of partners and subcontractors requires improvement.
  • AT&T prefers to bid on WAN or mobility outsourcing opportunities when there is a significant AT&T network service component.

Avaya

Avaya manages more than 7 million on-premises-based CIs, and a modest pool of nearly 300,000 hosted or cloud-based CIs. These CIs are generally focused on core network elements, or voice, voice mail, contact center infrastructure and LAN ports. Avaya is a partner to provide managed communications services and support services to several of the vendors in this Magic Quadrant. Avaya should be considered an outsourcer or managed service provider in engagements related to voice and contact center infrastructure. Avaya can handle midsize and large MNCs independent of geographic distribution of the communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the manufacturing, financial services and U.S. public-sector markets.

Strengths
  • Avaya continues to grow its portfolio of multivendor network devices and communications instances under management. Specifically, Avaya's ability to manage multiple vendors of contact center and unified communications infrastructure, messaging and LAN switches is considered Strong Positive.
  • Avaya's release and change management is rated Strong Positive across voice communications, contact center infrastructure and LAN switches.
  • Avaya's event, incident and problem management is considered Strong Positive across voice communications, contact center infrastructure and LAN switches.
Cautions
  • Avaya continues to be challenged from a revenue standpoint, with revenue declines in each of the last four quarters. Margins have improved, as the company has reduced cost order to maintain profitability ratios. Debt levels remain high at $6.1 billion, but the company successfully refinanced its debt to push debt maturities out to a later period.
  • Avaya's standard support and maintenance services have been the targets of increasing customer dissatisfaction and are rated Caution.
  • Avaya should not be considered a provider of managed WAN or remote access services.

BT Global Services

BT Global Services (BTGS) is a large CSP with a highly competitive global presence and capabilities across mature and emerging economies. The company focuses on providing value across the broad network and communications continuum — from traditional LAN and WAN to contact centers, unified communications and visual communications. The company manages almost 6 million on-premises-based CIs, and nearly 2 million cloud-based or hosted CIs focused on UCC and the contact center. The company should be considered an outsourcer or managed service provider in engagements related to all areas of network and communications systems. BTGS can handle midsize and large MNCs independent of geographic distribution of the networks and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the financial services, retail, global commerce, consumer packaged goods and U.K. public-sector markets.

Strengths
  • BTGS maintains the most experienced and elegant go-to-market approach of the CSPs that apply vertical market expertise and acumen to communications solutions. Depending on geography, the company focuses on targeted markets, including governments, global commerce, banking and financial services, and consumer packaged goods.
  • BTGS's capabilities and experience in LAN, WAN and remote access management are considered Positive.
  • The company's capabilities and experience in UCC and contact center infrastructure management are considered Strong Positive.
  • BTGS maintains the most aggressive and experienced CSP organization of the vendors on this Magic Quadrant, in terms of scope and scale, to develop global commercial agreements for outsourcing multicarrier service contracts, personnel and technology on behalf of its customers.
Cautions
  • BTGS's release and change management is rated Caution across voice communications, visual communications, data equipment, and WAN and remote access solutions.
  • Compared with other vendors on this Magic Quadrant, BTGS is not as competitive a provider for communications outsourcing for companies with more than 60% of their network service contracts and communications assets located in North America. Where there is little investment in BTGS networks, the company is more competitive as a managed service provider where no assets are transferred and no service contracts are novated.
  • BTGS is considered a niche provider of managed mobility and TEM services, and lacks proof of execution in the market.
  • Many customers cite BTGS's inflexibility and rigidity relating to account management and service delivery. BTGS requires a high level of vendor management at every phase of the outsourcing life cycle to successfully achieve results. This must be noted in the final costs when considering BTGS as a provider.

Cisco

Cisco continues to grow as a competitive, direct provider of IT services for customers in mature and emerging economies. The company focuses on providing value across the network and communications continuum. Cisco manages more than 5 million on-premises-based CIs, and more than 9 million cloud-based or hosted CIs focused mostly on Web conferencing. Cisco should be considered a support provider and a managed service provider in engagements related to all areas of Cisco networks and communications systems. The company provides some multivendor support, and value to large COPS deals as an MSI. Cisco can handle midsize and large MNCs independent of geographic distribution of the network and communications systems that require support and management. The company is seen as possessing more sector-based knowledge when serving the financial services, professional services, retail and public-sector markets.

