This IDC study (which is a translation of the Japanese report IDC #J8300110) analyzes the results of the Japan SMB User Survey we have conducted in February 2008 on the use of managed network services among Japan small and medium-sized businesses (SMBs). The implementation rates of managed services tend to increase with the company size. More than 50% of large companies with 1,000 or more employees have implemented managed services. Meanwhile, only 20% of small companies with 1-99 employees and 35%-40% of medium-small companies with 100-499 employees have done so. Even for functions that are necessary regardless of the industry or size of the user company, such as "network security" or "email", the implementation rates of managed services differ widely between the various company size segments. There is a huge room for vendors to cultivate customers outside the large-enterprise segment.

"Amid the economic slowdown that is affecting business performance, SMBs are now placing even stronger emphasis on cost cutting. Despite this, IDC believes that needs for managed services will increase among SMBs due to the shortage of IT manpower and demands for business clients to strengthen compliance systems. Whether service providers can develop sales channels that are able to reach this segment is a key determinant of their business success. It is necessary for service providers to pay attention to the procurement habits of SMBs, and collaborate with advisory professionals outside the IT sphere such as tax accountants/accountants," says Akiko Kawakami, senior market analyst, Communications, IDC Japan.