Executive Summary: ISG Provider Lens™ Multi Public Cloud Services - Switzerland 2023

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ISG Provider Lens™ Multi Public Cloud Services - Consulting and Transformation Services for Large Accounts - Switzerland 2023

ISG Provider Lens™ Multi Public Cloud Services - Consulting and Transformation Services for Midmarket - Switzerland 2023

ISG Provider Lens™ Multi Public Cloud Services - FinOps Services and Cloud Optimization - Switzerland 2023ISG Provider Lens™ Multi Public Cloud Services - Hyperscale Infrastructure and Platform Services - Switzerland 2023ISG Provider Lens™ Multi Public Cloud Services - Managed Services for Large Accounts - Switzerland 2023 ISG Provider Lens™ Multi Public Cloud Services - Managed Services for Midmarket - Switzerland 2023 ISG Provider Lens™ Multi Public Cloud Services - SAP HANA Infrastructure Services - Switzerland 2023

The development of cloud infrastructures is subject to constant change, which is primarily driven by the required economic value added

Today, the cloud is critical for companies to ensure business continuity and drive key initiatives. IT departments are at the core of this, providing innovative technologies and solutions that differentiate organizations from their competitors. The public cloud services market continues to grow rapidly, driven by the digital transformation of companies aiming to expand their business activities and increase customer satisfaction. Migrating to the cloud and modernizing applications are at the forefront of this transformation. Data and analytics are gaining importance, while interest in cloud governance is increasing.

According to ISG, the Swiss cloud services market recorded an increase of around 50 percent last year. However, the global market grew by over 100 percent, implying that although Switzerland plays an important role in the market, it is growing at half the global average.

The Q3 2023 EMEA ISG Index™ reported that the combined market (managed services and XaaS) saw a decline of 4 percent YoY, with the annual contract value (ACV) reaching $21.7 billion. ISG observed a slowdown in XaaS demand, which dropped by 10 percent year-to-date, while the demand for SaaS increased by 2 percent. However, the demand for managed services increased by 2 percent, reaching an ACV of $11.9 billion. ISG also found that through the third quarter of 2023, a total of 818 managed services contracts were signed, including 10 megadeals whose total ACV was 55 percent higher than the 11 megadeals signed in the first nine months of 2022. Within managed services, both ITO and BPO grew by 2 percent each, reaching $9.1 billion and $2.8 billion ACV, respectively. However, in the DACH region, the market for managed services
declined by 54 percent to $529 million in the third quarter and 25 percent year-to-date, amounting to $2.2 billion.

Nevertheless, the Swiss cloud services market is a very attractive segment for companies looking for a reliable and secure infrastructure. The reasons for its appeal include high-security standards, focus on data protection and security, robust data center availability and good internet connectivity. Its location in Europe also makes it an ideal market for international companies seeking centralized data management. The Swiss market consists mainly of medium-sized providers, offering customers better opportunities for direct local engagement and receiving customized solutions. Although the Swiss cloud services market is not growing as fast as the global market, Switzerland offers numerous opportunities for service providers with a clear focus on quality and service orientation.

Cloud implementation is of key importance today to ensure performance and efficiency. According to the ISG Index™ for the Swiss market, XaaS gained significant momentum in the first half of 2023, growing by 40 percent YoY. In addition, the IaaS and SaaS segments within the XaaS market recorded an increase of 39 percent and 18 percent respectively in the second quarter of 2023.

Some of last year’s trends are presented below.

The Swiss market continues to consolidate. Last year, several mergers and acquisitions took place or were completed in the Swiss market, ELCA/EveryWare, Swisscom/MFT and UMB/BKW). The market noted the emergence of different integration approaches, ranging from rapid and comprehensive integration to
complete independence. The next few months will show which approach will prove to be more successful.

There is a growing trend in the adoption of multicloud strategy. Companies have realized the disadvantages of vendor lock-in practices by public cloud providers, leading to high costs and limited negotiation. The lack of interoperability among the offerings of several public cloud providers is also a challenge. Companies are now working with multiple hyperscalers to negotiate usage prices, increasing market competitiveness. ISG estimates indicate that almost three-quarters of public cloud customers use a multicloud environment, a trend that is expected to continue.

AI and ML are gaining popularity among companies of all sizes that have access to vast data stored on the cloud and other resources. By using AI and ML technologies, they gain valuable insights and metrics to improve efficiency and develop new business models. Importantly, they no longer need to invest a lot of
time and money in training AI experts and data scientists. Instead, they can experiment with these technologies in small proofs of concept (PoCs) and then decide which strategy to pursue.

Companies embracing digitalization, distributed workforces and hybrid IT solutions understand the importance of securing their data in cloud environments. With the increasing demand for flexible security systems that protect sensitive data, workloads and applications, service providers are offering specific combinations of physical and cyber security practices to counter ransomware and DDoS attacks. This focus on security remains an important factor for companies prioritizing data protection.

All providers offer security solutions as part of their overall packages to safeguard the end-to-end
infrastructure and data of enterprise customers.

