HFS Top 10 Cloud Migration and Management Services 2019 Excerpt for IBM
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HFS Top 10 Cloud Migration and Management Services 2019 Excerpt for IBM HFS Research authors: Ollie O’Donoghue, Research Vice President Jamie Snowdon, Chief Data Officer Martin Gabriel, Sr. Research Analyst August 2019 “Cloud is still the number one investment priority for enterprise IT. Providers need to demonstrate both delivery capabilities and a compelling technology roadmap.” — Jamie Snowdon, Chief Data Officer 2 © 2019, HFS Research Ltd Excerpt for IBM What you’ll read Topic Page Introduction 4 Research methodology 6 Provider profiles 16 Market direction and recommendations 17 Survey respondent demographics 21 About the authors 23 3 © 2019, HFS Research Ltd Excerpt for IBM Introduction ! Enterprise leaders continue to look to the cloud as the solution to their transformation woes—recent HFS research still places cloud high on the digital technology shopping list across verticals and regions. In part, this is driven by the need for enterprises to modernise their infrastructure. But, increasingly, other digital technology investments, particularly automation, analytics, and enterprise applications, come with a need to build out cloud environments. ! Throughout this research, HFS analysts conducted candid interviews with industry executives from both the buy-side and the sell-side to establish how the provider landscape is developing to cater to the insatiable demand for cloud services. One thing’s clear: public cloud is no longer a dirty word, and the relative maturity among decision makers is increasing exponentially as hyperscale cloud firms push convincing narratives out of IT and into the boardroom. However, for the high-value it services players that need to fit all the pieces of the cloud jigsaw together, there is a lucrative market to work in. ! Nevertheless, the market is highly competitive, and vendors need to come armed with a clear marketing narrative and the partnerships in place to support client ambitions—or risk losing ground to better equipped rivals. 4 © 2019, HFS Research Ltd Excerpt for IBM Cloudification is the foundation for the modern enterprise The HFS Digital OneOfficeTM Framework While adoption of cloud services in The customer-centric digital organization The empowering Digital OneOffice the modern enterprise has been considerable over the past few years, engagements are often piecemeal Digital underBelly The nervous and linked to specific projects, or ● Digitization and automation of processes system they are part of a broader ● Cloudification and security transformation initiative. With more ● Unification of data enterprises focusing on the latter, The Intelligent support functions we’re seeing a maturity in the circulatory ● Autonomous and agile working culture conversations business and IT system ● Inclusive digital mindset leaders are having as they strive to Mobile and social ● Unification of outcomes build the digital underbelly needed interaction Real-time ● Lean and design thinking to support their digital organization. Touchless personalization Moreover, as enterprises strive for Predictive digital insights interaction Customer-driven The neural customer-centrism, predictive digital process design network ● Predictive analytics insights, and intelligent support ● Cognitive AI processes functions, the burden on the digital ● Machine learning underbelly, and, by association, ● Blockchain and IoT cloud services, increases exponentially. The market for cloud Collaborative, unified, dynamic, intelligent, responsive, simple services can only grow larger. Source: HFS Research, 2019 5 © 2019, HFS Research Ltd Excerpt for IBM Research methodology The research is the result of data collected in Q2 and Q3 2019 through provider RFIs, structured briefings, client reference interviews, and from publicly available information sources. This information is augmented by a large G2000 survey of enterprise leaders. IT Services providers were assessed on the following three main dimensions: 33.3% 33.3% 33.3% Voice of the Buyer Ability to execute Innovation capability ● Candid feedback from client ● Partnerships and resources ● Vision for investments references and the results ● Breadth, reach, and scale ● Automation and integration capabilities from the IT services ● Execution capability and roadmap ● Marketing and thought leadership customer survey ● Pricing and commercial models ● Verticalization and industry-focused solutions 6 © 2019, HFS Research Ltd Excerpt for IBM Providers covered in this report 7 © 2019, HFS Research Ltd Excerpt for IBM Executive summary ! The cloud migration services market continues to grow significantly as enterprises seek to modernize and optimize their infrastructure. While much of the market is still