Strengths
  • Cisco has successfully increased its capabilities to sell and deliver Advanced Services through partners and directly to customers. The vendor may agree to put fees at risk for gain-share agreements with guaranteed savings.
  • Customer satisfaction with Cisco's technical support and maintenance services is rated Strong Positive, and it is industry-leading among network equipment manufacturers and communications software vendors.
  • Cisco's incident and problem management services (not private label) are considered Strong Positive across its portfolio of network hardware and communications applications.
  • Cisco's release and change management services (not private label) are considered Positive across its portfolio of network hardware and communications applications.
Cautions
  • Bundling Cisco Advanced Services and traditional technical support and maintenance services can lack pricing transparency.
  • Increasingly, Cisco customers cite that it is not easy to conduct business with the company. Common complaints and concerns include separate technical teams and user portals by platform, bureaucratic impediments to global provisioning, and sourcing of services and products for global MNCs.

CSC

CSC is a global IT and business process outsourcer with a portfolio of outsourced and managed customers across mature and emerging economies. The company focuses on providing value across the entire network and communications continuum — from traditional LAN and WAN to contact centers, unified communications and visual communications. In August 2013, CSC announced an agreement with AT&T to subcontract the management of CSC's COPS installed base, as well as large parts of its related resources and workforce, to AT&T. CSC will still own and manage the broader agreements and relationships. It is expected that CSC will still vie for COPS opportunities in the market and leverage AT&T for delivery for some, or all, of the scope of work. At this time, CSC and AT&T are working through details to operationalize this deal.

Based on past performance, the new sourcing relationship with AT&T and observed delivery capabilities over the past 12 months laid out in customer references and customer interactions, CSC is considered an outsourcer or managed service provider in all engagement types related to all areas of network and UCC systems. Leverage CSC to take on midsize and large MNCs where geographic distribution of the network and communications systems that require management are primarily in North America and Western Europe. The company is seen as possessing more sector-based knowledge when serving financial services, manufacturing, transportation and public-sector markets.

Strengths
  • CSC maintains the experience and flexibility to develop traditional outsourcing agreements or to engage in managed service contracts focused on IT operations.
  • Based on customer conversations with Gartner, CSC's release and change management service processes have improved. These services are rated as Promising across voice communications, visual communications, data equipment, and WAN and remote access solutions.
Cautions
  • Customer references in formal surveys and ad hoc Gartner calls cite project and program management as significant liabilities and are rated as a Caution.
  • CSC customers regularly cite contractual inflexibility.
  • Customer references continually point to CSC's slow response to the need for innovative services. While this is changing for cloud-based services, the introduction of new professional services related to hot topics and emerging market requirements lags.

Dimension Data

Dimension Data is a system integrator with global presence and capabilities across mature and emerging economies. The company increasingly provides higher-value managed service agreements, and recently won a number of IT outsourcing agreements. Dimension Data offers value across the entire network and communications continuum — from traditional LAN and WAN to contact centers, unified communications and visual communications. The vendor manages nearly 4.5 million on-premises-based CIs, and more than 6 million hosted or cloud-based communications CIs comprised almost entirely of Web-conferencing seats.

Dimension Data should be considered a third-party maintainer, an outsourcer or a managed service provider in all engagement types related to all areas of network and communications systems. Dimension Data can handle midsize and large MNCs independent of geographic distribution of the network and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the financial services, life science and pharmaceutical, manufacturing, and public-sector markets.

Strengths
  • Dimension Data's ability to provide maintenance and support services worldwide across network and communications product lines is considered Strong Positive. Dimension Data is a private-label provider of services to many vendors included in this Magic Quadrant.
  • The company's ability to provide expense management that supports fixed and mobile service contracts is rated Strong Positive.
  • Dimension Data's event, incident and problem management is rated Positive for voice communications, visual communications, data equipment, and WAN and remote access solutions.
Cautions
  • Dimension Data has invested in managed mobility services, and has several early-adopter clients, but these aren't yet proven in the market. New clients should exercise caution and test services, particularly for any services proposed by Dimension Data in support of smartphones, tablets and point-of-service devices.
  • Dimension Data provides program management and service-level management of multicarrier fixed service contracts for enterprise clients. Gartner, however, cautions against using Dimension Data as an agent for global mobile service contracts.
  • Customers recently interviewed by Gartner have voiced concerns relating to the company's ability to create fluid interregional communication, which hampers service delivery to multinational clients.
  • Customers have pointed to degrading and defensive project management services to source, provision and integrate new technology. Additionally, customers have identified degrading program management of partners and subcontractors for service delivery.

HCL Technologies

HCL Technologies (HCL) is a global IT and business process outsourcer across mature and emerging economies. HCL manages more than 17 million on-premises-based CIs, and nearly 2 million hosted or cloud-based CIs. HCL should be considered a managed service provider for all areas of network and communications systems. HCL can handle midsize and large MNCs independent of geographic distribution of the network and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the financial services, manufacturing, technology, telecom, media and life sciences markets.

