Cost Concerns Lead German Firms to Rethink Cloud Strategy

Rhea-AI Summary

The 2024 ISG Provider Lens™ report reveals that German enterprises are adjusting their cloud strategies due to economic downturn, focusing on cost optimization. Companies are reconsidering on-premises and private cloud environments, realizing not all workloads belong in the public cloud. Infrastructure modernization is seen as important for network security and meeting digital marketplace demands.

Service providers can assist in creating roadmaps for improving performance and reducing costs. The report highlights the risks of relying on outdated IT infrastructures and the importance of modernization despite its challenges. It also notes an increasing reliance on colocation services in Germany.

Positive

• Service providers can assist German enterprises in modernizing infrastructure and creating cost-reduction roadmaps
• Infrastructure modernization is seen as key to improving operational efficiency and business results
• Growing number of German enterprises are moving to colocation services and third-party data centers

Negative

• German economy weakened, leading to concerns about cloud costs
• Many German companies continue to rely on outdated IT infrastructures, risking security threats and inefficiency
• Infrastructure modernization requires significant investments in time, money, and resources

Infrastructure modernization is seen as key to bolstering network security and meeting the growing expectations of a digital marketplace, ISG Provider Lens™ report says

FRANKFURT, Germany--(BUSINESS WIRE)-- Responding to an economic downturn, German enterprises have adjusted their cloud strategies to place increased focus on cost optimization, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens™ Private/Hybrid Cloud – Data Center Services report for Germany finds the country’s weakened economy, coupled with a steady expansion of public cloud usage by German enterprises, is prompting concerns about cloud costs. Companies in Germany, realizing not all workloads belong in the public cloud, are now reconsidering their on-premises and private cloud environments, the ISG report says.

“Service providers can assist German enterprises in adding value to the business by modernizing and managing their infrastructure,” said Dr. Matthias Paletta, director, technology modernization, for ISG in Germany. “They can help these firms create a roadmap for improving performance and reducing the cost of running workloads.”

Short-term efforts by German enterprises to keep costs down can have potentially detrimental long-term consequences, the ISG report says. According to the report, many companies in Germany are continuing to rely on older IT infrastructures that have long since reached the end of their usable lifespan. Companies that stick with an outdated infrastructure will find it difficult, if not impossible, to keep up with the demands of modern applications and business processes and will be more susceptible to a variety of risks, including growing security threats, ISG says.

Modernizing an outdated IT infrastructure, however, can prove expensive on multiple fronts—requiring significant investments in time, money and resources as well as some risks, the ISG report says. Service providers can put enterprises on the path toward modernization by thoroughly assessing existing infrastructure, identifying gaps and inefficiencies and developing a roadmap for how these systems can be updated or replaced, the report says.

Infrastructure modernization is a critical step for many companies to remain competitive and meet the changing demands of the digital age, ISG says.

“The stakes are high for enterprises that choose to embark on an infrastructure modernization journey, but the long-term payoff can be significant,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “This is particularly apparent in terms of improved operational efficiency and enhanced business results.”

The report also examines how a growing number of enterprises in Germany are relying on colocation services and moving their infrastructure to the data centers of third-party providers.

For more insights into the private/hybrid cloud and data center services challenges that enterprises in Germany face, including regulatory restrictions and an ongoing shortage of talent, along with ISG’s advice for addressing them, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Private/Hybrid Cloud – Data Center Services report for Germany evaluates the capabilities of 100 providers across six quadrants: Managed Services for Large Accounts, Managed Services for Midmarket, Managed Hosting for Large Accounts, Managed Hosting for Midmarket, Colocation Services for Large Accounts and Colocation Services for Midmarket.

The report names plusserver as a Leader in three quadrants, while Arvato Systems, Atos, Axians, CANCOM, Claranet, DATAGROUP, Deutsche Telekom GK, Kyndryl, q.beyond, Rackspace Technology, Syntax and T-Systems are named as Leaders in two quadrants each. Accenture, akquinet, All for One Group, Capgemini, Computacenter, CyrusOne, Datacenter One, Digital Realty, DXC Technology, Equinix, HCLTech, Infosys, IONOS, ITENOS, KAMP, maincubes, Materna, noris network, NTT DATA, NTT GDC, PFALZKOM, STACKIT, Telehouse, TelemaxX, WIIT and Wipro are named as Leaders in one quadrant each.

In addition, Cognizant, CONVOTIS, Datacenter Leipzig and Global Switch are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.

In the area of customer experience, Green is named the global ISG CX Star Performer for 2024 among Private/Hybrid Cloud – Data Center Services partners. Green earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

Customized versions of the report are available from Claranet, CONVOTIS, Deutsche Telekom GK, noris network, q.beyond, STACKIT and TelemaxX.

The 2024 ISG Provider Lens™ Private/Hybrid Cloud – Data Center Services report for Germany is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of insights to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724697464/en/

Press Contacts:

Philipp Jaensch, ISG

+49 151 730 365 76

philipp.jaensch@isg-one.com

Matthias Longo, for ISG

+49 152 341 464 63

matthias@longo-pr.de

Source: Information Services Group, Inc.

FAQ

How are German firms adjusting their cloud strategies in 2024?

According to the ISG Provider Lens™ report, German firms are adjusting their cloud strategies to focus more on cost optimization due to economic downturn. They are reconsidering on-premises and private cloud environments, realizing not all workloads are suitable for the public cloud.

What are the risks of relying on outdated IT infrastructure for German companies?

The ISG report (III) indicates that German companies relying on outdated IT infrastructure face difficulties in keeping up with modern application demands, increased security threats, and potential business process inefficiencies.

How can service providers help German enterprises with infrastructure modernization?

Service providers can assist German enterprises by thoroughly assessing existing infrastructure, identifying gaps and inefficiencies, and developing roadmaps for updating or replacing systems. This can help improve performance and reduce the cost of running workloads.

What trend is observed in German enterprises regarding data center services?

The ISG Provider Lens™ report for 2024 notes a growing trend among German enterprises to rely on colocation services and move their infrastructure to third-party provider data centers.