Despite the flexibility that the cloud offers customers, a new survey by Microsoft and 451 Research suggests that customers are fiercely loyal to their primary service provider.
According to the survey, The Digital Revolution, Powered by Cloud, which was released Wednesday at the Microsoft Cloud & Hosting Summit in Washington, more than one-third of customers (38 percent) surveyed said they plan to increase spending with their primary cloud and hosting service provider upon contract renewal.
In an interview with The WHIR, Microsoft’s vice president, Hosting and Cloud Service Provider Business, Aziz Benmalek said that this indicates the critical role service providers play in continuing to “drive organic growth in existing customers and help them in their cloud journey.”
“Loyalty is high for the primary services providers,” he said. “In fact, 95 percent of the customers surveyed are expecting to stay with their current primary provider in the next year. Almost 70 percent have an annualized agreement with their service provider.”
This customer loyalty is critical for service providers as more options hit the market; pulling clients in every direction to fight for a piece of their IT spend.
The study indicates just how customers are spending the majority of their IT budgets. According to the report, 71 percent of customers’ cloud and hosting budgets are now allocated to managed services, application hosting and security services.
Benmalek said that managed services in particular is “one of the fastest-growing segments” of IT spend in the cloud.
Survey respondents said that it is important that cloud and hosting providers have experience helping customers transform existing IT environments to cloud-based services, offer services beyond infrastructure (including managed services), can make recommendations for cloud platforms or apps to purchase, and can migrate workloads to different cloud environments. The survey also suggests that customers want service providers who can be a single point of contact for a variety of cloud services, and can broker contracts with other service providers.
Microsoft has more than 30,000 hosting partners, and while Benmalek wouldn’t say specifically how much revenue these partners drive for the vendor, he did say that it continues to grow “double digits from year to year.”
“It’s one of the fastest growing businesses for us,” he said.
Service providers are one component of Microsoft’s hybrid cloud strategy, Benmalek said. Microsoft’s “three-legged stool” is on-premise, hosted private cloud and services providers, as well as Azure public cloud.
“It’s a very exciting time for us and I think the vibrant ecosystem we see continues to be a key bet for us,” he said.
The full 78-page report is available for download on Microsoft’s website.