Strengths
  • HCL's release and change management services remain a Strong Positive rating across voice communications, visual communications, data equipment, and WAN and remote access solutions.
  • HCL's event, incident and problem management is rated Positive for voice communications, visual communications, data equipment, and WAN and remote access solutions.
  • The company's multivendor support services are considered Positive for voice communications, visual communications, data equipment, and WAN and remote access solutions.
  • Of the traditional offshore providers, HCL continues to be the leader in offering a shared operations center — i.e., it leverages a shared IT operations management platform for enhanced service automation and efficient pricing. HCL's proposition of dedicated and shared operation services models provides flexibility in IT decision making.
Cautions
  • Customers cite opportunities for improvement in HCL's technical project management and program management of multiple external vendors to support the customer environment.
  • Customers regularly cite inconsistent knowledge management across the HCL organization, relating to managed IT, as well as to account management.
  • Customers continue to cite that critical analysis applied to technical and business problems is not HCL's forte. The focus on timely closure of tickets sometimes clouds the root cause analysis and effective problem management effort.

HP

HP continues to focus on providing value across the entire network and communications continuum — from traditional LAN and WAN to contact centers, unified communications and visual communications. The company manages more than 27 million on-premises-based and hosted CIs across LAN, WAN and UCC. Based on past performance, perceived expertise and observed delivery capabilities laid out in formal presentations and customer interactions, HP should be considered an IT service provider in all engagement types related to all areas of network and communications systems. HP provides services to midsize and large MNCs independent of geographic distribution of the networks and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the financial services, energy and public-sector markets.

Strengths
  • HP maintains the experience to develop traditional outsourcing agreements or to engage in managed service contracts focused on IT operations.
  • HP's event, incident and problem management is considered Positive for voice communications, visual communications, data equipment, and WAN and remote access solutions.
  • HP is a leader in R&D for service deliverables related to software-defined networking (SDN) and network function virtualization (NFV), and its impact on the corporate network and data center.
Cautions
  • Some clients and prospects cite HP's strained relationship with Cisco as a concern. Some concerns include the sourcing of support contracts and HP's loss of access to advanced, new product information relating to future products and features from Cisco.
  • Some customers continue to cite weaknesses in HP's release and change management services across voice communications, WAN and remote access solutions. Customers cite timeliness per SLAs and effectiveness in terms of technical knowledge as suggested areas for improvement.

Huawei

Huawei's plan is to grow as a competitive, direct provider of IT services to customers in mature and emerging economies. The company focuses primarily on support services, while providing some value-added professional services across the network and communications continuum. Huawei should be considered a provider of support and professional services related to all areas of Huawei networks and communications systems. The company also provides some multivendor support. Huawei can handle midsize and large MNCs for support and professional services across Eastern Europe, Asia/Pacific, Latin America, the Middle East and Africa.

Strengths
  • Customers across the board appreciate the low-cost maintenance and support services of Huawei's branded technology.
  • Customers across the board also appreciate Huawei's low-cost technology consulting services.
  • Many customers rate Huawei's technology consulting services highly to supplement internal capabilities.
Cautions
  • Some customer references do not feel that Huawei aggressively pursues and achieves technology performance improvement initiatives.
  • Some customer references have expressed concerns about Huawei's account management (e.g., people and process to amend commercial agreements based on need, or the ability to address lapses in the relationship).
  • Some customer references feel that Huawei can improve upon the program management offerings.

IBM

IBM is an IT and business process outsourcer with global presence for consulting, design, integration, managed and cloud capabilities related to networks and communications applications across mature and emerging economies. The company focuses on target areas of the network and communications continuum — typically, data center networks, campus/branch, contact center infrastructure, unified communications, visual communications, mobility and security. Gartner estimates that IBM manages 2 million on-premises-based CIs, and nearly 50,000 hosted or cloud-based CIs across UCC and contact centers.

Based on past performance, perceived expertise and observed delivery capabilities laid out in formal presentations and customer interactions, IBM may be considered a consultant, integration or managed service provider that supports data network initiatives, campus/branch initiatives, contact center solutions, mobility solutions and UCC. IBM can handle midsize and large MNCs independent of geographic distribution of the communications systems and assets that require management.

