With an average 3.4% spending increase for telecom technologies and services, Europe¿s 2005 enterprise telecom outlook is good. This is one of the key findings of a recent Business Technographics® survey of 305 telecom decision-makers at large European enterprises conducted by Forrester Research, Inc. (NASDAQ: FORR). The big winners: IT security, IP equipment, and mobile equipment and services. However, Forrester also found that cost and security stand out as European enterprises¿ reasons for holding back on telecom technology adoption ¿ and it warns that both vendors and service providers must address these concerns before expecting enterprises to buy into the potential of the new technologies.
Lars Godell, Principal Analyst, Telecoms, at Forrester Research states: ¿While growth for some mature connectivity, IT security, and IP communication technologies is leveling off, there is significant interest in deploying mobility services like wireless email.¿ Larry Velez, Senior Analyst, Telecoms, adds: ¿And there¿s good news for incumbent telcos here: A majority of large enterprises are open to buying new technologies as a managed service. BT and France Télécom are the favorite service providers in general and for managed network services in particular.¿
Forrester did find that there are big differences across countries in terms of telecom budget plans for 2005. While UK and Irish firms expect to reduce their spending by 0.1%, French firms expect to increase their spending by 5.6%. Forrester thinks that a more competitive UK enterprise market and differences in telecom equipment purchasing cycles explain the gap, overriding the positive impact of the superior economic outlook for the UK. Also, some technologies will see much stronger growth than others. Spending on IT security, IP equipment, and mobile voice will experience the strongest growth compared with 2004 spending levels ¿ with 67%, 51%, and 47% of firms, respectively, planning increases. Not surprisingly, the majority of firms will keep their PSTN and legacy data spending stable in 2005.
Enterprises Show Great Interest In Managed Network Services
As a result of large firms¿ big IT departments and their internal skills, Forrester had expected to find less interest in managed services than its survey results actually showed. However, the large firms surveyed showed an interest in managed solutions for most connectivity, security, and IP communications technologies ¿ for a mixture of reasons, including cost savings, simplicity, and skills. Perhaps the biggest piece of positive news for service providers is that as many as 68% of firms are interested in a managed desktop VoIP service. Velez comments: ¿Many firms of all sizes overwhelmingly prefer to buy managed network services from incumbent telcos. We would have expected systems integrators to have been more popular than our survey results indicated.¿
Suppliers Need To Address Cost And Security Concerns To Drive Tech Adoption
Forrester¿s survey shows that security is the single most important purchasing factor for VPN and wireless; and that cost is the most important obstacle to buying VPNs and IP communication.
Reflecting their increased awareness of IT security threats, European firms mention security as a big issue in their buying processes: Almost half of all firms say that security is the biggest factor when buying wireless technologies. To address this issue, Forrester believes that service providers must increase the robustness of their own networks¿ security to meet the needs of diverse enterprises.
Godell concludes: ¿Forrester has long recommended that suppliers better address the enterprise business case for migrating to an integrated voice and data infrastructure. While the business case has been improving, our survey shows that cost remains both the most important factor in and the biggest obstacle to justifying the IP migration. Suppliers need to be more innovative about developing migration services.¿
The Data Overview mentioned in this release, ¿Europe¿s 2005 Enterprise Telecom Outlook,¿ was authored by Lars Godell, Manuel Méndez, and Larry Velez and is available to Forrester WholeView 2¿ clients.