Navigating the cloud opportunity: how service providers can win and retain customers in the hyperscale world

Open source technologies can drive innovation, allowing customers to deliver more and exceed business expectations. And the growing customer interest in multicloud environments and consumption-based pricing models offers an opportunity for service providers that partner with Red Hat to meet evolving business needs.

To investigate this trend further,  Red Hat collaborated with CRN UK and Channelnomics Europe to identify insights into winning and retaining customers in the hyperscale world. The Red Hat-sponsored report includes the results of the survey of 150 EMEA decision makers, such as IT professionals, managers, directors and above, from industries including banking and finance, logistics, manufacturing, retail and education. 

The findings highlight the opportunity for service providers to offer specialized skills around hybrid and multicloud, application modernization, and PaaS.

Multicloud growth 

The results of the survey show a clear path for service providers to help businesses with the challenges they are encountering with multicloud realities:

• More than 65% of respondents reported that their use of multicloud was likely to increase over the next three years.
• 75% say managed service providers should provide specialist multicloud skills, enabling them to take a workload specific approach.

With multicloud, service providers can differentiate themselves in a crowded market and drive revenue with new service offerings. By supporting customers at every stage of the cloud journey and helping them overcome the commercial and technical barriers to cloud adoption, service providers can capitalize on the multicloud capabilities.

Application-centric infrastructure

The findings also reveal an opportunity for service providers to maximize on significant PaaS margins and create a closer connection with customers at the same time:

• 58% of respondents have increased their use of PaaS services over the last three years.
• More than 65% of surveyed enterprises are increasing the extent to which they use service providers for infrastructure, cloud and services.

With 69% of respondents considering PaaS attached to IaaS and 44% considering PaaS attached to SaaS over the next three years, service providers with skills in these areas are particularly equipped to address growing needs. This is especially true considering that 88% are concerned with a lack of in-house platform skills and knowledge gaps on legacy systems. Partnering companies can monetize the opportunity by filling the skills gaps in microservices, containerization and Kubernetes  to help customers bring applications to market earlier.

More than two-thirds of our respondents say they are increasing their use of cloud or managed service providers, while only 4% do not use them or are reducing their use. A sample response suggests some businesses see MSPs as an opportunity to host more complex applications. There is a market opportunity for service providers that offer excellent service, predictable costs, and can  meet customer security and reliability expectations.

The open source opportunity

Offering open source solutions to customers as a service helps service providers align to and capitalize on customers' buying programs.  

With open source technology, organizations can address IT challenges and operate more effectively in the fast-paced and competitive cloud service market. For example, Red Hat OpenShift provides an enterprise-ready Kubernetes container platform with full-stack automated operations to better manage multicloud deployments.

Red Hat’s open source solutions are rooted in community innovation and supported by a growing partner ecosystem to help customers navigate their cloud journeys. The EMEA Red Hat Certified Cloud and Service Provider program allows service providers to offer a consistent foundation to any cloud deployment and meet the opportunities uncovered by the report. Through the program, members benefit from new skills, capabilities, enhanced enablement and new technology offerings to build multicloud and PaaS service offerings. 

"We have found that we share a common understanding of a customer's journey to cloud and actively work together in defining services which meet their digital transformation needs; either on-premises, on public cloud, or across a multicloud environment," says Stephen Dixon, Product Manager at UKCloud, a Premier Red Hat CCSP. 

Read the full report to learn more about how to create revenue and gain a competitive edge in the cloud service market.