ISG Provider Lens™ Google Cloud Partner Ecosystem - Workspace Services - Europe 2023

The Google ecosystem is becoming larger and more dynamic than ever before.

The Google Cloud ecosystem continues to grow in scale, scope and variety of technology services and solutions. As the smallest of the three main hyperscalers, Google Cloud has been in the shadow of the Azure and AWS public clouds and associated ecosystems for several years. No longer. Since the launch of our inaugural Google Cloud Ecosystem report in 2022, ISG has seen rapid growth in the Google ecosystem, with providers making significant co-investments with Google, ramping up skills and certifications, setting up dedicated Google Cloud business units, and driving more workloads and data migrations to the Google Cloud Platform (GCP). ISG’s 2023 study, based on extensive provider briefings and detailed primary and secondary research, provides a comprehensive overview of the ecosystem, along with an analysis of strengths and development areas of individual providers across five distinct quadrants: Implementation and Integration Services; Data Analytics and Machine Learning; Managed Services; SAP Workloads; and Workspace  Services.

While the growing market heft of Google Cloud can be attributed to many factors, our analysis indicates three primary factors driving its popularity among enterprise decision-makers and ecosystem providers.

First, enterprises are increasingly looking to Google Cloud to extract greater value from enterprise data—to liberate relevant data from enterprise and departmental siloes, standardize that data, combine it with external data sources, ask the right questions of it, and finally  get the resultant insights in a meaningful form to enterprise decision-makers. These are all areas in which Google Cloud and its AI-first suite of tools and solutions excel, with enterprises using GCP-native tools such as BigQuery, Vertex AI, Bard (generative AI) and TensorFlow; data meshes and fabrics such as Dataplex and Dialogflow (for conversational AI); and others. However, before cutting-edge AI techniques can be applied, significant efforts are needed to standardize and modernize data platforms. This is where ecosystem providers play a crucial role, bringing a panoply of data migration frameworks, accelerators and automation solutions that enable faster and smoother transfer of databases into BigQuery format on GCP.

However, the role of ecosystem providers goes way beyond just data migration and modernization. Providers are critical in helping enterprises with data governance and compliance, creating analytical tools and dashboards for visualizing data, developing responsible  AI frameworks, and identifying and developing specific AI/ML use cases. A notable development this year is the emergence of more industry and domain-focused AI/ML use cases; for example, the use of Vertex AI to turbocharge drug discovery in life sciences, AI platforms  providing end-to-end visibility into grocery supply chains, or solutions to glean marketing insights from consumers’ online browsing habits. Some providers are integrating Google’s AI tools with IoT and edge computing technologies to provide insights into distributed energy infrastructure or enhance situational awareness for logistics and fleet management operators. Yet others are building immersive conversational AI solutions to enhance CX or enabling data for digital twin simulations and industrial metaverse applications.

Second, sustainability remains a key driver of GCP adoption. With data centers consuming around 3 percent of the total global energy supply annually and ICT infrastructure responsible for up to 3.9 percent of global carbon emissions, many enterprises consider the sustainability of computing infrastructure and operations as core to achieving net-zero goals[1]. With its focus on green and renewable energy use, GCP becomes a strong choice for enterprises looking to reduce their broad IT-related carbon footprint. Yet Google Cloud’s sustainability credentials extend far beyond the carbon footprint of the platform itself: Google Cloud increasingly provides a platform and toolset to help enterprises embed wider sustainability improvements across their organizations. Many providers use GCP to create environmental, social and governance (ESG) reporting and analysis tools; some create GCP-based offerings around climate-risk intelligence or supplier sourcing risks in farflung supply chains; and others implement SAP solutions on GCP to manage product  carbon footprints.

The third driver of GCP’s growth relates to cloud economics. In an environment of weak economic growth and persistent inflationary pressures, cloud spending—and how to optimize it—has become a growing preoccupation for enterprise IT leaders. GCP is attractive  because of its generally competitive pricing and its ability to support enterprises’ multicloud strategies, reducing the risks of technical lock-in, increasing bargaining power vis-à-vis the other hyperscalers, and providing a raft of open-source and integratable tooling. Google Anthos also provides a versatile platform for firms following a multicloud-native strategy.

Ecosystem providers play a key role in helping firms optimize their cloud economics, for example, by providing consulting and advisory services that help firms evaluate different cloud options and create roadmaps for a multicloud strategy. This year ISG notes the growing prominence of sophisticated FinOps frameworks and tools developed by several providers for GCP and other public clouds. These FinOps tools can measure cloud spend and relative usage down to the departmental or team level, identify opportunities to eliminate unnecessary cloud spending, reallocate capacity to areas of higher business demand, and potentially institute charge back mechanisms in areas of overspending. 

Within this broad picture of GCP growth and evolution, several other trends were evident in the Google Cloud ecosystem. Generative AI—a class of large-language ML models that can create text, images, and code—has penetrated the public consciousness and attracted huge media attention, notably through OpenAI’s ChatGPT. Most major Google ecosystem providers are experimenting with transformer models in some fashion, and several are launch partners for Google Cloud’s Bard platform. However, full-fledged, enterprise-grade applications of generative AI are still scarce. Many solutions are still at a nascent stage, with the promise of more dramatic innovations to come.

With the rapid growth of the Google ecosystem, GCP skill gaps are becoming a significant challenge for many service providers, particularly in areas such as data engineering, ML and site reliability engineering (SRE). Service providers are responding by ramping up their investment programs in GCP certifications, drawing on global and regional delivery models and developing more talent versed in multicloud deployments and operations.

The overall market for cloud services in Europe remains mixed, with growth dampened by the global tech slowdown, a sluggish economy and increased pressure on IT budgets. According to the ISG Index, the demand for IT and business services in Europe declined  by 5 percent YoY in the first quarter of 2023, with managed services declining by 4 percent YoY and cloud-based services down by 6 percent. Regional demand varied, with U.K. managed services down by 2 percent YoY, and DACH down by 21 percent YoY, but France managed services revenues remained buoyant with 27 percent YoY growth. EMEA IaaS dropped 10 percent YoY in the first quarter, with the top three hyperscalers experiencing a 12 percent YoY decline, the first ever recorded.

Yet within this overall picture of slowing cloud consumption in Europe, Google Cloud appears relatively resilient. Nearly every ecosystem provider we surveyed for this report saw increasing demand for GCP and related services in Europe. Demand remains robust in the U.K., moderate in the DACH and Benelux regions, and relatively weak in the Nordics. Google Cloud’s ability to weather the broader tech slowdown is due in part to its focus on the areas that are now top-of-mind for enterprise IT decision-makers: demand for big  data, ML and analytics capabilities; the need for data modernization and integration; the growing sustainability imperative at the C-level; an increased focus on cloud economics and FinOps solutions; and the increasing integration of data and cloud strategies. With pressure on enterprise budgets, some providers see more demand for fast-cycle POCs and projects with clear ROI in Europe. However, enterprises are still cautious with their risk appetites for wider cloud transformation, and demand for lift-andshift implementations on GCP is still significant. Finally, with European regulations around data and AI continuing to emerge, there is a growing demand for sovereign cloud solutions for GCP in Europe, with enterprises looking for additional capabilities to secure and segregate their data  within defined geographic borders.

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