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Microsoft is hosting its 13th annual Cloud and Hosting Summit this week in Bellevue, Wash., bringing together nearly 500 partners across different business models to explore digital transformation at work.
The conference kicked off with a presentation from Aziz Benmalek, Microsoft VP of worldwide hosting & managed service providers on Wednesday, who shared some findings from a survey it conducted recently with 451 Research.
When it comes to end-customer cloud transformation projects, service providers are “vital,” Benmalek says, and 89 percent of customers said they are willing to pay a hefty premium to have a service provider help them manage and implement their hybrid cloud.
“That puts you at the center of the opportunity as we move forward,” Benmalek said.
Benmalek told the audience that Microsoft has seen double-digit growth in its Hosting & Managed Services over the past five years.
“This ecosystem is one of the fastest growing channels [for Microsoft],” Benmalek told Talkin’ Cloud in an interview. “All signs are showing continued growth in that space.”
Amy Hood, Microsoft CFO, said that the company’s hosting and cloud partners have helped it get to where it is today.
“You have lots of people you could partner with and we’re deeply thankful that you partner with us,” Hood told the audience at Microsoft Cloud & Hosting Summit 2017.
Partners with region-specific, vertical-specific, and business process-specific knowledge help Microsoft reach customers they wouldn’t be able to on their own, she added.
“We will never have that depth of knowledge that you all have,” she says. “Our job is to empower people and organizations to do more… empowering you all to take your IP and your knowledge and be more successful.”
Microsoft, 451 Research Report Highlights Demand for Hybrid Cloud, Managed Services
For the third year in a row, Microsoft commissioned 451 Research to conduct a report. This year’s version, Digital Transformation Opportunity for Service Providers: New Paths to “Beyond Infrastructure” looked at the opportunities around hybrid cloud and managed services.
“We have tens of thousands of partners from around the world that are delivering hybrid solutions,” Benmalek said in an interview. “Hybrid business is here and growing from a customer demand point of view.”
According to the study, for North American respondents, top adoption drivers of hybrid cloud include flexibility and choice, extending IT resource capacity of existing on-premise infrastructure, and maximizing ROI on existing on-prem IT investments while being able to use public cloud for new applications and workloads.
These new hybrid environments are becoming more complex and pushing customers to lean more heavily on service providers to provide managed services.
“Managed services are becoming king,” Benmalek said. “Customers are looking for service providers to run the whole stack for them,” including looking for managed services around DevOps, end-to-end application management, proactive capacity planning, and more, he said.
So who are the service providers that are going to win the most from organizations looking for these types of managed services? According to Microsoft and 451 Research, 57 percent of North American respondents said they would rely on an MSP or a managed hosting provider, 54 percent a public cloud IaaS provider, 53 percent a security service provider, and 51 percent would look for a consulting/IT outsourcing/systems integrator to help them in their hybrid/multi-cloud journey.
North American respondents were split on the number of service providers or vendors they would like to work with on hybrid cloud. Thirty-nine percent said that they would like to obtain hybrid cloud by purchasing individual services from multiple providers and vendors, while 36 percent said they would look for an integrated multi-vendor solution built and managed by one service provider.
Last year, the five most popular managed services were backup and recovery, archiving, infrastructure/application monitoring and alerting, disaster recovery, and managed networking and CDN. In 2017, the most popular services will be similar, except for the addition of premium 24/7 support services, suggesting service providers like Rackspace are on to something.
According to the report, organizations will also be increasingly looking for professional services to help them reach their goals around digital transformation, including integrating legacy business processes and systems with SaaS functionality, and modernizing applications.