Today at our annual Microsoft Cloud and Hosting Summit, we released a new Microsoft-commissioned study by 451 Research, titled Digital Transformation Opportunity for Service Providers: New Paths to “Beyond Infrastructure.” The study reveals an enormous opportunity for our cloud partners to help customers with both hybrid cloud implementation and with managed services for the next phase of digital transformation.
“More than ever before, customers are looking to a single trusted advisor to provide transformation-oriented managed services and hybrid implementation. Customers are looking to service providers to not only transform IT but also transform their entire business – to rewire the building and support new requirements, all while keeping the lights on.”
-Melanie Posey, Vice President, 451 Research
Microsoft’s ecosystem of cloud and managed service provider (MSP) partners are uniquely positioned to help customers with the critical managed services and capabilities to achieve their top business goals.
The Role of Services Providers for Hybrid Implementation and Management
According to Gartner, hybrid will be the most common usage of the cloud — but this will require public cloud to be part of the overall strategy by 2020. As digital transformation projects move forward, nearly 90% of surveyed customers are willing to pay a hefty premium to service providers to help them implement and manage their hybrid cloud environment.
The survey also found, that for the third year running, Microsoft Azure is the top pick among hybrid cloud users for IaaS Platforms. At Microsoft, we are working with tens of thousands of partners to joint deliver not only hybrid offerings but a full portfolio of cloud services. We have seen double-digit growth in Hosting & Managed Services over the past five years straight, with no signs of a slowdown.
The Next “Beyond Infrastructure” Opportunity
Our 2016 study revealed that for the first time, companies were relying more on digital infrastructure rather than physical. That trend continued to manifest in customer responses this year, demonstrating increased opportunity for service providers. In fact, as the “beyond infrastructure” shift continues, services will account for 74% of hosting/cloud spend in 2017, up from 71% as reported in 2016.
The Era of Managed Services: The New Normal
Half of all organizations surveyed consider service providers as vital for future digital transformation projects. Even better, 60% of those would be willing to pay twice as much as they currently spend to have a single trusted advisor solution to manage all their digital transformation-related sourcing, implementation, and management needs.
Additionally, the new research shows that 62% of cloud/hosting infrastructure spending comes bundled with value-added services, rising to 84% for the next hosting/cloud infrastructure engagement. By owning the customer relationship end to end it provides the perfect platform for partners to build value-added services for their customers that will create stickiness and differentiation from the competition.
Key Opportunities in Future Digital Transformation Projects
When it comes to vertical markets, the survey indicated that standout opportunities for digital transformation projects in the coming year include financial services, retail, and healthcare sectors.
In the short term, customers will need anything and everything related to data and site protection, including backup and recovery, disaster recovery/site protection, and archiving. All of these areas have shown substantial increases in current and planned usage for 2016-2017.
Longer term, a more strategic play is “run the stack” services for the ongoing operation, management, and support of cloud/hosting infrastructure environments, including:
- End-to-end application management
- Proactive capacity planning
- Premium/on-call 24/7 support
- Incident management and remediation
- Infrastructure/application alerting and monitoring
The evidence is clear: hybrid is here to stay and the opportunity for service providers has never been greater. If your business offers solutions and services that can benefit customers and their digital transformation projects, please join us by becoming a Microsoft partner today. To learn more about how to maximize the opportunity with Azure, and take your cloud business to the next level, check out our comprehensive Cloud Practice Development Playbooks.
Are you already implementing cloud or managed services? How do you see these new opportunities as helpful to your customer and impactful for your business? Share your thoughts with us in the comments below.