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Cautious Enterprises Still Eyeing Hybrid Cloud Objectives

Cautious Enterprises Still Eyeing Hybrid Cloud Objectives

Enterprises continue to seek private and hybrid cloud services even as they become more vigilant toward spending on large cloud implementations, according to a new research report published by Information Services Group (ISG), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens Private/Hybrid Cloud — Data Center Services Archetype report finds that enterprises have slightly reduced their spending on cloud technologies and business model transformations over the last four quarters amid economic and political uncertainty. Across the major types of outsourcing clients, with varying levels of cloud maturity and ambition, demand is steady for infrastructure services and slowly growing for managed services.

“Organizations facing economic volatility have become more strategic and selective in their cloud initiatives, but they still see value in implementing cloud computing and new technologies such as AI and analytics,” said Bernie Hoecker, ISG partner and Enterprise Cloud Transformation leader.

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Hybrid clouds have become the standard in recent years as enterprises modernize their infrastructure to remain competitive and improve customer experience, the report says.As a result, IT management has become more complex, and more organizations have begun outsourcing these operations to service providers.

Enterprises make outsourcing decisions on cloud services based on factors including attitudes toward data center integration, virtualization, governance, downtime and data lossISG says. These decisions are also shaped by each organization’s cloud maturity and goals for cloud implementation.

Through basic FinOps technology, many companies reined in their spending on cloud resources in 2021 and 2022, ISG says.Now they aim to rearchitect applications to use more affordable cloud-native technologies, such as serverless architectures, for further savings.

A core benefit of hybrid clouds is the high degree of control they offer, allowing companies to use public cloud capabilities without placing all their data in third-party data centers, the report says.As they assemble hybrid clouds, service providers and their clients are increasingly adopting proprietary platforms and tools using AI and ML to automate cloud operations.They are also adopting a polycloud approach to hybrid clouds, enabling applications to use specialized capabilities of multiple cloud providers based on specific needs.

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The 2023 ISG Provider Lens Private/Hybrid Cloud — Data Center Services Archetype report examines four different types of clients, or archetypes, that are looking for private or hybrid cloud data center services.The report evaluates the capabilities of 29 providers to deliver services to the four archetypes:

Traditional Archetype: These clients prefer to retain control of most of their IT organization. They engage in outsourcing to address skill gaps or offload some management of non-mission-critical IT assets. Most of their outsourcing projects are small or medium-sized and aimed at improving capacity utilization and containing costs. They evaluate providers mainly based on cost.

Managed Services Archetype: Enterprises in this group have experience outsourcing data center operations and are open to giving service providers additional responsibility.They prioritize cost reduction but are also looking to improve IT productivity with an outsourcing partner. These clients typically work with multiple providers under service-level or business-level agreements.

Transformational Archetype: These are enterprises that have embraced cloud technology and plan to transform their IT infrastructures into hybrid cloud environments.They are willing to undertake massive projects and take risks to achieve strategic value, working with mature providers that have a significant scale of operations.

Pioneering Archetype: These clients are at the forefront of IT management practices among their peers and consider IT a driver of revenue and profit, especially through improved customer experience. Developer productivity in a DevOps infrastructure is a higher priority than tactical goals such as short-term cost reduction.

Among the providers ISG evaluated, DXC Technology is named as a Leader across three archetypes, and AccentureEnsonoHCLTechInfosysLTIMindtreeTCS and Wipro are named as Leaders across two archetypes.AtosCapgeminiCoforgeHexawareHPEKyndrylMicrolandMphasisNavisitePersistent SystemsRackspace TechnologyTech MahindraUnisysUST and Zensar Technologies are named as Leaders in one archetype each.

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