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WHITE PAPER Delivering business value in the cloud Hosted Services for Channel Partners Find out more about our Hosted solutions at partners.talktalkbusiness.co.uk/hosted In association with

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Page 1: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

WHITE PAPER

Delivering business value in the cloud

Hosted Services for Channel Partners

Find out more about our Hosted solutions at partners.talktalkbusiness.co.uk/hosted

In association with

Page 2: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

1. Executive summary ........................................................................................3

2. Why offer hosted services ............................................................................4

3. Development of hosted services ................................................................ 5

4. Who is adopting hosted services ................................................................6

5. Reasons for adoption ..................................................................................... 7

6. Ready to adopt hosted services? ...............................................................9

7. Ensuring a successful transition ...............................................................10

8. Addressing security concerns .................................................................... 11

9. Helping users achieve their hosting goals .............................................. 12

10. Emphasising the local angle ....................................................................... 13

11. Adding value with hosted services ........................................................... 14

12. References ...................................................................................................... 15

Contents

HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

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Page 3: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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1. Executive summary As businesses look to drive additional value with ICT, hosted services enable them to operate with greater agility while keeping costs under control.

Companies of all sizes are recognising the benefits of on-demand technology - harnessing online solutions to reduce the reliance on their own in-house infrastructures.

They are able to upgrade their ICT function by outsourcing to a third-party specialist, while also reducing capital expenditure, accessing expertise, increasing mobility, reducing their carbon footprint and ensuring business continuity.

But in order to fully reap the benefits of hosted services, companies need to have business grade connectivity and full technical support from their service provider.

Adopters also need to prepare meticulously for the deployment of hosted services, weighing up the risk factors against the potential benefits of sourcing ICT in the cloud.

Each individual business approaches hosted services from a different position, and must make strategic decisions based upon its own characteristics.

Using statistical evidence and industry commentary, this paper investigates the case for adopting hosted services, either to complement on-premise ICT or fully replace legacy solutions.

HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

Page 4: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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2. Why offer hosted services? If next-generation networks are the roads and railways of the digital age, then hosted services are the vehicles driving technological change. Ever-more businesses are embracing IT solutions delivered on a subscription basis through the cloud - seeking to drive down IT costs while increasing agility and functionality, and maximising user value.

By outsourcing information and communications technology (ICT) functions to the data centre, companies are gaining access to best-in-class services and applications, and freeing themselves from the shackles of legacy solutions. With hosted services - delivered over a network via off-site data centres - businesses can position themselves as IT consumers, passing on the capital expenditure burden to the provider.

“Most people think of the cloud as being an ICT service that is not on the premises anymore, but it is much broader than that. We have to start defining the cloud in terms of a range of hosted services

- both information and communications technology.”Any Lockwood, Director of Product & Marketing at TalkTalk Business

HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

Page 5: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

3. Development of hosted services Major advances in the data centre and in networking technology

- notably the advent of broadband, Ethernet and Ethernet-in-the-first-mile (EFM) - have catalysed the development of hosted services. With improved connectivity now a reality for many companies, infrastructure providers have created an innovative service delivery model which appeals to a wide user base. Businesses - long-frustrated by the limited shelf-life of hardware and out-the-box software - can use hosting to move to an investment model based on operational rather than capital expenditure.

In a little over half a decade, demand for hosted solutions has spawned a multi-billion pound, rapid-growth industry. Inspired by the launch of Amazon Web Service in 2006, a multitude of providers have brought cloud-based offerings to market, in the UK and overseas. IDC expects global turnover to rise from £13.6 billion in 2010 to £46.3 billion in 2015, at a compound annual growth rate of 27.6%, while indirect income from the cloud is forecast to total £700 billion per annum within four years, supporting 14 million jobs worldwide.

“Applications can now be tailored for particular industries, whether it’s retail, manufacturing, technology, financial services or anything else.

“In this way, cloud applications can cater for any need - no matter how niche.”Zach Nelson, Chief Executive at NetSuite.co.uk

Page 6: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

4. Who is adopting hosted services?

Corporate businessesIn Q4-2011, KPMG reported that 81% of corporates were using, experimenting with or planning to adopt cloud-based services. More than one in ten (13%) said they were in the process of transitioning to an entirely hosted service model, while another 10% had already reached this end-point.

