Cautious U.S. Firms Still Seeking Benefits of Hybrid Clouds
Demand for private/hybrid cloud solutions and services continues to grow in the U.S., even as many enterprises temporarily scale back cloud investments due to macroeconomic concerns, according to a new research report published by Information Services Group (ISG) a leading global technology research and advisory firm.
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“Companies are reining in costs and beginning to rearchitect applications for greater savings”
The 2023 ISG Provider Lens Private/Hybrid Cloud — Data Center Services report for the U.S. finds many companies are still under pressure to rearchitect, rehost or replace legacy applications to meet current requirements. Even in the U.S. market, which is ahead of other regions in cloud migration, a majority of enterprise workloads still reside on company premises. Service providers are playing a significant role in the move to more flexible, efficient infrastructure.
“Hybrid clouds are steadily becoming the norm for U.S. enterprises,” said Bernie Hoecker, ISG partner and Enterprise Cloud Transformation leader. “As companies face the growing complexity of their IT environments, they are becoming more open to outsourcing operations.”
While some enterprises have been forced into cloud migration because their existing applications have reached the end of life, many are embracing hybrid cloud infrastructure as a foundation for new applications using AI, analytics and automation and to enable better customer and employee experiences, the report says.
Cloud cost optimization has become a high priority for U.S. organizations amid fears of an economic downturn, ISG says. In some cases, rapid “lift and shift” cloud migrations in response to the COVID-19 pandemic failed to deliver the maximum efficiency made possible by hybrid clouds. Across the board, enterprises are exploring or implementing FinOps frameworks to better control spending on cloud resources.
“Companies are reining in costs and beginning to rearchitect applications for greater savings,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “New software architectures open the door to more affordable, cloud-native technologies.”
The colocation business has also grown significantly in the U.S. over the last two years, the report says. Colocation providers have built up their regional data center presence, especially in the Southwest, which is attracting many enterprises from other regions. Working closely with technology vendors and network operators, colocation providers are improving IT operations, reducing latency and enhancing network performance for clients of all sizes.
The report also explores several other private/hybrid cloud trends in the U.S., including modernization plans by midmarket companies and moves by providers to standardize infrastructure and automate more processes.
For more insights into the cloud challenges faced by U.S. companies and advice on how to diagnose and fulfill a company’s particular needs, see the ISG Provider Lens Focal Points briefing here.
The 2023 ISG Provider Lens Private/Hybrid Cloud — Data Center Services report for the U.S. evaluates the capabilities of 65 providers across four quadrants: Managed Services for Large Accounts, Managed Services for Midmarket, Managed Hosting and Colocation Services.
The report names DXC Technology, Ensono, Kyndryl and Rackspace Technology as Leaders in two quadrants each. Accenture, Capgemini, CoreSite, CyrusOne, Cyxtera, DataBank, Digital Realty, Equinix, HCLTech, Hexaware, Infosys, Mphasis, Navisite, NTT DATA, NTT GDC, QTS, TCS, Unisys, Wipro and Zensar Technologies are named as Leaders in one quadrant each.
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