Report: Enterprises Turn to Managed Services to Optimize Public Cloud
By now the benefits of public cloud are well-known: increased agility and opportunity for innovation, reduced operating costs.
But as public cloud adoption continues to grow, so do difficulties with migration, modernization and ongoing operations. Integrating emerging technologies, such as advanced data analytics, artificial intelligence and the Internet of Things, has also proven to be an enduring challenge for enterprises, which often face difficulties acquiring the skills necessary to take full advantage of the platform.
This is true of all public clouds, including Amazon Web Services (AWS), which continues to occupy an overwhelming share of the market. As a longtime AWS Premier Consulting Partner, Rackspace asked 451 Research to conduct a study into the ways enterprises are using partners to enhance their AWS adoption, and learn what challenges they continue to face.
Accelerating transformation through research
For the study, researchers pulled data from a variety of sources: 451’s Voice of the Enterprise service, which draws on surveys of IT decision-makers; a series of in-depth interviews with users of AWS and managed services; plus a custom survey of IT buyers and decision-makers also engaged with managed services for AWS.
Most of the findings were positive. Enterprises are already confidently engaging with managed service providers for cloud migration and backup, and they’re showing an increased appetite for additional services, including monitoring and management, performance and cost optimization and application-focused managed services.
But it also revealed ways that enterprises and managed service partners must do a better job communicating around scope, pricing and even structuring the relationship itself. As that relationship continues to expand, with the top managed service providers offering critical professional and advisory services on top of more traditional managed services, communication, flexibility and trust become even more important.
Below I’ve highlighted three key findings, which, while focused on AWS, tend to apply to public cloud adoption in general. I encourage anyone interested in migrating to public cloud or seeking to maximize its potential to download the entire report and really dig in.
End-to-end delivery now expected, but can cause confusion
The study confirmed one trend we’re already seeing: enterprises increasingly expect providers to possess capabilities that address the full implementation lifecycle. This includes services traditionally characterized as professional services (such as up-front assessment, design, build and implementation), plus true managed services, like infrastructure monitoring and management, performance and cost optimization, security management, and ongoing management of application deployed into cloud.
In the past, professional services have been distinct from managed IT services, focused more on project-based engagements, while managed services were ongoing, subscription-based offerings reliant on automation and process. Today, that distinction is fading in favor of this more unified, end-to-end services approach enterprises are seeking.
Because of these expanded expectations, however, the handoff from consulting to more traditional managed services can be an unnecessary source of difficulty for the enterprise. Enterprises reported challenges trying to understand exactly what to expect, how to identify and measure service provider requirements and obligations, and how they are delivered and paid for.
Complexity continues to increase, exacerbating talent shortage
The business-wide application of new technologies (cloud and otherwise) introduces complexity at every stage, and an operational demand that can be difficult to address with existing IT staff, resources and skill sets. Respondents to 451’s Voice of the Enterprise surveys rated cloud platform expertise as the category of IT skills for which they face the most acute skills shortage.
This increased complexity inhibits’ enterprises’ ability to deliver on business goals such as increased business agility, accelerate delivery of new products and services, and optimized economics, is what often leads enterprises to engage with managed services.
Pricing structures should be flexible in both directions
Part of the transformative impact of public cloud is the opportunity for enterprises to adopt a consumption-based approach to provisioning (and paying for) IT resources, shifting spending from capex to opex. Managed services typically follow that consumption-based pricing model.
Not all enterprises find flexible pricing beneficial. Companies operating on fixed IT budgets and tasked to do “more with less” reported that the ability to consume both cloud resources and associated managed services at a fixed monthly cost appealing. But others identified a “trust issue” with use-based pricing for managed services when part of the value of those managed services is ensuring the efficient use of cloud resources. In a percentage-based pricing model, operational efficiency is theoretically at odds with service provider revenue.
Separate from structure, enterprises found value in providers’ ability to roll the pricing of multiple services – including the underlying cloud resources and the service provider’s own managed services, along with software licensing, operating tools and additional partner-operated services – into a single bill.
The bottom line? Enterprises engaging with these next generation professional and managed services providers should expect them to be adaptable on pricing model and contract terms, while also being flexible in their own expectations, allowing the process of transformation to impact the enterprise’s own structures for procurement and IT spending.
Overcoming the challenges
Above, I’ve touched on three challenges identified in 451 Research’s study — you can download the complete version here — so I want to wrap up with the actionable recommendations around each:
- End-to-end services: Look for trusted providers capable of supporting the entire implementation lifecycle, from assessment to design, implementation, migration, operation and ongoing optimization. Given that expanded scope, communication, transparency and trust — in both directions — becomes a critical component for successful engagements.
- Skills gap/expertise: Seek out managed service providers engaged in the partner networks of your chosen public cloud and the applications they intend to implement. Service providers engaged in the larger partner ecosystem of technologies, tools, platforms and specialist services are more capable of addressing the spectrum of enterprise transformation requirements.
- Flexible pricing/business models: Seek transparency and flexibility in a service provider’s pricing and service delivery models, but also be willing to be flexible and update business processes in ways that will enable the benefits of consumption-based models for IT.
For enterprises seeking a trusted partner to maximize the value of AWS, the 451 Research study is clear: the best results come from engaging with service providers which provide full end-to-end lifecycle expertise, and offer transparency, flexibility and honest communication.
If that’s what your organization is looking for, consider Rackspace. A longtime AWS Premier Partner, we accelerate the value of cloud at every stage of the transformation journey. Share your story with us at AWS re:Invent Dec. 4-6 in Las Vegas at the Venetian, in the Sands Expo Center, booth 1637.