Strengths
  • IBM's consulting capabilities related to data center networking are rated Strong Positive.
  • IBM's contact center infrastructure consulting capabilities are rated Positive.
  • IBM's consulting capabilities related to M2M communications solutions are considered Positive.
  • Customers cite improvements in processes and controls to improve the execution of project and program management goals.
Cautions
  • Some IBM customers cited the need for better management and assessment of service delivery quality of partners and subcontractors used in managed service deals.
  • Some IBM customers continue to report a systemic problem where on-site personnel lack the requisite technical knowledge and training.
  • The company does not generally bid on stand-alone communications systems, contact center infrastructure or network outsourcing deals.

NEC

NEC is a communications and IT solutions provider that also functions in the market as a global third-party maintenance provider. The company maintains a global presence and capabilities across mature and emerging economies. NEC provides higher-value managed service agreements and occasionally engages in traditional (although limited) outsourcing agreements. It offers value across the entire network and communications continuum — from traditional LAN and WAN to contact centers, unified communications and visual communications. The company manages more than 39 million on-premises-based CIs, and more than 1 million hosted or cloud-based CIs for telephony and broader UCC. NEC should be considered a third-party maintenance provider, an outsourcer or a managed service provider in all engagement types related to all areas of network and communications systems. NEC can handle midsize and large MNCs independent of geographic distribution of the networks and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the healthcare, hospitality, higher education, public-sector, financial services and retail markets.

Strengths
  • NEC customers continue to cite the company's account management and how the relationships are developed to ensure program success.
  • NEC's ability to provide maintenance and support services worldwide across network and communications product lines is considered Strong Positive. NEC is a private-label provider of services to many system integrators and outsourcers.
  • NEC customers regularly cite the company's bench strength in terms of technical expertise, as well as the flexibility of resource availability in all geographies.
Cautions
  • On 1 October 2013, NEC Europe sold the sales and services organizations located in Spain, Portugal and Switzerland to Getronics/Connectis (owned by Aurelius). NEC's remaining enterprise communications service organizations in Europe are located in Sweden and Italy. Potential customers must inquire about NEC's commitment to serving the European COPS market and with which companies they will partner for service delivery.
  • Customers regularly cite inconsistent knowledge management across the NEC organization relating to managed IT and account management.
  • NEC should not be considered as a provider of managed mobility services for smartphones, tablets or field service devices.
  • NEC is viewed by its customers as a tactical provider focused on day-to-day operations and unable to provide transformative consulting and advisory services.

NextiraOne

NextiraOne is a network integrator and third-party maintainer. The company has global presence and capabilities across most mature and emerging economies. NextiraOne offers value across the entire network and communications continuum — from traditional LAN and WAN to unified communications and visual communications. The company manages more than 18 million on-premises-based CIs. NextiraOne should be considered a third-party maintainer, an outsourcer or a managed service provider in all engagement types related to all areas of network and communications systems. NextiraOne can handle midsize and large MNCs based in Europe, with modest to high levels of asset distribution in Asia and Eastern Europe, and some presence in North America. The company is seen as possessing more sector-based knowledge when serving the financial services, energy and utilities, manufacturing, and public-sector markets.

Strengths
  • NextiraOne's customers regularly cite the company's bench strength in terms of technical expertise, as well as the flexibility of resource availability in all geographies.
  • NextiraOne's event, incident and problem management is considered Promising for voice communications, visual communications and data equipment.
  • NextiraOne customers in Europe regularly cite the company's account management and the relationships developed to ensure program success.
  • NextiraOne's ability to provide maintenance and support services worldwide across network and communications product lines is rated Positive. NextiraOne is a private-label provider of services to many system integrators and outsourcers.
Cautions
  • Gartner rates NextiraOne's field service resources and presence in North America as poor.
  • Customers cite opportunities for improvement in NextiraOne's technical project management and program management of multiple external vendors to support the customer environment.

Orange

Orange is a global CSP and supports a portfolio of communication-centric services spanning managed services, traditional outsourcing, and an ever-expanding cloud communications and managed mobility portfolio. The scope of Orange's management responsibilities covers nearly 3 million on-premises-based CIs, and nearly 600,000 hosted or cloud-based UCC configuration items. Orange should be considered an outsourcer or a managed service provider in engagements related to all network and communications technologies and services. Orange can handle midsize and large MNCs for which the distribution of network services and assets are located primarily in Western Europe, with moderate to high levels of presence in Asia, the Middle East and Africa, and a moderate presence in North America. The company is seen as possessing more sector-based knowledge when serving the manufacturing, financial services, life sciences, pharmaceutical, and oil, gas and mining markets.

