Cloud has become a disruptive phenomenon impacting both businesses that consume these capabilities and the service providers that deliver them. This includes managed service providers (SPs), which have become a regular source of support for enterprises in optimizing the value of cloud capabilities through the use of managed cloud services.
What’s driving demand for managed cloud services? According to IDC research, enterprises around the world look to these services to support businesses demanding more agility and/or speed from IT. Managed cloud services can enable firms to build new revenue-generating products and services faster, as shown in the figure below. This aligns with strategic enterprise initiatives that are primarily focused on:
- Developing a more agile application environment
- Improving availability (reduce downtime) of applications across enterprise portfolios (99.999% availability for applications)
This has resulted in the adoption of managed cloud services by 71% of organizations worldwide, with another 22% of organizations looking to adopt these services in the next 12-24 months.
The collective impact has created a worldwide market of spending on managed cloud services that reached US$34.0 billion in 2017 and is expected to grow to $74.9 billion by 2022 at a five-year CAGR of 17.1%. However, enterprises are consuming these services across multiple types of solutions that include managed public cloud services, managed private cloud services, and managed hybrid cloud and IT services. These represent 10%, 36%, and 55% of this market, respectively. (Source: Worldwide Managed Cloud Services Forecast, 2018–2022: An Extraction View of Technology Outsourcing Services Markets, IDC # US43249518, September 2018)
Business drivers for managed cloud services
Question: Which two of the following do you believe are the primary business drivers in utilizing managed cloud services?
When it comes to the types of workloads used for managed cloud services across both private and public clouds, the top-ranked applications involve front-office capabilities (customer relationship management) and back-office support functions (supply chain management, enterprise resource planning). Enterprises also use these services for critical data management capabilities such as data warehousing and business intelligence. When probed further, 59% of firms are currently using managed cloud services to manage these applications on public clouds. This is depicted in the figure below,
Managed cloud services: adoption by enterprise workloads
Question: Please indicate the top three areas for which you use or would use a provider of managed cloud services to support managing your business applications on public and private Infrastructure-as-a-Service (IaaS) clouds.
Since ensuring the performance of clouds is one of the top enterprise concerns, it is not surprising that they indicate availability as their top-priority service-level agreement (for example, 99.99% uptime), followed by time to respond (for example, 15-minute response time). When it comes to availability, enterprise requirements are stringent: 34% demand no less than 15 minutes of downtime (99.9% uptime or greater) and 11% want no more than five minutes of downtime on a monthly basis. Further, as the figure below highlights, 10% of enterprises want to provision an application in one day or less, and 31% want to achieve this within one week or less.
SLA requirements for application provisioning
Question: Approximately how long does it currently take your service provider to provision an application for use by end users using managed cloud services? For respondents not currently using managed cloud services, please estimate what you think it should take.
Success for managed SPs in meeting these requirements will require building an ecosystem of technology and services partners. As IDC research shows, the set of partners that managed SPs need to include involve software vendors that can provide those critical applications on clouds, particularly public clouds, and public cloud providers that can support delivery of these applications. Besides offering increased agility and support for new revenue opportunities, providers need to mitigate security risks while meeting critical SLAs such as application provisioning and availability.
Finally, buyers worldwide indicate that managed SPs and their partners not only need to support firms in shifting to a more standardized IT environment but also to tailor these services to specific geographic and industry requirements.
For more information on SAP’s managed cloud services, please visit www.sap.com/pmc.