Executive Summary: ISG Provider Lens™ Multi Public Cloud Services - Germany 2024
27 Jan 2025
by Wolfgang Heinhaus
The individual quadrant reports are available at:
ISG Provider Lens™ Multi Public Cloud Services - Managed Services — Large Accounts - Germany 2024
ISG Provider Lens™ Multi Public Cloud Services - Managed Services - Midmarket - Germany 2024
ISG Provider Lens™ Multi Public Cloud Services - SAP HANA Infrastructure Services - Germany 2024
The multicloud has now established itself as the standard in the public cloud sector in Germany
The widespread use of cloud technologies in Germany encourages innovation to increase customer satisfaction. This trend has prompted many companies to invest significant resources in switching to a public cloud infrastructure. In the past four quarters, ISG has seen a continued demand for cloud computing in Germany, driven, in particular, by
the ongoing digitization of business processes and the increasing need for high-performance computing solutions for business-critical applications. This demand is mainly driven by the rapid growth and development of various technology areas, particularly with regard to the modernization of applications as well as AI and ML. Companies in Germany are also looking to update their outdated software applications to adapt to current business requirements and the next generation of cloud infrastructures. This process often requires a high level of expertise in terms of transformation capabilities and computing power due to the complexity of these applications. The AI and ML technologies that form the foundation of many modern digital services and solutions are highly complex. They work with complicated algorithms and processes that require considerable computing power. ML models, for example, often need to process large volumes of data in real time, which requires robust and effective computing resources. The high demand for these compute-intensive technologies highlights the criticality of cloud computing in the current digital landscape. By providing scalable and efficient computing resources on demand, multicloud computing platforms enable businesses and developers to access advanced technologies without the need for extensive upfront investment in IT infrastructure.
The decision to use the term Multi Public Cloud Services for this study is based on the high relevance of multicloud environments within the IT industry. It also underpins the results of ISG‘s analysis, which point out that around onethird of all companies use at least one public cloud; the remaining companies use either two public clouds or three cloud providers and a small proportion even use four or more public clouds. This multicloud structure has made the
management of cloud infrastructure considerably complex, which, in turn, has led many of them to seek external service providers instead of managing the sophisticated environments themselves. However, the shortage of skilled
professionals has made it difficult to source suitable resources to meet these challenges. Professionals with experience and qualifications in multiple cloud environments are considered particularly valuable as they can support effective hybrid cloud implementations and ensure efficient operations. Various certifications also help to ensure adaptability and compliance for future multicloud projects. Companies are encouraged to source the necessary skills and technologies from service providers to grow their business and maximize the benefits of the latest advanced technologies to achieve innovation and competitive advantage.
The debates on cloud sovereignty and data location regulations, which were initially perceived as hindering and restricting the growth of cloud technologies, have gradually evolved toward more open and flexible views. The sovereign cloud is not a barrier for global cloud providers. Rather, the sovereign concept and current solutions encourage expansion in the market by removing fears and uncertainties. Companies should take an approach based
on the best available solutions and carefully select cloud providers to achieve a balance between cost, compliance, performance and differentiation in the market.
The following developments, among others, were observed in the past year:
Cloud-native approach: For many companies in Germany, moving their workloads to public cloud environments through the use of cloudnative technologies is a top priority. While the lift and shift approach can offer a way to quickly transfer applications to the cloud, it does not fully harness the opportunities offered by cloud-native technologies, which can lead to inefficiencies and limitations in the long term. Cloud-native technologies are designed to maximize the benefits of a cloud environment. This includes splitting monolithic applications into small, independent microservices that can be developed, deployed and scaled independently. Encapsulating these microservices in containers creates a consistent and isolated runtime environment across different cloud platforms. The process includes other aspects such as serverless computing and orchestration tools such as Kubernetes, which enable highly scalable, resilient and agile applications — a critical factor in today’s dynamic digital economy. Service providers are expanding their cloud-native practices to support this transformation. They also help companies based in Germany develop strategies for the introduction of containers and microservices, offer best practices and provide
tools and services to facilitate the transition. In this way, the providers make a decisive contribution to harness the full potential of the cloud for their customers.
FinOps has become indispensable: Cloud usage is increasing significantly, making managing and optimizing cloud costs a top priority for many companies. FinOps has helped numerous customers avoid wasting resources in the cloud
and make the cloud’s flexible spending model financially sustainable, enabling teams to make business trade-offs between speed, cost and quality. Thanks to these benefits, FinOps is growing in popularity. This growth is driven by
the increasing need to gain deep insights into cloud costs and usage and align their cloud investments with business outcomes. As ISG has noted, no single FinOps tool provides all the necessary functionalities. Customers have the option to select service providers that can integrate FinOps tools to provide comprehensive dashboards for cost management.
Sophisticated AIOps solutions: As the demand for migration and operational automation increases, intelligent automation capabilities will be enhanced through the use of AI and ML technologies. As these technologies evolve,
AIOps solutions will become more powerful and complex and will be able to identify real-world problems and extract valuable insights from large volumes of structured and unstructured data, while detecting false positives and false
negatives. MSPs are increasingly using AIOps capabilities and, depending on the toolset and maturity of the AI, achieving a 30 to 50 percent reduction in their operational activities. These AIOps solutions analyze large volumes of
data, identify significant patterns and provide insights that support proactive measures. Over the years, AIOps solutions have evolved to the point where they are prescriptive and can resolve some issues on their own.
The quadrant for consulting and transformation services for large customers in Germany has maintained its growth momentum over the last four quarters, partly because companies have recognized the real business value of moving to the public cloud, which has led to more intensive use of cloud technologies. They have also realized that they can find the optimal solutions by using different cloud technologies, which both increases customer satisfaction and leads to higher revenues.