consumed through the modernization of legacy environments, we’re increasingly seeing leaders push for specific cloud environments to underpin specific digital technologies—particularly analytics and automation. As enterprises face more disruption from direct competitors and nimble disruptors, we will likely see more multi-year transformation engagements where cloud services form a central part of the project. The challenge, however, is deciphering the value assigned to specific cloud engagements, as they are often tied to broader projects such as forming the foundation for an application optimization and modernization program. ! The hyperscale puBlic cloud giants—AWS, Azure, and Google Cloud Platform—are dominating much of the mindshare and market share in the gloBal market. AWS continues to post high double-digit growth alongside strong growth from Azure and GCP. Underpinning the unstoppable growth of these firms, almost all of the IT providers have a partnership with all three firms. Nevertheless, there is also a richer ecosystem of service providers catering to the market—from competitive regional hyperscale firms such as Alibaba Cloud, to boutique and niche players such as nClouds (HFS Hot Vendor 2018) taking on specific industry challenges. As the market continues to evolve and grow, there should be plenty of opportunities for new and innovative firms to make their mark. However, as enterprises push to drive more value from cloud services, providers will need to work harder to impress. ! Next wave of re-platforming underway in cloud. As the emphasis shifts from pure virtual machine environments to containers and serverless cloud variants. This shifts the hybrid mix more toward public cloud and companies opt for multi-cloud solutions for compliance and regulatory reasons. 8 © 2019, HFS Research Ltd Excerpt for IBM Major trends impacting the market ! Cloud wars continue to impact the market: The cloud wars in the hyperscale space continue to batter the market as AWS, Azure, and Google battle for market share. We’re hearing stories of vendor lock-in to retain clients that may bounce platforms to ultra-competitive initial pricing structures to lure unsuspecting IT teams onto new cloud environments. From a vendor standpoint, the market has also noted the speedy rise of Alibaba Cloud in the APAC region to rival the giants operating there. And while the firm’s heritage and reputation may stop it from expanding too aggressively in North America and Europe, its foothold in APAC could make it a dominant force on the global market over time. ! Cost isn’t a driver in cloud engagements: Based on discussions with leaders and client interactions, it has become increasingly apparent that cost is becoming less of a table stake when engaging for cloud services. Clients advise they are now driven by other factors such as time to market, client and user experience, and a need to boost IT efficiency. In many ways, this represents a maturity in the mindset of enterprise leaders as cost has been a core focus for cloud engagements for some time. ! Enterprises’ dependency on service provider for skilled talent: We’re continuing to see a heated talent war in the cloud services space, forcing enterprises to lean on service providers more aggressively to bring the skills and capabilities they need to modernise their environments. An aspect of the cloud wars is filtering down to the enterprise level as each layer of the value chain scrabbles for in-demand talent. It is at its most acute for service providers that are working to build innovative training and talent management capabilities to channel talent into high-demand areas. However, increasingly, key talent is moving from the service providers into the growing hyperscale cloud providers, causing resentment and concern for other stakeholders further down the chain. 9 © 2019, HFS Research Ltd Excerpt for IBM ©10 2019, HFS Research Ltd Excerpt for IBM GloBal size and forecast IT infrastructure management ($B) Cloud vs. traditional Market size ($B) Cloud Traditional CAGR 143.2 145.5 2.1% ! 137.7 140.6 Cloud-centric infrastructure 131.3 134.6 management services start to 34.9 -16.3% dominate the market as old 46.1 56.7 contracts renew into hybrid and 66.2 cloud deals. 75.9 85.0 ! Market-within-a-market developing as customers move from virtual machines to containers and 110.6 19.0% serverless solutions on cloud. 97.1 83.9 ! Overall infrastructure management 71.5 58.7 market has started to grow as the 46.3 increase in new deals offsets the shrinking traditional market. 2018 2019 2020 2021 2022 2023 10 © 2019, HFS Research Ltd Excerpt for IBM ©11 2019, HFS Research Ltd Excerpt for IBM Global size and forecast cloud professional services ($B) Market size ($B) ! The cloud and hybrid professional services market continues to grow rapidly as it forms