Executive Summary: ISG Provider Lens™ Next-Gen Private Hybrid Cloud - Data Center Solutions & Services - U.S. Public Sector 2022
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U.S. public sector IT management is changing. Combinations of forces are driving more public sector organizations to outsource their IT estate operations. The COVID-19 pandemic was the major factor driving remote work enablement, but other aspects — increased cloud adoption, end-of-life servers and storage, edge computing, new computing styles and development methods, increased cybersecurity threat levels, and staff shortage — influence how organizations choose to run their services.
These major trends have three practical implications. The first is the continual movement of workload to the cloud, including mainframe applications. At the same time, public sector organizations are facing challenges in retaining employees who are responsible for managing these applications. And finally they are closing their data centers to reduce costs and environmental footprint. This all create an opportunity to move applications to a managed service, with providers offering the ability to both maintain software and host large systems. Other providers take a further step by migrating mainframe applications to cloud-native technologies and then running the applications in either a private or hosted cloud.
Environmental concerns and reliance on aging hardware result in fewer self-hosting options, pushing organizations to move their applications into either managed hosting facilities or to use managed services providers to migrate the applications to public or private cloud services. Energy efficiency to reduce both carbon footprint and costs is the critical factor for new-build data centers.
This advantage is driving the closure of older facilities, moving workload to either managed hosting or managed services providers. Managed services are a proven, effective way to cut carbon emissions.
ISG research found that while colocation companies are rapidly building large, new data centers, they are mostly used by managed hosting or cloud providers, not by public sector organizations directly. Only a few colocation providers offer support to this sector and those have been folded into the Managed Hosting quadrant in this report.
New approaches to computing are adding to this trend, requiring expertise that is difficult to find. With the general shortage of workers and the accelerating rate of retirement, managed services providers are becoming the most effective way for organizations to staff their IT services. Outsourcing the management of both hosting and services enables public sector organizations to focus on recruiting for their main function, without the need to seek out new and rare skills.
Managed services and hosting providers use a different approach to ensure adequate staff to support clients. Artificial intelligence (AI) techniques such as chatbots are creating teams of digital workers that are instantly available round-the clock for handling simple tasks such as password reset. More advanced machine learning techniques are being deployed to optimize service delivery and reduce costs by spotting and resolving potential security and performance issues before they turn serious. Purchasers should ensure that providers use these approaches for prompt and effective services at a reasonable cost.
AI and machine learning are also driving changes in how applications are built, run and hosted. Specialist approaches such as neural networks require appropriate, scalable hardware including GPUs. These requirements drive the need for new servers. It makes better economic sense to access them via a managed services provider as they are likely to be replaced faster than the normal server replacement schedule due to technology advances.
Other hardware architecture changes are also underway, with many city and state entities finding themselves having to deliver infrastructure support for new requirements such as self-driving vehicles and other new forms of transport. These services typically have extremely low latency compute requirements that are best met with edge computing facilities. They are best supported by specialists, and managed services and hosting providers are stepping up to meet the demand.
Software architectural changes are also in progress. In common with the commercial sector, many public sector organizations use hybrid and multi-cloud architectures that require updates to how software is integrated and deployed. This also allows organizations to adopt new and efficient software architectures, including serverless, microarchitecture and elastic computing resources. Managed services providers are increasingly taking over the migration of public sector transformations and their operation. Many offer their own unique toolsets to migrate applications to appropriate architectures, whether for maintaining legacy systems or porting them to cloud-native structures.
Apart from software transformation, the migration to agile and DevOps-enabled work has gained traction. Agile has proven to increase developer product and user satisfaction, while DevOps ensures the integrity of application delivery. Managed services providers have deep knowledge and experience with how continuous integration and continuous deployment (CI/CD) pipelines can be optimized to improve service delivery, reduce downtime and increase release frequency. FinOps is another new capability, and clients seeking to migrate to new architectures should ensure that providers can deliver the required level of FinOps processing to monitor and control cloud spending.
DevOps is increasingly combined with security, leading to DevSecOps. This approach — especially when in turn combined with toolsets that are powered by AI and machine learning — promises to adjust the balance of costs away from being largely operational to focus more on delivering value. It ensures that security is integrated into all new systems and is integral to operations instead of being an afterthought, as it has been in most cases.
This report assesses the main providers of managed services and hosting to U.S. public sector organizations that want to focus on core activities and improve the quality of IT systems for both internal and external use. After the enablement of a safe and rapid change to remote working during the pandemic, providers are now focused on maintaining the speed and quality of delivery. They are working toward improving IT in terms of hosting, digital transformation, workload migration and adoption of new techniques in software and hardware.
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