“Larger organisations are beginning to adopt Software-as-a-Serve, particularly for CRM, HR and mail, and demanding new solutions such as integration and analytics provided through the cloud.”Helen Stuckey, Cloud Leader for IBM Global Business Services, UK and Ireland

Small and medium-sized enterprisesThe IDG UK survey suggests small and medium-sized enterprise (SME) hosting will be a major growth market in 2012 as adoption rates continue to increase. Nearly half (42%) of current SME users subscribed in the last 12 months, compared to 35% in the previous two years and 23% prior to 2009. Seemingly small businesses are warming to hosted services, coinciding with recent improvements to network connectivity.

“One way SMEs can compete more effectively with large companies is by embracing emerging technology. The cloud offers them the opportunity to manage IT resources more effectively.”Phil McCabe, Senior Policy Adviser at the Forum of Private Business

Page 7: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

5. Reasons for adoption

Reduce costsBy sourcing ICT services on-demand, firms can move to an investment model based on operational expenditure. In Q4-2011, KPMG found that economic factors were ‘an important driver’ of adoption for 76% of corporate users, while 75% said cost savings were needed to justify the deployment of hosted services.

Ensure ICT maintenanceWith service providers managing and maintaining infrastructure, end-users can streamline their in-house ICT setup. In Q3-2011, Cisco found that 67% of businesses see easier maintenance as a ‘key benefit’ of hosted services.

Upgrade ICTSome 64% of Cisco respondents identified automatic service updates as a ‘key benefit’. Service providers are incentivised to offer regular upgrades - if their rivals make the latest solutions available, they need to match them or risk losing customers. KPMG found 79% of corporate hosted services users had seen technical benefits and improvements not possible via in-house data centres.

Increase flexibility/scalabilityFirms can scale service use up/down according to demand, coping with peaks and troughs in activity. KPMG discovered that 80% of corporate users adopted hosted services to increase organisational agility, while 76% were seeking ‘strategic benefits’ and a competitive market advantage.

Go greenThe Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions are achievable annually by 2020 if businesses consolidate servers and increase efficiency. Servers hosted by an infrastructure specialist may be utilised by multiple businesses, helping to reduce spare capacity and minimise energy waste. At the same time, these firms can streamline their in-house infrastructure, reducing their carbon footprint to ensure regulatory compliance (e.g. CRC Energy Efficiency Scheme for large organisations).

KPMG survey on key factors in transition to hosted services, Q4-2011

Economicfactors

76%Cost

savings

75%

Enhance ICT securityNetwork security solutions, delivered by a data centre specialist, assist with control, manageability and mitigation of risk. Service providers are incentivised to invest in best-in-class solutions as a single breach can cause irreversible reputational damage. Few individual businesses can afford such levels of protection. Research conducted by Colt in Q2-2011 found 73% of firms see data security and privacy services as ‘a key requirement’ of cloud suppliers.

Ensure business continuityIn the event of an unexpected disaster - such as a fire, flood or hardware theft - data and files are backed up off-site by an infrastructure provider, minimising the losses incurred. Even if the office is destroyed, key servers are unaffected as they are housed in a remote location, managed by a third-party.

The Carbon Disclosure Project believes combined energy savings of

£1.2billionand an annual reduction of CO2 emmisions of

by 2020

Page 8: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

Increase mobilityAccording to IDG UK (Q4-2011), employees are able to access work email (94%), office apps (76%) virtual private network server (75%), databases (72%), archives (55%), production systems (55%), CRM (47%) and video conferencing (25%) remotely using hosted services. Using cloud technology they can work from any location, even on the move, accessing user accounts and information from any internet-enabled device.

