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Hyperscale cloud services providers (HCSPs) are churning out rapidly evolving services at massive scale. The IT services providers’ challenge is finding ways to help enterprises apply these services to real-world business priorities and challenges.


  • Demand for hybrid cloud is driven by both digital transformation and IT modernization use cases, with hybrid cloud becoming strategic both for enterprises and HCSPs.
  • The HCSPs’ hybrid cloud strategies threaten further disruption for traditional IT service providers that have relied on custom, private cloud solutions to generate their cloud revenue.
  • SIs and IT service providers need to prove their relevance to enterprise customers when enterprises increasingly look to a handful of HCSPs for strategic direction and to deliver consumable, managed cloud services, up and down the cloud stack.

Features and Benefits

  • The report evaluates the growing importance of hybrid cloud in enterprise IT strategy and the reasons behind the fragmented approach to implementation.
  • The report highlights the disruption faced by IT service providers and what they can do to overcome these hurdles.

Key questions answered

  • Why is hybrid cloud so important in enterprise IT?
  • What are the HCSPs doing to build deeper relationships with customers and what this means for the IT service provider?
  • How can the IT service provider survive the disruption that the HCSP is causing to their business model?

Table of contents


  • Catalyst
  • Omdia view
  • Key messages


  • Recommendations for enterprises
  • Recommendations for vendors

Demand for hybrid cloud is driven by both digital transformation and IT modernization use cases

  • HCSPs target edge and hybrid cloud solutions
  • Most on-premises hybrid-cloud use cases fall into one of three categories
  • HCSPs get on-board with hybrid cloud

Hybrid cloud is now strategic both for enterprises and hyperscale cloud service providers

  • Differing levels of enterprise cloud maturity have resulted in a fragmented approach to cloud implementation
  • Figure 1: Four levels of cloud adoption maturity
  • Figure 2: Top priorities for enterprise IT
  • The organizational and cultural changes implicit in hybrid cloud are more consequential than the architectural changes
  • Cultural change should be good news for SIs and MSPs, but failure to deliver a convincing “cloud experience” is costly
  • Figure 3: IT Services segments in 2020: market size year-on-year growth (%) and relative size of market ($m)
  • The cloud giants have become the new global SIs (GSIs) in some key industry sectors
  • Figure 4: Industry sectors are seeking a more consultative relationship with AWS, Microsoft, and Google Cloud

Hybrid cloud strategies threaten further disruption for traditional service providers

  • HCSPs continue to disrupt the IT services model, just as IT service providers think they’ve tamed public cloud
  • Hyperscale cloud service providers start to displace SIs as the partner of choice at the high end of the market
  • The HCSPs’ hybrid cloud strategies offer the reduced time-to-value that traditional IT services offerings cannot match
  • There is still a role for SIs and MSPs in helping customers manage their journey to hybrid cloud, but it is changing

SIs and IT service providers need to prove their relevance now that HCSPs set strategic directions

  • Enterprises will focus on no more than two cloud service providers for their core enterprise applications
  • The SIs’ and IT service providers’ role is to take the generic (i.e., the cloud) and apply it to customers’ business priorities
  • COVID-19 will accelerate demand for cloud, but it will come at the expense of cancelled SI projects and more insourcing
  • Cloud security and network services will become essential elements in the cloud services mix


  • Further reading
  • Author