Strengths
  • Orange's capabilities and experience to support and host on-premises-based telephony and UCC solutions are rated Positive.
  • Orange's capabilities and experience to support and manage WAN and remote access solutions are considered Strong Positive.
  • Orange continues to invest in personnel and service solutions related to managed mobility services and managed M2M solutions. Its capabilities and experience are considered Positive.
  • Orange customers rate Orange higher than competitors in terms of ease of doing business related to equipment and global network service sourcing and provisioning.
Cautions
  • Orange is not seen as competitive in communications outsourcing for companies with more than 50% of their network service contracts located in North America. However, Orange continues to increase its U.S. competitiveness by investing in broadband coverage.
  • Orange's release and change management services are rated Caution across voice communications, visual communications, data equipment, and WAN and remote access solutions.

Telefonica

Telefonica is a global CSP and supports a broad portfolio of communications-centric services. Telefonica should be considered an outsourcer or a managed service provider in engagements related to all network and communications technologies and services. Telefonica can handle midsize and large MNCs for which the distribution of network services and assets is located primarily in Western Europe and Latin America. The company is seen as possessing more sector-based knowledge when serving the manufacturing, financial services and public-sector markets.

Strengths
  • Telefonica's global support service capabilities and experience with LAN, WAN and remote access management are considered Positive.
  • Telefonica's capabilities and experience with UCC and contact center infrastructure management are rated Positive.
  • Telefonica customers consistently praise the company for pricing in COPS agreements that present good price for value.
Cautions
  • Gartner rates Telefonica's number of field service resources and its lack of presence in North America as Caution.
  • Telefonica has a limited number of customer references in North America, the Middle East, Africa and Asia/Pacific regions.
  • Telefonica's release and change management services are rated Caution across voice communications, visual communications, data equipment, and WAN and remote access solutions.

Verizon

Verizon is a CSP with a competitive global presence and capabilities across mature and some emerging economies. The company focuses on providing value across the network and communications continuum — from LAN and WAN to unified communications mobility, M2M and visual communications. Verizon should be considered an outsourcer or a managed service provider in engagements related to all areas of network and communications systems. Verizon can handle midsize and large MNCs independent of geographic distribution of the networks and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the financial services, retail and U.S. public-sector markets.

Strengths
  • Verizon's ability to integrate, aggregate and manage hosted and cloud-based UCC services in North America is considered Strong Positive.
  • Verizon's ability to integrate, aggregate and manage on-premises-based messaging services in North America and Europe is rated Strong Positive.
  • Verizon's event, incident and problem management services are considered Promising for the company's network services.
Cautions
  • Some Verizon customers continue to express dissatisfaction with Verizon's TEM services. Verizon terminated TEM services as a component of its service catalog in June 2013.
  • Some customers remain dissatisfied with Verizon's program management for service delivery from third-party partners and subcontractors.

Vodafone

Vodafone is a global CSP and supports a broad portfolio of communications-centric services covering a traditional outsourcing portfolio to an ever-expanding cloud communications and highly competitive managed mobility portfolio. Vodafone should be considered an outsourcer or a managed service provider in engagements related to network and communications technologies and services. The company is considered a market-leading provider in terms of the number of connections related to enterprise mobility and M2M consulting, and other project-based services. Vodafone can handle midsize and large MNCs for which the distribution of network services and assets is located primarily in Western, Central and Eastern Europe; Asia; the Middle East; and Africa. The company is seen as possessing more sector-based knowledge when serving the manufacturing, financial services and pharmaceutical markets.

Strengths
  • Vodafone's capabilities and expertise related to managed mobility services for smartphones, tablets and field service devices are considered Promising.
  • Vodafone's capabilities and expertise related to managed and hosted UCC are considered Positive.
  • Vodafone continues to invest in personnel and service solutions related to managed mobility services and managed M2M solutions. Its capabilities and experience are considered Positive.
Cautions
  • Vodafone's capabilities and expertise related to TEM for mobile and fixed service contracts are rated Caution.
  • While customer dissatisfaction related to the company's ability to provide program management across multiple partners and subcontractors remains, there are some signs of improvement as Vodafone continues the integration of Cable&Wireless Worldwide.
  • Complex problem management related to global WAN and remote access solutions is rated Caution.
  • Release and change management services for LAN switches, WAN and remote access solutions are rated Caution The primary reasons for dissatisfaction focus on lack of technology expertise and poor timeliness in executing work orders.

Wipro

Wipro is a global IT and business process outsourcer across mature and emerging economies. Wipro manages nearly 22 million on-premises-based CIs, and about 300,000 hosted or cloud-based CIs. Wipro should be considered a managed service provider for all areas of network and communications systems. Wipro can handle midsize and large MNCs independent of geographic distribution of the network and communications systems that require management. The company is seen as possessing more sector-based knowledge when serving the financial services, retail, manufacturing, life sciences and pharmaceutical markets.

