Response on Managed/HostedResponse on Managed/Hosted

Thanks very much for your article on managed/hosted services. I think you raise a number of interesting points related to the current economic climate and hype surrounding the communications market space. We at CGI have been involved with outsourcing and managed/hosted services for many years. In fact, it's the core of our business model and a large part of our strategic direction. We don't see it as a bubble but instead a natural means of conducting business. I would suggest the growth we've seen in our business and client base over the past couple of decades would support an assertion that at least a portion of the enterprise community looks to companies like ours to help them in evolving their businesses through outsourced/managed/hosted services, and that this is likely to continue. The types of services we provide run the spectrum of those you list in your column (and then some).

But you raise an interesting question: where is this all going, and why? Is the current climate simply creating a spike--or bubble--that will evaporate when normality returns? Or will this actually create a new normality? Having lived in the middle of the tech bubble of 1999/2000 and come out the other side (hopefully) a little more wiser, I can't help but align with your view to some extent. I think there is a hype cycle in play here that could take a similar course. We definitely are leveraging our experience in providing hosted/managed services over the past 2 decades to jump firmly into the communications fray - providing hosted communication services to SMB, mid-market and large enterprises--though we feel the large enterprise variant will likely trend more toward CPE-based managed versus hosted.

We also see this as being a competitive field for the long term, and that hosted/managed UC will play a large part of the overall business. The reason being that our current customer base is telling us to take them beyond VoIP into the future (that being UC), looking for enhanced effectiveness of their communications and better value for their business. We've also seen a number of RFxs come out from current and future customers looking for an evolution to UC, with a very open path to hosted services. The interesting phenomenon that we're witnessing is most companies, especially with their own strong technical team, initially begin looking at CPE-based implementations not knowing or understanding the options, but when exposed to the option of hosted, become very interested and are taking the option very seriously. It's still early in the game, but we've not seen the eagerness related strictly to the current economic conditions, but instead related to a sound business option that can enable a number of business benefits.

I think in the end it will be how the solution is positioned and who's doing it. There will be people that read the hype and try to take advantage of it, and will position their solution as helping people through the tough economic climate: this is where the bubble aspect is coming from. There are a number of us, though, that have been in the game a long time and understand the ins-and-outs of the hosting business, and believe there's a long term path here. I believe we're creating a base that will last beyond the current hype and bubble. Our approach to add CaaS to our hosting portfolio is coincidental with the current hype, not because of it. Hopefully if there is a bubble our base will expand with it and be permanently larger as a result. I believe, to your question, CaaS and managed/hosted services will be a permanent fixture going forward due largely to efforts like ours, in spite of a bubble scenario.