ISG Provider Lens™ Public Cloud – Solutions & Services Archetype Report 2020
ISG has observed massive momentum from enterprises to move to cloud, which has led to a sharp increase in cloud adoption. Enterprise demand has now shifted toward more of an as-a-service model, where the preference is for applications based on software as a service, pushing traditional software vendors such as ERP companies to move their packaged applications to run in the cloud. One of the major reasons that enterprises accelerated their cloud adoption is the pandemic, which has had a major impact on how everyone works. Many organizations wanted to rapidly move their employees to a work-from-home model, which required significant changes in their application and infrastructure landscapes. Traditional retail, travel and aviation are just a few of the industries that were severely impacted but now are slowly adjusting to the new norm by implementing several technological enhancements for contactless transactions, while keeping safety as the biggest priority.
Enterprises have been following social distancing norms and working from home for an extended period that started in March and continued throughout September. This has led to a massive rise in online shopping for almost everything, which has changed the business requirements to support work from home, increasing the overall cloud services demand. In addition, most large events — including trade shows, sporting events and festivals — have gone virtual this year. Cloud infrastructure is an ideal ecosystem for this because it provides the agility and scalability required to provide a better customer experience. Virtual business meetings are the new norm, which has often led to deals getting closed much faster. Almost all service providers reported nonstop service delivery and some, especially IaaS and PaaS providers, have seen their planned revenue advance with recordbreaking growth. Several other factors such as leveraging AI/ML and cognitive capabilities for data analysis are also driving enterprises to transform their applications and migrate to a public cloud environment.
Going cloud-native is now a big part of migrating workloads through recoding or rearchitecting. Just a few years ago, enterprises just wanted to move their applications to the public cloud, and there was high demand for lifting and shifting applications. This approach later led to either refactoring or re-architecting the workload so that it performed better, which in turn raised costs. The irony was that enterprises moved to the cloud to save costs, but in the end had to shell out more money to right-fit the application on the public cloud. Public cloud transformation engagements have now become more prominent, as the trend has changed to moving the application to the public cloud using cloud-native approach, which is mainly driven by the service provider community. Container technology and microservices have enabled enterprises to take full advantage of the flexibility and agility the public cloud architecture provides. ISG also sees a strong demand in transforming legacy applications, which involves completely re-architecting and recoding workloads and moving from COBOL to a Java-based application that works seamlessly on public cloud infrastructure.
To differentiate themselves from their peers, several large service providers have developed industry-specific offerings based on expertise they have gained over the years, including deep knowledge about the governance and compliance regulations required for that particular industry. Along with having top-tier partnership levels, service providers are also rapidly acquiring competency certifications from hyperscalers, which are like prized possessions or trophies. They are a seal of approval from the public cloud provider that the service provider has demonstrated expert knowledge about transformation in a particular industry or technology. This has helped service providers instill confidence in their prospective enterprise clients when they are selling their cloud transformation services.
ISG has also observed that many service providers are leveraging artificial intelligence (AI)-based cognitive capabilities and machine learning (ML) tools and services to offer high-quality public cloud migration, speed up service delivery, increase IT efficiency, automate operations, predict incident management and deliver a superior user experience. Providers have developed tools that take data from various sources to predict downtime and implement self-healing measures to prevent such situations. AI for cloud operations monitors various elements of the entire cloud infrastructure and provides predictive analytics for incident management to aggregate events, reduce noise, auto-correlate and identify the probable root cause using ML technology.
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