- Jason Flye
- Reading Time: 3 minutes
Navigating evolving market trends and mitigating potential cloud risks are critical components of any infrastructure strategy. The first step to a robust infrastructure plan is to identify the trends disrupting your cloud vendor relationships.
In today’s rapidly evolving IT landscape, organizations are navigating a maze of technology options, including cloud-first technology, generative AI and boutique solutions. These modern technologies are fundamentally transforming the cloud and managed services needs of organizations, but undergoing these initiatives is complex and affects all aspects of your legacy infrastructure models.
As companies plan for these cloud-first transformations with one of the main hyperscalers, they must reimagine their supporting infrastructure strategies while managing the myriad of risks that can cause delays or disruption to services. To do so, companies must have a deep understanding of the current market trends for cloud and Managed Services Provider (MSP) relationships.
Here, we will outline the market trends disrupting your cloud vendor relationships to help companies effectively begin planning their infrastructure strategies.
Key Market Trends Impacting Your Cloud Relationships
1. Hyperscaler Incentives Creating Cloud Vendor Lock-In
Cloud hosting spend has grown exponentially over the past several years. It’s eclipsed $560B in spend globally and continues to grow. The hyperscalers are fighting for market share, looking to not only gain your spend in the short-term, but hold on to that spend and prevent you from moving to other providers.
To accomplish this, a lot of the hyperscalers are offering more credits and incentives to attempt to lock you into their overall relationship and keep you there for the long term. These credits and incentives are extremely valuable in the early days and help mitigate switching costs, but disappear very quickly and are not renewable. This is making it very challenging for organizations, both from a financial standpoint and from an internal capability standpoint, to be able to move away because the hyperscalers are buying your business so early on.
2. Runaway Cloud Spend
Another trend on the cloud side is the “runaway cloud spend” that we are seeing from the hyperscalers. Oftentimes, our clients are experiencing what we call runaway cloud sprint spend resulting from the ease of rolling out particular workloads in the cloud as well as a lack of internal governance. In turn, this creates cloud spend that far eclipses your particular agreement as well as your overall business plan and strategy. This often leads to a great loss of overall value with the hyperscalers within that relationship and an erosion of your business case over time.
3. Rise of Niche Boutique Cloud Managed Services
The next trend we are seeing is the rise of niche boutique cloud managed services providers. While there’s a lot of large professional services firms that are continuing to dominate the market, there are also a lot of niche and boutique cloud managed services partners that are really starting to rise and grow within their overall market share.
This is due to a lot of the unique tools and technology that they’re bringing to bear, ones our clients are really interested in. Companies want to be able to capitalize on those tools, not only to ease the transition into the cloud, but also ensure that they are receiving accelerated value while they’re in that cloud environment and as they’re living out the course of that deal.
The Bottom Line
Navigating the evolving market trends is no easy feat but having a deep understanding of how the cloud trends and MSP trends, respectively, impact one another is critical to ensuring a successful and cost-effective cloud transformation initiative.
