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3 Key Ways IT Service Vendors Are Enabling Clients’ Cloud Journeys

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The rise of self-service provisioning and automation of public cloud environments gives companies autonomy in managing their infrastructure and flexibility in meeting fluctuating capacity demands. From the perspective of an IT service provider, however, if clients can provision new cloud environments in a few minutes and then use the same screen to orchestrate and manage that cloud environment directly from the host, does an IT services provider play the same critical role in managing infrastructure as it once did?

NelsonHall has found that rather than decrease in importance, the role of IT service providers may actually increase as clients move to cloud-based infrastructures. There are three main drivers of this:

  • The need for help in developing and executing a migration plan
  • The complexity of managing hybrid cloud environments
  • The use of cloud as a foundation for broader digital transformation

Advisory & Migration Services Critical

Whereas, a few years ago, public cloud environments were used to host non-critical or non-production environments such as development or test, companies are increasingly looking to leverage cloud environments as broadly as possible across the enterprise.

Accordingly, IT service providers recognize the criticality of getting engaged in cloud advisory and migration for their clients. ~60% of the vendors profiled in NelsonHall’s recent Cloud Infrastructure Migration & Management project have made investments in cloud assessment automation tools and ~65% have invested in migration automation tools. The majority (~60%) also have PaaS offerings, based on open-source tools such as Cloud Foundry and OpenShift, to support developing cloud-native applications.

IT service providers are positioned to drive the process of defining how to disposition various workloads, including replacing existing applications with SaaS solutions, developing new cloud-native applications, or migrating existing applications to cloud environments, as well as where each should be hosted (public cloud, private cloud, on-premise) and have developed tools and methodologies not available within any single company.

In particular, IT service providers are increasingly investing in automation tools, such as AppDynamics Application Intelligence Platform, to enable the discovery and categorization of application landscapes, producing detailed migration strategies. These automation tools can reduce assessment and migration planning effort by 80-90%, with case studies showing effort that was measured in weeks and months now measured in hours and days.

IT service vendors are also leveraging broad application-migration resource pools in low-cost locations, as well as automation tools such as NetIQ’s Platespin, to accelerate the migration of workloads to cloud environments.

In addition, IT services vendors are managing to capture significant cloud management revenues from application assessments and migration services, with vendors typically reporting from 40% to 80% of their on-going cloud hosting and management engagements arising from advisory and migration engagements. These migration projects are increasingly where vendors build the knowledge and develop the relationships necessary to provide on-going support of cloud-based environments and the workloads that reside in them. For example, TCS, solely targets its cloud management services at clients with which it has an existing relationship, or at organizations for which it provides cloud advisory and migration services.

Managing Complexity in Hybrid Clouds

Large, established companies have found that there is not a one-size-fits-all cloud solution, so hybrid clouds spanning public cloud environments, private cloud environments, SaaS products, and legacy on-premise applications are becoming the norm. Management consoles that enable a company to provision, orchestrate, and manage across a variety of cloud environments through a single interface are critical for consistent IT infrastructure management in this new complex cloud environment.

For example, AWS sees IT service vendors playing a key role in driving clients on the hybrid journey: assisting clients to re-factor legacy applications to operate in the cloud, building new cloud-native applications, and providing the management of cloud environments across AWS and private clouds. NelsonHall estimates that ~40% of AWS’ large corporate clients are leveraging a third party service provider to manage their cloud environments.

Indeed, all 14 vendors profiled by NelsonHall have developed cloud management systems leveraging tools such as Chef, Puppet, ServiceNow and other tools, bundled into single proprietary toolsets that automate management functions and can be leveraged at centralized low-cost delivery centers.

Migrating to cloud environments and leveraging these automated management consoles has enabled companies to typically realize a 30%-40% infrastructure hosting and operating cost reduction and a drop in the time to provision new environments from weeks to hours.

Enabling Digital Transformation

While companies are looking at hosting workloads in the cloud to reduce operating cost, in many cases that is not the sole objective. NelsonHall’s Cloud Infrastructure Migration & Management study identified the use of cloud as a foundation for a broader digital transformation as a key driver of cloud adoption. Indeed, in ~19% of instances it was listed as the primary objective.

As consumer expectations for personalization and agility grow and new cloud-native companies become competition, digital transformation is a major focus area for most established companies. These digital transformation initiatives are broader strategic programs that often begin with migrating and managing workloads in the cloud.

While the value of cloud-hosted environments is measured in reduced infrastructure and operating costs, broader digital transformation initiatives typically measure success in client-facing and strategic objectives such as speed to market for new products, improved customer service, and ultimately increased revenue.

Accordingly, IT service vendors with a consultative and applications-centric heritage typically position their cloud migration and management offerings as components within a broader digital transformation service rather than as key ends in themselves.

Furthermore, given these critical roles that IT service providers play in supporting client cloud journeys, it doesn’t come down to making a fundamental choice between IT service providers and cloud hosters, as might be assumed. There are key complementary roles for both. 

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