Cloud services are on the rise and come with increased costs — a fact that companies cannot ignore. To optimize control and manage these expenses, it is of utmost importance for companies to take effective measures. However, a complex and extensive cloud environment makes it difficult for many companies to monitor costs. Thus, the FinOps concept has gained prominence, emerging as one of the most discussed topics in recent years. ISG customer discussions primarily revolve around cloud cost optimization. Service
providers, with their extensive experience in managing cloud infrastructures and assets, play a crucial role in efficient cost management.

ISG notices a focus within the Consulting and Transformation Services for Large Accounts on leveraging public cloud environments for driving business value. However, modernizing outdated infrastructure requires significant investment and customer maturity.

Providers must demonstrate the long-term benefits to convince customers of this transition.

Prioritizing a shift to cloud-native architectures by restructuring or refactoring workloads is favored by both enterprises and vendors. They understand the limitations of a hasty lift and shift approach, recognizing the
long-term benefits of using microservices architectures and other native cloud technologies.

The Leaders are Accenture, Capgemini, Eviden, IBM and Swisscom.

Some service providers in the Consulting and Transformation Services for Midmarket quadrant specialize in catering to small and midsize companies. They have recognized the enormous potential of this market segment and actively address customers overlooked by larger global providers. These customer-oriented
providers strive to meet tight deadlines and frequently use the lift and shift method to accelerate the migration process.

They follow a platform-oriented approach and rely on proprietary tools and solutions to identify, evaluate and migrate workloads to the cloud and automate processes. Customers show high satisfaction with these providers’ cost-effective solutions, significantly enhancing the cloud journey and improving overall CX.

The Leaders are Accenture, Aveniq, Capgemini, Swisscom, ti&m and UMB. ELCA/EveryWare is positioned as a Rising Star.

According to the ISG forecast for the Managed Services for Large Accounts quadrant, only a few MSPs will be successful due to extreme market competitiveness. Providers adopt a platformoriented approach, offering additional industryspecific functionality compared to traditional cloud-managed services. These additional
services include FinOps services, AI- and MLbased analyses and new, revenue-generating business models. Providers differentiate themselves by forming strategic partnerships with hyperscalers to jointly develop solutions and pursue a joint market launch strategy.

The Leaders are Accenture, Atos, Capgemini, Kyndryl, Infosys, Swisscom and Wipro, with HCLTech as a Rising Star.

The ecosystem is growing rapidly in the Managed Services for Midmarket quadrant. Smaller and midsize providers are attracting more customers with their public cloud-managed services for multicloud  environments.

Takeovers in the Swiss market contribute to consolidation. Certified MSPs form an exclusive club due to hyperscalers carrying out annual audits and tightening MSP certification criteria. While most service providers in this segment use some form of automation tools to manage their customers’ cloud infrastructure, AI technology adoption remains limited.

The Leaders are Aveniq, BitHawk, Claranet, NetCloud, Swisscom, ti&m and UMB, with ELCA/EveryWare as a Rising Star.

In the Hyperscale Infrastructure and Platform Services quadrant, market share remains consistent with AWS witnessing a slight decline of two percent while Microsoft and Google each gained one percent of growth.
Increased sales indicate a rising use of service offerings. Some Swiss user companies are using multiple providers and are setting up hybrid or multicloud environments as their own data centers struggle to meet increasing operational requirements. Flexibility and scalability of the infrastructure, compliance, security and sustainability are just some of the aspects that can be better implemented in the data centers of public providers.

To counter skilled workforce shortages, public cloud providers are developing additional services and functions and improving automation with AI support to avoid errors and improve availability. In addition, they are also developing industry-specific solutions to offer customers further added value.

Leading providers are Aveniq, AWS, Google, Microsoft, Swisscom, ti&m and UMB, with Infomaniak as a Rising Star.

In the SAP HANA Infrastructure Services quadrant, the willingness to move SAP infrastructure to the private or public cloud is increasing significantly. Companies are also considering switching from their old SAP
environments to the SAP/4HANA system, exploring the advantages cloud providers offer. Providers deliver powerful SAP-certified, scalable and flexible infrastructure with extensive services and functions that are not
possible in companies’ own data centers. In addition, customers do not need to invest in new hardware. However, not all Swiss customers support SAP’s transformation to large hyperscalers’ public clouds. Some users want to operate SAP/4HANA in their own data center and only move less critical applications to the
cloud. According to the German-speaking SAP User Group (DSAG), 41 percent of customers in the German-speaking region (Germany, Switzerland and Austria) currently use SAP/4HANA in their own data centers,
eight percent with a private cloud provider and three percent in public cloud. This means that approximately 50 percent of SAP users have yet to make the switch to SAP/4HANA.

Cloud providers have a great opportunity here to win over these customers. Local cloud providers offer data security advantages by keeping data within Switzerland, protected from the U.S. CLOUD Act.

Leading providers are Aveniq, AWS, itesys, Microsoft, Swisscom and UMB.

Providers in the FinOps Services and Cloud Optimization quadrant develop strategies to identify resources to better control IT spending and establish mechanisms for reporting spend, governance and compliance. Leading service providers use advanced AI to detect anomalies in cloud usage and associated costs and suggest architectural changes, enabling companies to benefit from higher performance and lower costs. By introducing new control mechanisms, these providers can prevent unnecessary expenditures.

Leading providers are Accenture, Capgemini and Kyndryl

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