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3 key trends for service providers to watch

Jelle Frank van der Zwet
May 7, 2019

As companies move more towards cloud-based IT, the need to optimise and future-proof new hybrid IT environments and networking structures becomes more crucial. But in order to put the right strategy forward and meet emerging needs, service providers must understand the underlying trends.

IT now plays a central role in more or less everything we do and the last 10 years in particular have seen our IT dependence skyrocket. This is clearly illustrated in the stock exchanges, where the industry or trade-related companies of the past have been unseated by tech giants Google, Microsoft and Amazon. For the generation growing up today, ‘always connected’ will be a way of life: the difference between their expectations and those of the first IT generation is vast if we compare it against the digital, hyperconnected economy we are living in now.


With these changes in the way we live, work and interconnect, the traditional view of how IT is produced and consumed is less appropriate. For IT to be valuable to users today, communication and interactivity are key considerations. For service providers, this will greatly influence how services are delivered to customers, with optimising IT to enhance customer experience and increase efficiency manifesting as strong drivers for digital transformation.

The companies that will succeed best in this new environment are those with the ability to change their focus from products, to helping their customers orchestrate the relationships, platforms, and complex networks that build today's hyperconnected IT environments.

Here we summarise some of the market trends for IT service providers.

1. A focus on interconnectivity

Traditionally, IT-focused service providers have mostly worked with infrastructure and system integrators, focusing on servers and workplaces and not primarily on communications. In today's digital environment, the focus has shifted to connecting with cloud providers and interacting with other parties and systems, with interconnectivity sitting at the heart of all digital communications. For this reason, we see the emergence of more and more service and outsourcing providers, realising the potential of this development and jumping on the train.

Alongside the focus on interconnectivity, the development of different cloud-based tools is moving faster. As ever more companies pursue cloud strategies and the number of cloud suppliers increases, more hybrid environments are being created. A mix of private and public clouds, data centres and different SaaS solutions that all communicate with each other is not uncommon.

These things all create greater demand for fast and safe connections. In this new complex IT environment, it becomes a challenge for providers to ensure optimal communication and data transfer between their customers' different platforms.

2. Multi-cloud security challenges

Companies today are increasingly choosing multi cloud strategies, with 59% using two to six different clouds. This creates completely new security requirements with the need to maintain ongoing, high-level security for all applications used in the business, and defend against potential threats, intrusions and attacks across a much wider attack surface.


The most common setup is where a company uses one main cloud supplier to aggregate its largest applications, with a number of additional cloud services on other platforms. But the security image for this is complex and we can only assume that we have only today seen the beginning of the development of multi-cloud and hybrid structures.

One reason for increased security challenges is that companies usually still make decisions based on one application at a time and this determines where or in which cloud it is placed. For service providers and system integrators, this opens up new opportunities to help customers orchestrate and optimise more complex IT environments.

One way providers can help their customers create better security for their multi-cloud environments is by building security keys outside of the cloud using data synchronisation. This is an established solution already used in colocation to ensure a good level of security. Demand for this type of service is expected to increase, creating a new area of security offerings for service providers.

3. An evolving delivery model

A third emerging trend is a greater demand for external digital data centres or “colocation”. This is driven by increased complexity in service delivery, itself caused by the need for fast and smooth digital transformation, requiring flexibility and scalability, and increasing customer demand for packaged services.

This increased complexity forces service providers to develop their offerings and delivery models, but this can prove advantageous: through collaboration and the right mix of IT tools, platforms and relationships in the right place, they can work more intelligently, and more cost-effectively.

The industry as a whole is seeing increased demand for interconnection with other suppliers and platforms, and this thinking also filters down into a customer’s choice of data centre. Today, operating alone won’t provide a recipe for success. Instead, it's about finding smarter, faster and more efficient ways to deliver by selling with others rather than just through them. This means that suppliers who are colocated in the same data centre are becoming increasingly important as the data centre itself becomes a central arena and focal point for cooperation in a safe and neutral environment.

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Want to learn more about how market trends are changing the landscape for service providers? Download our Whitepaper ‘Trends for European Managed Service Providers’, or contact us to discuss further.