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Summary

IT vendors used to offer enterprises cloud technology and the hire of another contractor for integration and support services. IT Service Contracts Analytics (ITSCA) has seen a rush of deals where companies are offering their own managed cloud with multiple services bundled in it.

Tech vendors get their arms around managed cloud

Proprietary technology vendors have accepted the new normal of hybrid cloud services. Building private cloud solutions to scale can increasingly only be done by accommodating diverse public cloud resources in the managed cloud solution, as two major deals signed in May 2020 highlighted:

  • Bharti Airtel selected IBM and Red Hat to build its new telco network cloud. Airtel will build its next generation core network, analytical tools, and new consumer and enterprise services on top of this cloud platform based on open standards. Using IBM and Red Hat's portfolio of hybrid cloud and cognitive enterprise capabilities, Airtel plans to adopt an open cloud architecture that uses the Red Hat OpenStack Platform for all network workloads and Red Hat OpenShift for newer containerized workloads. We estimated the deal value at $475 million over a period of five years based on comparable sector deals incorporating this kind of service.

  • Unisys expanded a contract with the California State University (CSU) for CloudForte and managed security services to support CSU's hybrid-cloud environment with new CloudForte capabilities to help CSU integrate its hybrid cloud information resources and deliver more educational and administrative services across its 23 campuses. We estimated this to be a three-year, $35 million deal based on industry sources. CSU has cited a $4.5 million upfront cost saving plus $2.8 million annual savings with this deal.

Vendors adapt to expand hybrid cloud services

Keeping a stake in the hyperscale end of IT outsourcing will require even the biggest tech players to adapt to the enterprise requirement for flexible, multiservice hybrid cloud. More companies are committing to a hybrid cloud strategy based on flexibility and moving to “as-a-service” resources which gives them access to advanced technologies including Artificial Intelligence (AI), automation, and analytics, all of which are being highlighted by enterprises in our emerging services surveys.

Appendix

Further reading

Omdia IT Services Contracts Analytics

IT Services Contracts: Quarterly Analysis, 4Q19, ENS002-000123 (March 2020)

Author

Anushree Agarwal, Analyst, IT Tools & Insights

David Molony, Principal Analyst, Enterprise

[email protected]

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