Executive Summary: ISG Provider Lens™ Microsoft Cloud Ecosystem - U.S. Public Sector 2024

The individual quadrant reports are available at:

SG Provider Lens™ Microsoft Cloud Ecosystem - Managed Services for Azure - U.S. Public Sector 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - Microsoft 365 Services - U.S. Public Sector 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - Power Platform Services - U.S. Public Sector 2024

ISG Provider Lens™ Microsoft Cloud Ecosystem - SAP on Azure Services - U.S. Public Sector 2024

Insights into the Microsoft Azure ecosystem become critical as SLED organizations shift to cloud.

State, local and education (SLED) organizations increasingly embrace cloud computing for core IT infrastructure due to several compelling advantages.

Cloud provides exceptional scalability, enabling organizations to easily adjust computing power, networking and storage to meet fluctuating demands. Cloud platforms offer enhanced security, with robust data centers, advanced data protection and qualified staff, protecting sensitive information. The cloud enables organizations to embrace agility and innovation, facilitating the adoption of technologies, modernizing  existing systems and operations, and implementing digital services quickly and efficiently. Finally, cloud technology combined with qualified IT service providers enables the alignment of IT and business strategies, with seamless planning, execution and enhancement independent of frequently inaccessible in-house resources.

Microsoft has made Azure clouds integral with the core office, communications, server and storage applications used by most organizations, establishing Azure as the de facto standard cloud platform for more than half of U.S. SLED organizations. Using the expertise of IT service providers alongside the innovations within the Azure ecosystem, state and local governments in the U.S. can strategically equip themselves to provide effective and impactful services to their citizens amid the challenges of a dynamic technological environment. Partnering with experienced IT service providers within the Azure ecosystem is instrumental in
navigating this evolving landscape and maximizing Azure’s benefits.

Azure and its ecosystem are experiencing continuous evolution, offering ever-expanding capabilities and requiring more and varying knowledge. Key developments that warrant close attention and which typically benefit from collaboration with and outsourcing to IT service providers include the following:

1. Enhanced Security and Compliance:

• Focus on zero-trust architecture: Azure’s security features are evolving toward a zero-trust model, continuously verifying access and minimizing the impact of potential breaches. This feature aligns with the increasing focus on cybersecurity among U.S. SLED organizations. 
• Compliance with evolving regulations: Microsoft invests heavily in Azure compliance with key  government regulations, including FedRAMP, HIPAA and CJIS. This investment makes it easier for organizations to ensure their cloud solutions adhere to strict data privacy and security standards.
• Collaboration with IT service providers: IT service providers with expertise in Azure security can help organizations implement zero-trust principles, navigate complex compliance requirements and conduct security assessments.

2. AI and ML for Public Services:

• Improved citizen engagement: Azure offers AI-powered chatbots, virtual assistants and sentiment analysis tools, enabling organizations to enhance communication and personalize citizen interactions.
• Data-driven decision-making: Azure empowers organizations to use data analytics and ML to optimize resource allocation, predict service demand and identify emerging issues proactively.
• Ethical considerations and bias mitigation: IT service providers can assist organizations in developing responsible AI frameworks, ensuring fairness and inclusivity in AI-powered solutions while mitigating  potential biases.

3. Cloud-based Infrastructure for Efficiency and Cost-effectiveness:

• Scalability and agility: Azure’s on-demand cloud infrastructure allows organizations to scale resources up or down as needed, minimizing upfront costs and adapting to fluctuating demands.
• Modernization of legacy systems: Migrating to Azure enables organizations to modernize aging IT infrastructure, applications, data sources and formats, improving efficiency and reducing operations and maintenance costs.
• Expertise in cloud migration: IT service providers can guide organizations through the cloud migration process, ensuring seamless transitions and maximizing the benefits of the cloud environment.

4. Migration, Modernization, Integration and Interoperability with Existing Systems:

• Hybrid and multicloud capabilities: Azure can seamlessly integrate with on-premises infrastructure and other cloud platforms, allowing organizations to use existing investments while adopting and adapting to cloud solutions.
• Open-source technologies: Azure’s support for open-source technologies fosters adaptability and customization for organizations with unique needs, empowering them to innovate effectively.
• Interoperability expertise: IT service providers can help organizations navigate the complexities of  hybrid and multicloud environments, ensuring smooth data exchange and interoperability between diverse systems.

5. Sustainability and Environmental Impact:

• Focus on clean energy and carbon reduction: Microsoft’s commitment to sustainability aligns with the
  growing emphasis by governments on environmentally responsible practices. Azure utilizes renewable energy sources and energy-efficient infrastructure.
• Sustainability reporting and analytics: Azure offers tools for measuring and analyzing the  environmental impact of cloud usage, enabling organizations to track progress toward sustainability goals.
• Collaboration with sustainability focused providers: IT service providers with a strong focus on sustainability can offer insights and solutions to help organizations optimize their cloud usage for minimal environmental impact.

This report assesses and summarizes the capabilities and offerings of qualified IT service providers that partner with Microsoft to develop, improve and deliver services and solutions regarding the above. ISG’s assessment only incudes providers with known and established government businesses. Entities with the most significant presence and sector influence are positioned toward the right on the X-axis in ISG’s quadrant structure. Those with portfolios that include the services most likely to be used by and most suitable for the current and future business value needs of SLED clients are positioned higher on the vertical Y-axis. The Leaders quadrant in the upper right includes entities that combine the most remarkable presence and  influence with the highest portfolio suitability and value. Portfolio attractiveness includes providers’ ability and track record in complying with SLED security and regulatory requirements regarding data, infrastructure and related concerns and needs.

Providers’ presence and influence include the availability and quality of resources in the U.S. and in near-shore and offshore locations. This is because of SLED organizations’ typical preferences for, and frequent legislative requirements for, data sovereignty, service provider communication and collaboration, local job creation and economic impact, and critical infrastructure concerns related to political and economic conditions.

Finally, this report is used as a summary of ISG research and an indicator of available and suitable offerings and the providers of the same. This report does not intend to provide a complete source of information or guidance. U.S. SLED organizations should consider working with third-party advisors when evaluating, negotiating, contracting and working with outsourced IT service providers. Advisors provide objective assessments and can offer a neutral, market-driven perspective.

The assessments help organizations better evaluate and compare service providers and choose the best fit based on needs, not influenced by internal politics. Secondly, advisors possess extensive knowledge of the IT outsourcing landscape. They understand market trends, pricing models and the diverse capabilities of various providers. This expertise allows them to guide organizations through selecting qualified vendors, negotiating contracts and structuring the outsourcing arrangement effectively. Finally, advisors can mitigate risks associated with outsourcing. They help identify pitfalls like security vulnerabilities, hidden costs and contract loopholes. Additionally, they can assist in developing key performance indicators (KPIs) to ensure the chosen provider meets performance expectations.

Access to the full report requires a subscription to ISG Research. Please contact us for subscription inquiries.