Service providers face choppy waters ahead as automation, scalability and reliability look to challenge the channel in an era of evolving buying behaviours and customer change.
That’s according to findings from 451 Research, forecasting that over the next two years, 60 per cent of enterprises will run most IT functions in off-premises environments.
The change stands to impact both traditional hardware and software vendors, vendors now competing directly with public cloud providers as service providers consider hyper-scalers for compute and storage purchases in response to workload changes.
“As such, the vendor community must adapt their product roadmaps, marketing programs and sales strategies to address the growing role service providers will play,” 451 Research research vice president, Al Sadowski, said.
Consequently, over the next three years, IT transformation will be required in at least a partial capacity (65 per cent), with 12 per cent of businesses forecasting “complete transformation”, compared to 23 per cent citing “no transformation”.
Specific to the channel, service providers rank reliability (39 per cent) as the leading criteria when working with vendors, based on what services must be provided to customers, alongside an increased need for differentiation.
Reliability mirrors the top customer pain point revealed to service providers.
“They are also not afraid to forgo traditional hardware solutions in favour of simpler solutions to provision,” the report stated.
“For example, among respondents, 57 per cent will deploy hyper-converged platforms in the next 12 months, up from 38 per cent deployed today.”
As highlighted in the report, the most represented services are not the fastest-growing IT segments, but remain back-up and disaster recovery.
Sadowski said creating a competency for new technology and attracting customers “takes time” for service providers, especially when the majority (39 per cent) prefer to work with a small group of strategic partners.
“The vendors that can prove their solutions reliable and of value to their customers are more likely to succeed,” the report advised.
Despite “strong interest” in open networking projects, “limited adoption remains in the market, while 21 per cent of service providers currently do not have a formal strategy for handling the Internet of Things.