94%76%

75%72%

55%55%

47%25%

work email

office applications

virtual private network servers

databases

archives

production systems

CRM systems

video conferencing

IDG

UK (Q

4-2011)

“Hosted services may lead to people working more flexibly. People are going to become a lot more comfortable having their data accessible to them anywhere on any device all the time.”Graeme Codrington, founder of TomorrowToday

“The cloud allows businesses to cut costs, offer flexible working, trade internationally and improve business continuity and disaster recovery policies.”Phil McCabe, Senior Policy Adviser at the Forum of Private Business

“Vendors and service providers are investing heavily in solutions and services and the market is picking up on the advantages the cloud has to offer in terms of efficiency gains, cost reduction, productivity and scalability.”Zach Nelson, Chief Executive at NetSuite.co.uk

Page 9: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

6. Ready to adopt hosted servicesBusiness-grade connectivity facilitates the use of hosted services, and its absence is a major inhibitor to successful deployments. Businesses with low-grade connectivity can access the cloud, but they may experience reduced choice, less resilience, lower speeds and weaker security. Hosted services are only as strong as their weakest link - the building blocks must be in place for the most successful deployments.

“Business-grade connectivity is where the performance level - in terms of availability, reliability and how quickly repairs are carried out - is appropriate to the service it is being used for.”Andy Lockwood, Director of Product & Marketing at TalkTalk Business

Any concerns over connectivity can be addressed during the vendor selection process. While some providers focus solely on service delivery, others incorporate data centre services and business-grade connectivity in their offering. This is the physical backbone of the cloud, and vital for hosted services delivery. User connections can be engineered during the deployment process, supporting enhanced performance and ensuring greater service reliability.

But each business should make choices based on its own capabilities, needs and end goals - there is no one-size-fits-all approach. Businesses may wish to keep mission-critical applications on-site - at least during the early stages of adoption

- and make their own provision for network access, security and ICT support. Others may benefit from a fully outsourced ICT function, with infrastructure, connectivity and services delivered as part of a bundled solution.

Page 10: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

7. Managing customer expectationsIn order to deliver value to business customers, resellers need to have a solution-level rather than design-level understanding of the services on offer. But a degree of expertise is required, and intermediaries should be able to answer common queries:

Is there a genuine business case for change?The benefits sought and obtained will vary - for instance SMEs may be targeting cost savings and expertise, while corporates could be seeking greater agility.

How do hosted services relate to the existing set-up?Businesses do not necessarily need to choose between hosting and legacy IT - they can establish hybrid environments which utilise both delivery models.

Does the business require enhanced connectivity?Business-grade connections are needed for high-bandwidth services such as VoIP and videoconferencing - businesses need to know what is possible with their existing infrastructure. Is a network upgrade needed prior to deployment?

Will the transition interrupt business activities?Some 58% of firms surveyed by Colt in Q1-2011 said ease of transition was a key enabler of adoption. Can complexity be reduced by sourcing connectivity, data centre services and hosted applications from a single provider?

Can all business goals be met by the provider?Different providers offer different types of services. For instance, one may offer hosted telephony, another hosted servers or software. Other providers may offer a wide range of services to their customers. Resellers need to establish the end goals of the customer - what exactly are they seeking from hosted services and are these targets realistic?

How effectively can a provider manage expectations?Four in ten (42%) IT leaders surveyed by Colt said they were unable to fully assess risk factors. Many are reliant upon the provider’s expertise, and may seek regular assurances. KPMG found that IT governance (17%), regulatory compliance (16%) and loss of control (14%) are key concerns - potentially stemming from a lack of understanding over how hosted services work.

Are the terms of supply sufficiently flexible?Businesses may wish to add or remove service subscriptions according to demand, meaning services must be scalable. In Q1-2011, Microsoft found that SMEs will pay for an average of 3.3 hosted services by 2014, up from under two in Q1-2011, as demand increases.

Where is the service provider based?Hosted service providers located overseas may be able to offer attractive tariffs. But if they have no control over the network and connectivity, customers are exposed to a greater degree of risk.

Is there provision for 24/7 customer support?With many businesses lacking ICT expertise, assurances over real-time technical support could be crucial.

What degree of responsibility will a service provider take?This will be outlined in the service-level agreement - some providers may only take limited responsibility for security, functionality and continuity of service.

Are hosted services fully secure?Network operators invest huge sums of money into physical and online security solutions - few individual businesses can afford to do the same.

