Executive Summary: ISG Provider Lens™ Microsoft Ecosystem Partners - Australia 2022
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Australia’s Microsoft ecosystem continues to gain complexity and value.
The ecosystem of Microsoft-certified service providers continues to gain both complexity and value in Australia, as the Microsoft product set continues to evolve rapidly across Microsoft 365 services and modern workplace, managed services for Azure, SAP on Azure and Dynamic 365.
The Australian government and the private business sector are ramping up cloud implementations. The competition between the local providers and their larger global rivals is intense. This trend is expected to increase significantly over the next five years, further intensifying local competition.
Over the next few years, Australian MSPs will need to invest heavily in AI-related capabilities and training to retain high levels of Microsoft Azure certifications and partnerships.
There is now a greater focus on app-driven modernisation of the cloud. It is taking the centre stage amongst Australian Microsoft Azure implementations, as organisations embark on the next wave of cloud. This is posing a challenge to cloud service providers to re-align their offerings.
Many Australian customers have already attained mature cloud adoption status due to increased use of cloud-based technologies in the region. Thus, many Australian companies are now positioned to migrate more complex applications such as SAP to the public cloud. However, there is still a lack of cloud certified resources and expertise in Australia in certain technologies such as cyber security, IoT and AI at the customer end, as client demand continues to rise. Although it is still in the early stages, Australian clients will increasingly focus on re-aligning legacy applications to leverage data, insights, machine learning and AI. The growing proliferation of digital touchpoints and the expansion of the enterprise into consumer segments such as a wearable will provide Australian MSPs with strong opportunities over the next few years.
Quadrant-specific market attributes
Managed Services for Azure
There are many challenges associated with the traditional cloud managed services model. The market is becoming highly competitive as global providers are using high levels of automation to reduce margins and capture market share, thereby requiring constant investment to remain competitive.
COVID-19 has resulted in several challenges, particularly regarding the rapid scaling of certain Azure projects, due to the growing trend for remote working. It has also accelerated the need for Australian customers to become more agile and reduce costs, which is driving a greater adoption of some cloud applications. This, in turn, is leading to an increased migration of workloads to public clouds.
Although Microsoft Azure entered the cloud space three years after AWS, Microsoft can leverage its brand name and strong collaboration with almost 800 Australian partners to continue to hold a large share of the market. Google, the other major competitor in this segment, has also made significant progress in signing up large enterprises.
Microsoft 365 Services
New virtual and virtual/physical hybrid teams and processes need agile technology deployments to function. Modern Workplace 365 involves the combination of the Microsoft 365 tools, together with enterprise-wide applications and services, to support the new normal.
Following the reshaping of Australian businesses because of COVID-19, many Australian companies now have hybrid workplace experiences, with their workforces partially spread across office and home. Thus, collaboration solutions are needed to bridge the experience gap between the two environments.
Australia’s new and probably permanent virtual and virtual/physical hybrid teams and processes need agile technology deployments to function, and Modern Workplace 365 addresses these requirements by combining the Microsoft 365 tools, together with enterprise-wide applications and services, to support the new mid-COVID-19 normal.
SAP on Azure
The SAP on Azure market is highly complex, with providers requiring specialist skills. Australian customers are demanding strong knowledge and certifications from their cloud partners, especially in the SAP on Azure segment, due to its complex requirements.
COVID-19 and ransomware attacks have accelerated cloud adoption amongst some Australian organisations. Many are now willing to migrate their business- critical proprietary systems to cloud, providing added opportunities for Azure providers based in Australia.
The SAP on Azure services market in Australia continues to grow, as more customers in the region look to migrate from their on-premises server environment to the cloud. Many Australian companies have already migrated low-to-medium complexity applications to the cloud and are now positioned to migrate more complex applications such as SAP to the public cloud.
One of the greatest challenges over the next 18 months reglated to SAP Azure implementations is the reluctance amongst Australian organisations to migrate high-impact critical business applications such as SAP from on-premises to the cloud. Therefore, Australian cloud providers need to continue to educate the market on how migrations of large complex workloads such as SAP on Azure cloud can be done with relative ease, simplicity and low risk.
Microsoft’s Dynamics 365
This platform continues to evolve at a rapid pace. The Australian market has recently seen the introduction of new products and significant shifts to existing applications, as the platform, as a whole, continues to evolve.
The key providers in the Dynamic 365 landscape in Australia are global. However, many local providers in the region are now emerging, and some are gaining global recognition.
MSPs are seeing a growing trend towards an amalgamation of technology across ERP, CRM, Dataverse and digital services on the periphery of the Dynamics 365 product set, as it evolves to become more modular and seamlessly connected.
The customer experience (CX) is a primary driver for Dynamics 365 initiatives in Australia, as smart businesses seek to offer customers a variety of ways to connect (omnichannel CX) to capture customer data at every touchpoint and leverage that data using AI and machine learning to increasingly personalise CX. Dynamics 365 service providers in Australia are now integrating technologies such as AI-powered chatbots and robotic process automation to continually enhance CX.
As organisations embark on the next wave of the cloud, there is now a greater focus on app-driven modernisation in the cloud to take centre stage amongst Australian Microsoft implementations. This is posing a challenge to cloud service providers to align their offerings and build necessary capabilities to address market demand. This requires an amalgamation of internal proprietary tools as well the integration of fit-for-purpose tools to address the related legacy issues.
Over the next two years, a range of new value-added services are expected to enter the Power Platforms (and Dynamics 365) market in areas such as cloud migration, micro-verticalised Dynamics 365 solutions, customer analytics and insights offerings and the PowerApps factory.
The addition of the power platform and customer insights requires staff to have new and different skillsets beyond traditional Dynamics 365 offerings. The market is seeing increasing opportunities around some traditional applications modules, which are evolving with new technologies such as IoT and remote assist around field service, project operations, Dynamics 365 marketing and omnichannel offerings in customer service.
MSPs in Australia are now working on innovating and developing custom solutions that will offer agile and flexible systems. This will empower companies to optimise resources with IoT integration and result in zero downtime in the back-office space.
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