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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 today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lenstm 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 Lenstm Focal Points briefing here.

The 2023 ISG Provider Lenstm 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.

In addition, Flexential, LTIMindtree and Microland are named as Rising Stars ? companies with a "promising portfolio" and "high future potential" by ISG's definition ? in one quadrant each.

Customized versions of the report are available from Hexaware and Microland.

The 2023 ISG Provider Lenstm Private/Hybrid Cloud ? Data Center Services report for the U.S. is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lenstm Research

The ISG Provider Lenstm Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world's top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries?a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit www.isg-one.com.

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