Strengths
  • Wipro's customer satisfaction for continual service improvement is highly regarded by its customer. Continual service improvement is rated Strong Positive.
  • Wipro's event, incident and problem management is considered Positive for voice communications, visual communications, contact center infrastructure, data equipment, and WAN and remote access solutions.
  • Wipro's customers headquartered in North America and Europe regularly cite the company's account management and the relationships developed to ensure program success.
  • Wipro's ability to provide remote management and support services through a dedicated operations staff, leveraging a user's IT operations management software, is considered Positive.
Cautions
  • Customers cite weakness in Wipro's technical project management and program management of multiple external vendors to support the customer environment.
  • Multiple Wipro customers cited cumbersome processes and controls, which impede the execution of project and program management goals.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor's appearance in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added

  • Huawei

Dropped

  • Atos
  • Getronics Workplace Alliance
  • Siemens Enterprise Communications
  • T-Systems

Inclusion and Exclusion Criteria

To be included in the 2013 COPS Magic Quadrant, a vendor must meet the following criteria:

  • In 2012, the service provider recognized at least $200 million in global COPS revenue. The revenue considered for the COPS Magic Quadrant is for process and IT services only. The revenue from the sale of network hardware, communications software and fixed or mobile network services (connectivity) cannot be considered COPS revenue. When more than 25 vendors meet this criterion, Gartner may expand the revenue requirement.
  • The service provider competes for stand-alone COPS deals that are not encompassed within broader IT outsourcing deals. The intent of this criterion is to address a market need for the selective sourcing of communications systems and services. Each vendor must identify at least four network-only deals won in 2012 where the vendor maintained a prime relationship.
  • The service provider may not recognize more than 70% of its COPS revenue from a single vertical market.
  • As the Magic Quadrant seeks to exhibit broad value, maintenance services may not represent more than 80% of a service provider's COPS revenue. All OEMs are required to verify in writing that they meet this requirement.
  • The service provider must be able to demonstrate the ability to deliver substantially against COPS agreements as a sole-source, direct provider of relevant IT services (providers relying entirely on partners or subcontractors are excluded). Ratings will favor more organic offers. Organizations that leverage substantial third-party service delivery must provide compelling evidence of superior program management (increasingly referenced as MSI) and execution on COPS contracts. Vendors must identify service partners across various geographies where they do not deliver IT services organically.
  • Service providers must maintain a prime relationship with customers in at least four of the seven geographies tracked by Gartner. The geographies are Asia/Pacific, Eastern Europe, Japan, Latin America, Middle East/Africa, North America and Western Europe. Vendors must identify at least one COPS prime relationship in at least four geographies.
  • The vendor will be judged solely on its core capabilities and presence. No go-to-market joint ventures are considered for this Magic Quadrant.

Evaluation Criteria

Ability to Execute

We evaluate seven criteria for the Ability to Execute.

Table 1. Ability to Execute Evaluation Criteria

Criteria

Weight

Product or Service

High

Overall Viability

Medium

Sales Execution/Pricing

Medium

Market Responsiveness/Record

Medium

Marketing Execution

Low

Customer Experience

High

Operations

High

Source: Gartner (October 2013)

Completeness of Vision

Gartner evaluates IT service providers on their ability to convincingly articulate go-to-market strategies and logical statements about market direction, innovation, customer needs and competitive forces, and how well they map to the Gartner position. Ultimately, IT service providers are rated on their understanding of how market forces can be exploited to create an opportunity for the customer and the provider. Each criterion is ranked high, medium or low in importance.

Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria

Weighting

Market Understanding

Low

Marketing Strategy

Low

Sales Strategy

Low

Offering (Product) Strategy

Medium

Business Model

Low

Vertical/Industry Strategy

High

Innovation

High

Geographic Strategy

High

Source: Gartner (October 2013)

Quadrant Descriptions

Leaders

Leaders affect competitors by the choices they make to create IT service offerings to support business goals, how they align their messaging and personnel to industry needs, and their ability to differentiate value, price and service levels to be first to market with relevant products. Vendors in the Leaders quadrant are performing well today, and maintain a stable organization with a clear vision of market direction. Leaders are building competencies to sustain their leadership positions in the market. Based on our analysis, the Leaders in this Magic Quadrant are:

  • Accenture
  • AT&T
  • BT Global Services
  • Dimension Data
  • HCL Technologies
  • Orange

Vendor and customer experience weigh heavily in the Leaders quadrant. All these vendors have demonstrated they have significant network management and outsourcing experience, and understand the dynamics needed to deliver network-centric IT services successfully.

