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How service providers need to change to stay relevant

25 May 2018

451 Research’s first-ever quarterly Voice of the Service Provider survey indicates that 77% of service providers will require some level of IT transformation over the next three years to meet the changing needs of their customers and remain competitive.

Specifically, service providers will be challenged by automation, scalability and reliability going forward.

Based on the results, the traditional hardware and software vendors will also have to compete with the public cloud providers as service providers consider hyperscalers for their next compute and storage purchases, since many enterprises are moving workloads off-premises.

“Over the next two years, 60% of enterprises will run most of their IT in off-premises environments,” says 451 Research Voice of the Service Provider research vice president Al Sadowski.

“As such, the vendor community must adapt their product roadmaps, marketing programs and sales strategies to address the growing role service providers will play. Our Voice of the Service Provider surveys help to quantify the drivers and priorities.”

Service providers pick vendors to work with based on what services they must provide to customers and what differentiates them in the market.

In the Voice of the Service Provider survey, 39% of service providers identified reliability as the most important vendor selection criterion, which 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.

For example, among respondents, 57% will deploy hyperconverged platforms in the next 12 months, up from 38% deployed today.

Additionally, the most represented services are not the fastest-growing IT segments but remain backup and disaster recovery.

Creating a competency for new technology and attracting customers takes time for service providers, especially when the majority of them (39%) 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.

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