Page 11: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

8. Addressing security concernsIn the early days of hosted services, fears over issues such as connectivity, data protection and performance inhibited growth. But as the delivery model has matured, and user understanding has increased, many of these fears have begun to subside. Certain challenges still remain for the industry however, particularly where attitudes towards security are concerned.

In Q3-2011, Cisco found that 64% of firms harbour concerns over data location while 76% have lingering security and privacy concerns. But, with providers investing significant sums in security defences and processes, 25% of businesses felt security fears are misrepresented and over-emphasised.

“Cloud providers offer better security, from both a physical and logical perspective.

“They’re investing in security tools and procedures on behalf of hundreds of customers, not just themselves, so they can clearly put more into it.”Royce Murphy, Chief Executive of Real Status

The key for providers is to convince business leaders that hosted services are indeed secure. They may be able to allay business fears by better communicating their expertise in this area and commitment to security best practice. Infrastructure providers need to provide detailed information on security procedures and policies, demonstrating that off-site data is safely stored.

“Once people realise their data is secure or as secure as it is ever going to be, they are going to start putting pressure on to move into the cloud.

“From a data perspective, we’re at the beginning of a remarkable shift to keeping our data in the cloud.”Graeme Codrington, founder of TomorrowToday

Page 12: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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9. Achieving your hosting goalsUsed appropriately, hosted services can drive business value

- through lower total cost of ownership and a high return on investment. However, resellers need to make clear from the outset that the cloud offers no guarantees of increased profitability. Each individual company must identify a genuine business case and develop an appropriate plan for deployment based upon its own characteristics. The customer needs to fully understand what they are receiving, and how it will be delivered by the reseller.

One of the problems faced by intermediaries is that cloud computing means different things to different people. Some businesses may refer to the cloud in terms of connectivity and data centre solutions, but others in relation to hosted services and applications. There is potential for confusion, which can result in companies selecting inappropriate solutions. So in order to meet customer expectations, resellers need to quickly establish the customer’s actual demands. Only then can they develop a suitable tailored solution.

Some businesses may choose to place their entire ICT function off-site, while others may utilise hosted services in conjunction with legacy solutions. Each approach can work, or fail, depending upon the strength of the business case and the choices made during deployment. Using their skill and knowledge, resellers can add value by steering adopters in the right direction.

“The furore surrounding the opportunity of cloud computing shows no signs of abating in the near future.

“Adoption remains healthy, both in terms of the number of new user organisations as well as increased penetration by existing users.”Andy Burton, Chairman of the Cloud Industry Forum

Page 13: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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HOSTED SERVICES: ACHIEVING BUSINESS VALUE IN THE CLOUD

10. Emphasising the local angleMore than eight in ten (82%) SMEs surveyed by Microsoft in Q1-2011 said it was ‘critical’ or ‘important’ to buy cloud services from a provider with a local presence. Many firms appear happier working with a smaller-scale partner, fearful of becoming just another statistic in a larger operator’s customer base.

Owing to a lack of in-house ICT expertise, SMEs are usually seeking hands-on support. They also want their service provider to be readily accessible should something go wrong. This creates a clear opening for agile, innovative resellers with a local presence. They are best-placed to offer practical support and rapid response times, more so than the larger network operators, whose core focus is on the data centre.

In the Colt survey, 42% of business respondents said they were unable to fully assess cloud risk factors - reiterating the fact they need specialist support. By offering professional and bespoke services, underpinned with transparency and a personal touch, resellers may offer the reassurance SMEs need to embrace hosted ICT.

“Systems integrators are responsible for building a full ICT solution, including everything from connectivity services through to hosted and on-site dedicated applications, through to the devices that people are using.”

“Since end-users have fewer in-house resources of their own, they rely on outside experts to help them design, build and operate their ICT infrastructure.

“That’s the reason businesses want to go through resellers.”Andy Lockwood, Director of Product & Marketing at TalkTalk Business

Page 14: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

11. Adding value with hosted servicesBusinesses appear eager to capitalise on the opportunities afforded to them by hosted services

- but some need a push in the right direction. The technical support and solution-level expertise offered by resellers can make all the difference, particularly if a business is caught in two minds over a move to the cloud.Just 3% of chief information officers surveyed by Gartner in Q1-2011 were using hosted services for the majority of their ICT, but this figure is forecast to rise to 43% by 2015. And with cloud investments the main priority for 50% of business leaders surveyed by Unisys Corporation, there are obvious commercial opportunities for intermediaries.

