ISG Provider Lens™ AWS - Ecosystem Partners - U.S. 2020 - SAP Workload
Providers (and AWS) Build for the Post-COVID Digital Cloud Reality
With the outbreak of the COVID-19 pandemic in 2020, the range, and pace of enterprise spending on cloud-based IT have increased dramatically. Sudden and massive disruption in the allocations and locations of workforces and resources, in supplier and customer relationships and communication as well as business planning and operations, have accelerated digital transformation worldwide. To quote several providers interviewed for this study, the core goal for enterprises in 2020 is, “more digital, more quickly.”
Surprisingly to some, many enterprises are still working to respond effectively to the COVID-19 disruptions. Providers interviewed in this study report as many as 60 percent of their enterprise clients have yet to initiate any significant remote work or work-from-anywhere (WFA) capability. The result is that the global scale of cloud adoption and use witnessed before 2020 is minor compared to what most enterprises and providers are experiencing now, and what they will continue to experience for several years to come. This, in turn, helps boost the resource utilization of hyperscale cloud providers such as Amazon Web Services (AWS) to levels beyond what had been expected or even considered. Also, savvy IT services providers are adjusting, extending and promoting their services and capabilities to build on this growth.
The effects on services providers partnered with AWS are summarized as follows:
Consulting Services: Most providers are moving beyond digital enablement and initial operational improvements to provide clients with more refined digital business strategies. The primary focus for most engagements has shifted from cost reduction to improved business outcomes. This is leading to more consultative approaches by providers, which, in turn, is driving more client interest in change management and design thinking that closely ties cloud IT investment with business impacts. DevOps has become a core component of providers’ portfolios, especially as clients investigate the benefits of cloud-native development and infrastructure-as-code.
Data Analytics and Machine Learning: Work-from-anywhere environments are spurring a huge wave of enterprise data discovery. Enterprise IT and business leaders are focusing more on what data exists across all aspects of the enterprise, rather than in specific functional areas. The scope and affordability of a huge range of IoT capabilities are adding to this. The result is accelerating interest and investment in analytics within business operations, especially including the use of machine learning (ML). More enterprises now see the benefits of using ML and artificial intelligence (AI) within business applications to process and learn from the massive scope of available data quickly and effectively.
IoT: Interest and investment in the Internet of Things (IoT) had been growing rapidly prior to the outbreak of COVID-19. We witnessed increasingly affordable and integrable capabilities to improve and manage productivity, processes, devices and environments. However, work-from-anywhere realities have helped broaden and accelerate enterprise IoT investigations and investments. Work from anywhere greatly expands the scope of devices connected to enterprise systems beyond traditional industrial sensors and data. More devices, along with different types of data and more connections, have spurred enterprise and provider investments in edge computing, networking, security, application programming interfaces (APIs) and data analytics.
Managed Services Providers: As noted in previous ISG cloud ecosystem and services studies, the role and value of managed service providers (MSPs) have been rapidly expanding into areas traditionally thought of as systems integration. The impact of COVID-19 on cloud adoption and integration requirements has pushed MSPs farther into system integrator territory. As one of the MSPs in our Leader quadrant put it, the primary role of MSP today is “integration, security, integration, security, and integration,” although traditional MSP roles as transactional service providers continue. The Leaders in our study recognize the changing MSP reality, and are investing in more skills, expanding their roles with AWS, and are acquiring more technology and tools providers.
Migration and Container Services: A longstanding assumption in technology circles has been that not everything will move to cloud. The expectation for more than a decade has been that large-scale, complex and customized enterprise software environments would remain at least 50% on-premise, with cloud layered on top and between apps and databases. However, with the growth of digital business, we see many enterprises with major applications are not able to adapt quickly enough to changed business environments. This sparked a global move toward rationalizing and modernizing traditional business software environments. Currently, COVID-19 has catalyzed this transformation, and we see many enterprises each moving most of their applications (and databases) into AWS and other hyperscale platforms. The ubiquity of affordable and adaptable container technologies such as Kubernetes and Docker has further accelerated interest and investment by enterprises and services providers.
SAP Migration and Implementation: SAP is the major enterprise app modernization and migration service provider. The company itself is pushing customers to move to cloud-based versions of its software by establishing cutoff dates to support on-premises versions within the next few years. This has helped catalyze some of the business app modernization and data discovery trend, which, in turn, leads to increased need of better analytics and MSP capabilities. Meanwhile, the larger trend toward enterprise-scale, cloud-based software as a service (SaaS) is inspiring more enterprises to outsource ongoing management of their SAP applications and environments.
At the bottom line, initial digital transformation is rapidly morphing into unified everything-as-a-service, and service providers building with AWS are witnessing massive opportunity and, therefore, business change. Providers themselves report some significant business challenges not only because they are adapting to widespread work from anywhere themselves, but also as more client work is done remotely. Most providers report either lean presence or no presence within client spaces. As environments become more complex, this could strain communications and relationships. Also, AWS itself is changing. The hyperscaler has been making huge investments in tools to enable new capabilities and services beyond its traditional platform position. AWS is also heavily spending on partnerships with service providers. We see few significant providers without strategic co-development, co-marketing agreements with AWS. In the emerging cloud-first, post-COVID digital business reality, each one is a critical appendage of the other.
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