Challengers

These vendors are strong in execution, but narrower than Leaders in their vision for taking market leadership. Their focus is more aligned with traditional operations than transformation in terms of enabling technology or other important service offerings. An example is increasing capital expenditures to match those of a competitor, or bringing services to market after a competitor has an established market position. Vendors in the Challengers quadrant execute well today, but, compared with Leaders, have a narrower view of market direction, and how and when to take advantage of, or create, market potential. The vendors that emerged as Challengers in this Magic Quadrant are:

  • NEC
  • NextiraOne
  • Wipro

These vendors demonstrated that they have a base of satisfied managed services and outsourcing clients. Overall, they need to address their strategic vision and broaden their service offerings (that is, capabilities and delivery) to meet clients' global needs.

Visionaries

Visionaries see the promise of the market and understand the user's needs. However, execution is short in terms of customer expectations, delivery capabilities and/or service availability (commercial program). These vendors are often held back from being a Leader by financial restructuring, and management that lacks deep market knowledge or that has proffered a poor strategy. Visionaries plan to expand their IT service coverage or create differentiation for the enterprise, but encounter delays due to lack of executive sponsorship. Vendors in the Visionaries quadrant have a clear vision of market direction and are focused on preparing for future customer requirements, although there is room for improvement in service delivery and execution. Companies in the Visionaries quadrant in this Magic Quadrant are:

  • Avaya
  • Cisco
  • CSC
  • HP
  • IBM
  • Telefonica
  • Verizon

Niche Players

Companies in the Niche Players quadrant focus on a particular segment of market requirements, as defined by characteristics such as size, vertical focus or selective network technology management offerings. For this Magic Quadrant, these vendors are:

  • Huawei
  • Vodafone

Vendors that appear in the Niche Players quadrant are viable options for organizations to consider for COPS. In this Magic Quadrant, vendors identified as Niche Players may have limited experience in certain regional markets, or they may only provide service offerings focused on specific network platforms (for example, PBXs, mobile and wireless, narrow markets or business segments served).

Context

Over the past year, customer discussions as part of Gartner's inquiry process have increasingly focused on replacing providers to avoid unsatisfactory service delivery and to migrate future use of external providers from long-term, monolithic network and communications environments to shorter and smaller technology-specific contracts. In the customer reference survey conducted as part of this Magic Quadrant's due diligence process, more than 62% of the providers' selected references told Gartner that they will put their outsourcing and managed services contracts out to bid, rather than sole-source them back to their current providers. The percentage of references indicating they will bring IT services back in-house and self-manage them rose from 5.2% in 2012 to 8.6% of respondents in 2013.

At the heart of the migration in commercial agreements lies nagging dissatisfaction with vendor account support and a failure to match expectations of service levels. Gartner's reviews of COPS agreements show that most providers meet their contracted service levels. However, at the heart of market dissatisfaction are users' requirements for drastic cost reduction year over year and the resulting agreements offered by the providers to meet user price requirements while protecting their own profitability. The switch from traditional outsourcing to managed service contracts is beneficial for users and providers, as deals are broken down into function technology and service delivery silos that are easy to manage by all participants.

Competitive Landscape

The main competitors, in terms of business models, for COPS globally are:

  • CSPs, such as BT Global Services, Orange and Verizon
  • System integrators and IT outsourcers, such as Dimension Data, HCL Technologies, Wipro and NextiraOne
  • Manufacturers (OEMs) and independent software vendors, such as Avaya and Cisco

User References

We asked each vendor rated to submit five references and to complete a formal interview or survey. For this Magic Quadrant, we used a combination of online surveys and telephone interviews to collect 90 reference responses.

Market Overview

In Gartner surveys, in ad hoc conversations at industry events and during Gartner's formal inquiry process, the key value propositions that end users cite most often for entering COPS relationships with third-party vendors are, in order of preference:

  • Attaining targeted cost-benefits
  • Flexibility in contracts related to engagement and consumption models
  • Improved operational and technology performance
  • Program management

Attaining Targeted Cost-Benefits

The primary justification for engaging in COPS agreements continues to be to reduce the expense burden of corporate networks and communications systems by transitioning the management, and sometimes the ownership, of the related technologies to a third-party provider and, increasingly, to multiple external providers. It is reasonable for companies to expect managed services, communications cloud services and outsourcing relationships to reduce a company's ongoing costs while maintaining or improving service levels. Gartner sees cost reductions typically falling in the range of 10% to 20% when these programs are rolled out effectively.