Nevertheless, companies are exercising caution when selecting workloads to move to the public cloud and have put a few of the future migration projects on hold, focusing instead on optimizing existing cloud environments. There is an increasing focus on integrating AI and ML technologies for process automation, which ensures both cost savings and
improved workflows. Large global companies are looking for providers that offer industryspecific solutions, cloud-native transformation capabilities, migration-oriented automation and expertise in the integration of hybrid clouds. In
this context, service providers in Germany are focusing on a business-value-driven approach to help organizations effectively assess workload migration to optimal landing zones, including diverse public cloud infrastructures (which could be part of a hybrid cloud strategy). Vendors are also expanding their cloud-native practices and helping customers develop a strategy for containers and microservices. As large customers realize that the lift-and-shift
approach to cloud migration is not beneficial in the long term, workloads need to be redesigned using cloud-native technologies.
In the area of public cloud infrastructure, providers of consulting and transformation services for small and medium-sized enterprises (SMEs) continue to focus on their sweet spots. SME providers are characterized by agility and
customer focus to meet the needs of their clients and have developed ground-breaking solutions; automation plays a central role in the projects. Many midmarket providers use both in-house and external automation platforms to automate numerous manual activities in transformation projects. These include identifying applications, assessing migration readiness, creating an implementation plan, migrating to the defined landing zones and other services. As SMEs based in Germany are still in the early stages of adopting cloud technologies compared with established global
companies, many migration projects still use the lift and shift method to make the migration process more efficient. In addition, SMEs have relatively little experience of moving to cloud solutions; their concerns about data security
in the cloud are addressed by the expertise and skills of service providers for a secure transformation. ISG has noted that SMEs are increasingly partnering with midmarket providers as they are much more flexible and adaptable to diverse requirements than large service providers. The companies are satisfied with the results and are increasingly awarding contracts to these midsize service providers.
In Germany, the market for public cloud managed services has steadily gained in importance among major customers and has the highest share compared with other segments. The individual analyses conducted by ISG last year revealed that the majority of large global companies have already started to use two or more hyperscalers for different applications. ISG is convinced that this trend will intensify significantly in the near future. This multicloud ecosystem has created an additional dimension of complexity. ISG also observes that vendors are investing significantly in the development of advanced AI- and ML-powered automation solutions, using large learning models (LLMs) to predict and identify bottlenecks, increase the accuracy of budgeting and forecasting, and improve overall
operational efficiency. GenAI is a hot topic and vendors have developed numerous solutions and use cases to help their clients optimize CX. In this research, ISG also noted that nearly all providers are delivering FinOps services
that are now considered standard, and service providers are increasingly challenged to find innovative ways to optimize cloud resources and reduce cloud costs.
In addition to traditional managed services, providers have launched comprehensive offerings, including automated provisioning and orchestration, service planning, cost control, container management, workflow automation and cloud resource optimization to differentiate their managed public cloud services clearly. In addition, service providers have started to develop industry-specific solutions based on their extensive experience with customers. With this expertise, they are able to offer customized managed services that are tailored to specific industry-specific regulations and
compliance guidelines.
Public cloud managed services for SMEs have developed rapidly in Germany. As SMEs often have limited experience with cloud technologies, they frequently rely on service providers to help them select cloud configurations, security solutions, data lakes and analytics, as well as DevOps automation and cost optimization. Midsize customers are also showing a growing interest in frameworks for developing cloud-native applications. Corporate customers who find it difficult to set up cloud platforms themselves and do not have the time for extensive training or certification are likely to seek the ideal partners in midsize service providers to accelerate their agile development for cloudnative application development. Support from DevOps automation service providers is also still required to optimize the continuous integration/continuous delivery/deployment (CI/CD) pipeline, which brings with it the need for help with the use of containers. Several projects also focused on cost management and monitoring the consumption of cloud
resources.
In Germany, the pressure on companies to abandon all or part of their own infrastructure operations and use the cloud-based IaaS/PaaS and SaaS offerings of large hyperscalers and local providers has increased dramatically. They
are finding it increasingly difficult to meet the requirements set by the market and regulators. Flexibility, infrastructure scalability, compliance, security, NIS2, legal requirements and strict sustainability requirements are aspects that a public cloud provider can better fulfill. Cloud providers are using AI and ML extensively to provide a wide range of services and functions that make operations highly available and secure, improve automation and eliminate manual errors. This requires high-performance servers, which an individual company does not have for cost reasons alone. A single cloud provider alone is often unable to meet the growing demands; hybrid or multicloud
architectures are increasingly emerging. In the wake of these such requirements, the major public cloud providers are making massive investments in Germany, building new data centers and expanding their offerings.
unbeatable range of services and functions, an advantage that in-house data centers do not have. SAP strongly supports the transformation to a hyperscaler, which is not yet supported by many customers. According to DSAG
(German-speaking SAP user group), around 40 percent of customers in German-speaking countries run their SAP operations in their own data centers. The RISE with SAP system based on SAP S/4HANA is a subscription package that helps customers to migrate SAP to the cloud and modernize it. The product offers additional features such as AI support, which is managed and optimized by SAP, and other services such as business optimization, automation and sustainability management. Companies that want to avoid operating with a public provider can outsource SAP Basis
operations to a certified local provider that offers similar services.
Secure file sharing is becoming increasingly important as employees have the option of working from office or any other location. However, accessing stored documents from outside the office is a problem. Secure file sharing is an ideal solution for working together on the same document, irrespective where and with which end device it is being locally or remotely accessed. This requires extensive security measures such as end-toend encryption of the data, setting up and blocking access rights as well as read and write permissions and storage in a secure location to protect the data.
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