How service providers can flourish with cloud

Despite the dominance of the cloud giants, service providers are better placed to provide end-users a bespoke cloud offering

The global service provider market is led by some of the largest technology companies in the world. These global hyperscale cloud providers turnover billions, commanding a considerable market share in the process.

The slice of the pie these major players consume leaves other service providers wondering if there will be anything left for them. The truth is that what other service providers lack in scale, they make up with nimbleness, speed to market and knowledge of the customer.

According to 451 Research, the Infrastructure-as-a-Service (IaaS) market is expected to be worth $20bn (£16bn) by the end of 2019[1]. At the same time, the managed, shared and dedicated hosting market will be six times bigger than IaaS. Here is where other service providers can tap the opportunities for market share.  

Further to this, 30% of private cloud users polled by 451 Research had moved workloads or data out of a hyperscale provider and into a private cloud provider, citing cost as the primary reason. Other factors included opting for more control, a perception of increased security and a desire to centralise IT services.

Service providers can flourish with cloud by tapping the opportunities that the global players are less well equipped to reach. 

Bespoke and complex

The first primary opportunity for service providers in cloud is the specific and tailored offerings they can provide customers. The global service providers are less well equipped for the complexity of certain end-users. For a service provider moving into cloud, they will already have the measure of existing end-users and the needs of their business.

This ongoing business relationship can progress further by offering additional cloud service that fit the multifaceted demands of that end-user’s business. That business may want certain security services added based on their IT infrastructure, or to progress towards the cloud at a certain adoption rate. The nimble bespoke service provider will be able to work with this business to find the ideal set-up for their cloud journey. 

Hybrid options

Hybrid IT, where a business uses both in-house and cloud based services for its IT infrastructure, enables firms to lease a portion of their required IT resources from a service provider with cloud capabilities.

The Hybrid IT approach enables end-users to transition to the cloud at their own pace, offering business continuity and controlled costs. Service providers can work with businesses on this journey, gradually increasing their reliance on the cloud as that business sees fit.

Cost saving

Service providers are best-placed to offer the most competitive pricing options for their end-users by working as ‘brokers’ to source and manage multiple cloud service providers that can save end users costs, time and hassle.

Service providers understand the intricacies of the cloud services market, both public and private cloud providers and pricing. They can source and match end-user requirements with recommended solutions and providers.

HPE service provider proposition

Working with service providers to realise the opportunities in cloud is a core focus of HPE. The central tenet of HPE’s vision is to be the leading provider of hybrid IT and make it simple.

To achieve that, HPE provides customers the right mix of on- and off-premises services that align to their unique business requirements. The HPE service provider strategy is designed to enable service providers to create differentiated services and business values, increase speed and business agility, and extend sales reach to accelerate revenue.

The HPE service provider strategy is built on three pillars:

Revenue generating solutions: Provide revenue generating solutions so service provider partners can quickly deploy services to accelerate revenue growth. This includes software-defined infrastructure, service delivery platforms and use-case optimised platforms. 

Flexible business models: Offer flexible business models and financial offerings that align cost to revenue, balance capex and opex, and unlock value from legacy investments. Focus areas there include transformation funding, IT consumption and investment strategies.

Go-to-market partnerships: Drive collaborative sales and marketing to enhance coverage and extend sales reach, including offering deep technical expertise alongside education and enablement.

Overall, the digital transformation revolution is in full swing. As businesses of all shapes and sizes are on this journey and are increasingly relying on their service provider partners to find the ‘right mix’ of IT to deploy workloads from the most appropriate platform based on business requirements such as availability, performance, cost, security, compliance and location.


[1] 451 Report: Building a Thriving Service Provider Business Amid Hyperscale Cloud Vendors. Available at: https://www.hpe.com/uk/en/resources/sp/building-thriving-service.html         

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