ISG Provider Lens™ Next-Gen Private Hybrid Cloud - Data Center Solutions & Services - Colocation Services - Nordics 2022

The Nordics attracts many data center providers

The “Next-Gen Private/Hybrid Cloud – Data Centre Services and Solutions 2022” study has evaluated more than 100 hybrid IT, colocation and managed hosting service providers that operate in the Nordics. ISG Provider Lens™ has identified the key service providers in this space and the main trends driving the market for managed services, colocation and managed hosting across the region.

The IT services market in the Nordics, comprising Sweden, Norway, Denmark, Iceland and Finland, is reflected by the following characteristics:

Acquisitions and investments: Some providers are being acquired by investment funds or private equity such as Green Mountain or by larger providers such as Advania, which recently acquired Visolit, resulting in a group of leading service providers across the region. Goldman Sachs Merchant Banking Division acquires 51 percent of the shares in Advania.

Collaboration: Some providers are collaborating to deliver a specific capability for a client, which is often provided as a managed service.

Network connectivity: Most Nordic service providers are directly connected by fast, low-latency, reliable and secure global network connections to major European data centers and supporting networks in Amsterdam, Frankfurt, London and Paris. This extends to the availability of direct connections between the data centers of U.S.-headquartered organizations and their Nordic/EMEA subsidiaries. This often results in an edge computing managed service, or a managed hosting solution being established in the Nordics. In most situations, data center providers are network agnostic, enabling choice and flexibility to clients.

• Real estate and data centers: Acquisitions and disposals of land and real-estate assets continue as some organizations leave or dispose of data centers while others purchase and refurbish. This has led to the establishment of new data centers in the region to meet the growing demand for managed services and colocation facilities.

• Managed services: Many of the providers operating across the Nordics offer managed services to both large accounts and midsize enterprises. A number of telcos, including France Telecom, Vodafone and British Telcom, are now offering cloud-based managed services to the Nordic market.

• Managed hosting: Most hosting providers support a comprehensive range of managed database systems, including Microsoft SQL, DB2, Adabas, Oracle, S/4Hana, My SQL, MaxDB NoSQL and Postgres. Managed operating systems that are supported include Linux, Solaris, HP-UX, AIX, Windows and Unix.

• Automation: The use of automation, particularly AI, bots, machine learning and software-defined infrastructure, is increasingly being considered to support the operations of managed services, managed hosting and colocation.

• Green energy: The ongoing cooperation between the regional governments and the Nordic suppliers on green energy programs has stirred strong interest among enterprises in the region. For instance, a Danish provider has begun to use offshore wind power for operating its data centers. Many data centers are recovering and utilizing waste heat for local community heating of their homes.

• Certifications: All providers mentioned in this study have some or all of the following ISO certifications: 14001, 22301, 27001 and 50001. In addition, other certifications such as HIPAA are held by providers that provide services outside of the Nordics.

• Provider relationships: Most providers have established relationships with major hyperscalers, including AWS, Microsoft Azure, Google Cloud and Oracle Cloud. Providers also have strong partnerships with major technology companies such as ServiceNow, Cisco, VMware, Red Hat, Citrix, Lenovo, Nutanix, SAP, Salesforce, and Parallels. These relationships have enabled to create go-to-market offerings and supplier ecosystems, specifically for clients or industry sectors. Examples include a joint data center migration initiative between Capgemini and Microsoft and the one cloud initiative between Atos and 10 other suppliers.

• Sovereign cloud: With the need to comply with General Data Protection Regulation (GDPR), the Nordic governments and NGOs are expressing interest in implementing sovereign cloud solutions. There are a number of European committees responsible for setting the associated standards such as the GAIA-X initiative, storage as a service (StaaS) and backup as a service (BuaaS). Some Nordic providers are actively engaged with these committees, as well as offering, promoting or operating sovereign cloud managed service solutions. Examples include Vodafone, T-Systems, Atos, Tietoevry and Sopra Steria.

• Tietoevry is the first verified sovereign cloud provider in the Nordics, providing Tietoevry Connect as a managed service. It is the sovereign data backbone of the region, offering a multicloud platform to accelerate customers’ cloud-native journeys and innovation at scale.

• Private cloud: Service providers are offering and developing private cloud solutions, often VMware-based, for specific clients and market segments. Hyperscalers such as AWS, Microsoft, Google and other technology companies such as HPE and Cisco are also offering private cloud solutions.

• Market focus: Many providers such as France-based Sopra Steria are targeting opportunities in both large and midsize enterprise segments.

• Beyond Nordics: Some Nordic-based providers have expanded their business model and operations outside the Nordics. For example, Tietoevry has a hosted card payments processing operation with more than eight billion transactions per year across 50 countries. Further expansion beyond the Nordics is anticipated with providers such as Basefarm, Green Mountain and Advania.

• Mainframe modernization: A number of providers have offerings or initiatives in place to address the challenges associated with mainframe modernization. This includes Fujitsu, CGI, Ensono, Tech Mahindra, IBM, AWS and Cognizant.

• Sustainability: Service providers are prioritizing environmental, social and governance (ESG) initiatives, with evaluation standards on specific areas, particularly data centers, being actively measured and reported on. In Sweden, tax relief is given to enterprises that meet certain targets.

The availability of low-cost green energy makes the Nordics an attractive destination to establish data centers and for the provision of managed cloud-based services. Further consolidation in the service provider ecosystem is anticipated. Providers that are planning to enter the Nordics should first consider acquiring or collaborating with an existing provider instead of establishing a new facility or entity.

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