Executive Summary: ISG Provider Lens™ Microsoft Cloud Ecosystem - Australia 2024

The individual quadrant reports are available at:

ISG Provider Lens™ Microsoft Cloud Ecosystem - Generative AI Services for the Microsoft Clouds - Australia 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - Managed Services for Azure - Australia 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - Microsoft 365 Services - Australia 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - Power Platform Services - Australia 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - SAP on Azure Services - Australia 2024

Australian organisations are focused on optimising Microsoft security capabilities in the 365 suite

The ecosystem of Microsoft-certified service providers continues to evolve in Australia and the rest of the world as Microsoft product sets continue to transform rapidly, creating a corresponding need to change offerings around Microsoft 365 Services and the Modern Workplace, Managed Services for Azure, SAP on Azure, Power Platform and Generative AI services. With current geopolitical instabilities, the growing risk of cyberattacks and enterprise need to have significant control over their cloud costs, there is much focus on acquiring solutions around cost optimization and governance and end to end security on Microsoft Cloud.

In Australia, both enterprises and government organizations are accelerating cloud implementations, with a corresponding increase in digital transformation investments to see rapid and measurable results.

Large IT services firms in Australia are shifting from being IT-centric to customer-centric, with significant focus on improving end-user experience to optimise business outcomes and customer journeys. Data driven and industry insights are helping to personalise this end-user experience.

Enterprises are focusing on employee productivity and taking a cautious approach with technology to  determine potential RoI. They are realising the importance of data governance and of having a strong data foundation with regard to generative AI (GenAI). Data governance in the past focussed on structured data in databases and data warehouses, however, the scope is now expanding to include unstructured data from
Microsoft applications such as SharePoint, OneDrive, Teams and Outlook. There is also increased emphasis on responsible AI with concerns about data privacy, security and protection of brand credibility.

Organisations are looking to better understand how to deliver improved EX. Microsoft has enabled this through Viva and is continuing to innovate in this area. An increasing number of large consulting firms are noticing their clients’ need to tap into existing data to deliver enhanced workplace experiences.

Enterprises are also looking to better leverage Microsoft security capabilities within the Microsoft 365 suite of services. Active legacy applications represent huge operational risks, making the security of a software lifecycle critical. AI will strengthen an organization’s cyber resilience. To keep their systems and data safe from cyberattacks, organizations should actively adopt AI for analysis and for cyber security.

The Microsoft ecosystem is helping to empower employees to work from anywhere and experience a high degree of connectedness in this new hybrid working model. The growing relevance of remote work and the need for organisations to collaborate internally and with clients is driving the broad use of Microsoft platforms such as Teams and Viva.

A data mesh is a new approach based on a modern, distributed architecture for analytical data management. Microsoft Mesh provides an immersive space for people to meet and collaborate.

Copilots are democratizing AI and could become the killer app, causing a surge in the development of accompanying apps and marketplaces. New platforms will enable users to tailor and refine the copilots to suit their specific requirements.

Microsoft continues to evolve its AI development and implementation strategy across Azure. There is increasing interest in using AI to augment human productivity. This factor is beginning to somewhat differentiate Azure implementations offered by MSPs, and will result in an acceleration of AI in Microsoft
Azure platforms over the next few years. In the Microsoft space, the use of intelligent, conversational AI to augment human abilities in various tasks is predicted to grow notably over the next five years.

The capabilities of GenAI bring a broad new set of challenges and possibilities to the realms of security and compliance. This is particularly true when clients need to align these technologies with the stringent requirements of assessments. GenAI technologies interact with various types of data, raising concerns about
data privacy, ethical use, bias and potential misuse. Understanding the functionalities and implications of these technologies is crucial for maintaining robust security measures and ensuring compliance with various standards.

Customer expectations and demands with regard to the broader IoT landscape and the requirement for advanced data analytics capabilities continue to grow rapidly both in Australia and the rest of the world. Over the next few years, Australian MSPs will need to increasingly invest in AI-related capabilities and training to accrue and retain high levels of Microsoft Azure certifications and partnerships.

Copilot for Microsoft 365 has elevated the desire to know more about Microsoft level E1, E3 and E5 licensing, what the clients are consuming and the value of data analytics to help address challenges clients are facing in
their respective environments.

AI and Copilot specifically are centred around increasing productivity, leveraging creativity and retaining top talent with increasing skill sets. This is pushing growth in data telemetry with extensibility or integrations with other services within the Copilot ecosystem. This allows IT service providers to further leverage
modernised communications and other services within Modern Workplace for Microsoft 365 services.

Driven by industry demand, IT service providers are increasing their focus on frontline workers technology by providing the right device, collaboration tooling, integrated applications and connectivity that will maximize business efficiency. There is now a greater focus on app-driven modernization in the cloud. It is taking centre stage amongst Australian Microsoft Azure implementations, as organisations embark on the next wave of
cloud. This is posing a challenge for cloud service providers realigning their offerings.

There is increasing interest in using AI to augment human productivity. Despite substantial industry discussion about the possibility of replacing humans with automation and AI, there is actually more interest in augmenting human ability with these technologies. Enterprises recognize the need to rapidly introduce new products and services in the market, which requires accelerating what humans do, rather than replacing them. In the Microsoft space, there is increasing use of intelligent, conversational AI to augment human abilities in various tasks.

The SAP on Azure market is highly specialised, with providers requiring specific skills. Australian clients are demanding strong knowledge and certifications from their cloud partners, especially in the SAP on Azure
segment. Although Microsoft Azure is three years younger than AWS in the cloud space, Microsoft is able to leverage its brand name and strong partnership with SAP to establish a stronghold among enterprises in Australia.

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