The gap between desired deep cost reductions and actual savings is a result of how poorly COPS deals are qualified and benchmarked in the due diligence process. Culpability for this shortfall lies with the bidding providers and the sponsoring user. Investments in upfront due diligence, related to inventory characterization and operational metrics (for example, the number of tickets generated per year, by technology platform and severity level), will contribute to more successful COPS deals.

Increasingly, Gartner is seeing COPS deals that leverage third-party MSIs to manage work streams, ensure execution and measure value.

Flexibility in Contracts Related to Engagement and Consumption Models

The issuance of RFPs for COPS megadeals (those over $100 million during the term of agreement) continued a downward trend. Increasingly, very large COPS deals have given way to the disaggregation of the communications tower that is increasingly multisourced according to a provider's expertise, vertical acumen and geographic presence. Instead of creating large, hard-to-manage contracts where assets and personnel are transferred to the provider, users now seem inclined to use providers to attack specific technology and business pain points. These may range from the management of increasing technological complexity to the management of out-of-control capital expenses, or the provisioning of advisory services related to network and communications architectural transformation to accommodate business change. The benefit of migrating from traditional outsourcing to managed services, or communications cloud services, is that engagements are predicated on demand (for example, monthly recurring charges per device per instance, or utility-based charges that are user-, business-unit- or site-specific).

There are dangers associated with disaggregating the communications tower into multiple bid opportunities. Disaggregation creates an environment in which many vendors require management and oversight. Vendor management is rarely a core competency of user organizations, with even fewer organizations staffed to address vendor conflicts related to incident and problem management. As a result of this scenario, Gartner sees continued success with the multisourcing integration model for very large MNCs. Smaller or midsize organizations are often unwilling to take on the added expense of program management by an MSI. As communications cloud services move from private clouds to public services, the MSI and/or cloud broker will become increasingly important in successful integration and ongoing program management.

Improved Operational and Technology Performance

Many end-user organizations have recognized that improving service levels related to their communications systems requires significant investment in full-time equivalents and technology. Poor processes, methodologies and tools make investments in operational services inefficient and ineffective. Organizations that have underinvested in resources often do not realize cost-benefits when engaging in managed services or outsourcing relationships. However, the improvements in technology performance and change management can be significant.

Due diligence is critical to secure improvements in operational and technology performance. At the heart of all successful managed services deals is service automation brought about by remote monitoring and management services. Automated workflows, remediation of Level 1 and Level 2 conditions through scripting and autonomics, proactive event and incident management, and remote change and release management are increasing availability and performance while driving down service pricing.

Gartner continues to see the inclusion of process outsourcing, in the form of TEM (for fixed and mobile network services), in almost every large competitive proposal as a way for businesses to increase the transparency of their telecommunications costs and operations.

Program Management

Very few COPS providers meet all customer requirements across all countries and geographies by leveraging internal resources for IT service delivery. Typically, COPS deals are an amalgam of internal and subcontracted resources to deliver IT services and support. Managing the workflows between the vendor's account management team, its own internal service delivery personnel, the customer's sourcing management resources and the project resources of subcontracting partners is a challenge that few providers in the market have mastered. Program management is often where many agreements break down in terms of incident and problem management, relationship management and cost management. Each interaction and delivery milestone that requires fulfillment across time zones and language barriers represents risk in the IT service supply chain. The risks are amplified when the workflow systems of the providers and their subcontractors are not bonded electronically, and when there is process dissonance across provider and user organizations. Users must work to understand the skill sets of the vendor's program management office to manage complex COPS deals.

Evidence

1 For this analysis, each participating vendor delivered a formal presentation to Gartner and was asked to provide a list of five customer references. Gartner then assessed each participant. The compilation of the results from the presentations and reference checks contributed to the final placement of the vendors in the Magic Quadrant. Gartner also used its research and conversations with users in the market to ascertain capabilities and satisfaction beyond what was provided by the vendors' selected references. The positioning in this Magic Quadrant reflects each vendor's Completeness of Vision and Ability to Execute

Note 1
Gartner Vendor Rating Definitions

Strong Positive: Vendor is viewed as a provider of strategic products, services or solutions.

Positive: Vendor demonstrates strength in specific areas, but execution in one or more areas may still be developing or inconsistent with other areas of performance.

Promising: Vendor shows potential in specific areas; however, execution is inconsistent.

Caution: Vendor faces challenges in one or more areas.

Strong Negative: Vendor has difficulty responding to problems in multiple areas.

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.

Overall Viability: Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.

Market Responsiveness/Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen to and understand buyers' wants and needs, and can shape or enhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.

Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying business proposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.

Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.