“The cloud is probably the most talked about technology with the least amount of current business.

“At present, the vast majority of telecoms and ICT business is not done through the cloud. It is growing from a very small base, meaning the growth will be exponential. “Andy Lockwood, Director of Product & Marketing at TalkTalk Business

In the past, businesses tended to make large, on-off technology investments, sandwiched by lengthy periods of inactivity. But through the subscription model, they have the option of making smaller, more regular purchases, adding capacity as and when required. As such, there are recurring opportunities for resellers to profit. By offering scalable solutions on-demand, they can develop long-lasting, mutually-beneficial commercial relationships with business customers.

Both corporates and SMEs are seeking greater value, quality and flexibility from their IT - along with improved service and reduced complexity. But it is crucial they have an access route they are comfortable with, which caters for their needs and also minimises risk. So as businesses search for solutions to their technology problems, reseller hosted services may provide an answer.

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Page 15: Hosted Services for Channel Partners · 2012-11-14 · Go green The Carbon Disclosure Project believes combined energy savings of £1.2 billion and a 50% reduction in CO2 emissions

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This white paper was written by NewsReach on behalf of TalkTalk Business, 2012.

12. References

Vodafone: CIO Pain Points Survey 2011: making mobile working...work (05/12)

European Commission: Eurostat (11/12)

IDC: Mobile Worker Population to Reach 1.3 Billion by 2015, According to IDC (01/12)

Good Technology: Good Technology Survey Reveals Americans are Working More, but on their Own Schedule (07/12)

Mesmo Consultancy: Email overload – twenty five percent expect a reply within one hour (11/12)

Vodafone: CIO Pain Points Survey 2011: making mobile working...work (05/12)

Vodafone: The future of communications - how will it change the way you work tomorrow? (04/12)

Daily Telegraph: (London Chamber of Commerce) London 2012 Workers stay at home to avoid the crush (07/12)

Good Technology: Good Technology Survey Reveals Americans are Working More, but on their Own Schedule (07/12)

IDC: Strong Demand for Smartphones in Second Quarter Continues to Drive the Worldwide Mobile Phone Market, According to IDC (07/12)

Ofcom: UK is now texting more than talking (07/12)

Futuresource: Tablet ownership to increase by 200% in USA and Western Europe in the next two years (04/12)

International Telecommunication Union: Key Global Telecom Indicators for the World Telecommunication Service Sector (11/11)

Ericsson: Traffic and Market Report (11/11)

Coalfire: 47 Percent of Users Lack a Password on Smartphones Accessing Company Files (08/12)

Fortinet: Fortinet Global Survey Reveals ‘First Generation’ BYOD Workers Pose Serious Security Challenges to Corporate IT Systems (06/12)

DQM Group: Speakman, T. (Filemaker) Mobile working: a headache or a business benefit? (08/12)

Forrester Consulting, Juniper Networks: Enterprises rethink IT strategy to support rising bring your own device adoption (08/12)

Fortinet: Fortinet Internet Security Census 2012 (06/12)

Information Week Reports: 2012 Consumerization of IT Survey (05/12)

Trend Micro: Consumerization is Here: Surveys from Trend Micro Confirm that BYOD is Overtaking the Workplace and That Device Security is Top Concern (08/12)

Coalfire: Coalfire survey reveals 84 per cent of respondents use the same mobile device for personal use and work; more than half report their companies have no mobile device usage policy (08/12)

Vodafone: The future of communications - how will it change the way you work tomorrow? (04/12)

Allot Communications: MobileTrends Report (02/12)

Strategy Analytics: Mobile Broadband Subscriptions on Tablets to Grow 7x in Next Five Years (08/12)

Forrester Research: Enterprise Mobility - A Client Choice Report Mobility Becomes An Integral Part Of Firms’ Network Strategy (07/07)

Gartner: Gartner Identifies Top 10 Commercial Business Applications for Tablet Devices (11/11)

Gartner: Gartner Says Mobile Device Management Is Essential for IT Success (05/12)