ISG Provider Lens™ Next-Gen Private/Hybrid Cloud - Data Center Services & Solutions - Archetype Report 2021
During the last financial year, the adoption of private and hybrid cloud has been gaining significant traction, and more popularly over public cloud. This has led to complex infrastructure environments and, therefore, enterprises are finding it difficult to manage these environments. ISG has observed that enterprises are still hesitant to move their critical workloads to the public cloud mainly due to security and control concerns, although they are ready to develop new greenfield applications on the cloud.
Enterprises have realized that outsourcing their IT infrastructure management is a great way to realign their IT with business objectives in the most cost-effective manner and to gain other benefits such: as access to specific IT skills not found in standard IT departments; availability of shared resources such as facilities managers, security, engineers and other technical staff; and help predict costs that can facilitate better budget control. While enterprises outsource the managed services, they are also looking to engage further with these service providers to have a long-term strategic relationship and innovate solutions specific to their industries.
The COVID-19 pandemic globally had a huge impact on IT outsourcing in terms of business decisions and technology investments planned for 2021. ISG has observed that the number of companies planning to outsource their managed services activities has been rising since the last year, and this trend is expected to continue in the future. In the beginning of the pandemic, enterprises scaled down some of their teams and froze IT outsourcing. A few months into the crisis, they introduced new ways of working in terms of delivering everything virtually and remotely and scaled up their IT development teams. Many enterprises that never outsourced are planning to begin outsourcing for the first time in 2021. Although enterprises have embraced a virtual managed services model, their delivery expectations have not changed. Most managed services are now virtually and remotely delivered, including transition and migration of workloads, sales and due diligence, meetings and more. These activities are being handled virtually and remotely because doing so is faster, better and cost effective. Managed hosting and colocation providers have also realized the importance of the cloud ecosystem, and have adapted their business models to integrate themselves as key parts of the IT infrastructure lifecycle.
Enterprises also saw a significant increase in calls to their service desks in the initial weeks of the pandemic, with connectivity, security requirements and application usage as the primary concerns. Service providers put in extra efforts and remotely supported incidents by providing all service desk agents with virtual desktops in the cloud, along with remote access to cloud-based service desk platforms, to ensure there were no disruptions in the services. During the COVID-19 pandemic, service providers have been able to reduce the need for in-person support by harnessing technologies such as virtual desktops, unified endpoint management, hyperconverged infrastructure (HCI) implementations and more.
ISG has also observed that while enterprises are selecting a service provider for their IT buying requirements, the top three key selection criteria included automation, a good track record with business continuity plans (BCP) and a robust infrastructure management platform. Automation, being a top priority, is required to handle complexity and monitor or manage costs. It is especially important for large global enterprises that have a siloed infrastructure across the globe.
As pointed out last year, the data center industry continues to face a talent shortage. Employees with vast experience have either retired or moved to management positions, while a small percentage of the workforce has less than five years of experience. Also, diversity has been challenging in this domain, as few women opt to join the data center business and comprise a fraction of the entire workforce in the industry. The industry should focus on hiring and training new candidates and creating an attractive proposition for becoming a part of this industry.
As there is a push from the enterprise community for outsourcing, the service providers are successful in bringing in new clients, especially those catering to the midmarket. Enterprises that are exploring the feasibility to outsource their managed infrastructure operations and are willing to experiment with the cloud are leading the market. However, this market segment is witnessing intense competition, which will eventually erode service margins. Service providers in this space have gone above and beyond to satisfy their customers.
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