Annual Hosting Study Highlights New Opportunities for Cloud Service Providers

By Aziz Benmalek, general manager, Hosting & Cloud Services, Microsoft Corp

March has been an exciting month for the Hosting Service Provider business and it’s not over yet. Just last week we announced the Cisco Cloud Architecture for the Microsoft Cloud Platform – and today we are releasing the results of our annual cloud and hosting study¹. In addition, I have the privilege of gathering with hundreds of our service provider partners from all over the world at our annual Cloud and Hosting Summit to discuss how we can work together to deliver the best cloud solutions to our mutual customers. Every time I meet with a hosting service provider partner, the insights I gain are invaluable and I couldn’t do my job without them. I can’t wait to see what our ecosystem of hosting service providers has to say about this year’s results and how they apply to our rapidly changing industry.

Last year’s study showed a cloud tipping point, with 45 percent of the companies surveyed moving beyond the discovery phase and into the implementation phase. As this cloud momentum continues, this year’s study has uncovered new opportunities for cloud solution providers to extend beyond the traditional hosting infrastructure services with applications, managed services and security services.

The new cloud opportunity for hosters

Infrastructure has become only a small part of the overall offering and the majority of customers are looking to hosters for other services including application hosting, managed services and security services. This is great news for our vast network of hosting partners as it presents a huge opportunity for them to grow their business. By offering value-added services, hosters can drive additional cloud consumption, increase their revenue for services and become a trusted advisor for our mutual customers. 

The study also identified an opportunity for cloud solution providers to help customers migrate from Windows Server 2003 ahead of the July end of support date. In fact, more than half of respondents said that migrating from Windows Server 2003 will increase their use of hosting services, with nearly 50 percent planning to migrate to a new version of Windows Server in their hybrid cloud environment. Situations such as these provide the perfect opportunity for hosters to position themselves as trusted advisors who understand the unique requirements of their customers’ businesses, not just their IT needs. And the Microsoft Cloud OS provides the flexibility that solution providers need to meet the individual needs of each customer.

Hosting decision makers and criteria have shifted

Today, decisions for hosting and cloud services are being made at a much higher level than the traditional IT manager. The findings showed that 52 percent of respondents say their CIO or CTO is a primary hosting decision maker, followed closely by the CEO (44 percent). In fact, IT staff are moving into more of an influencer (versus primary decision maker) role – only 38 percent of respondents cited IT infrastructure managers as a primary decision maker and 29 percent cited IT Architects.

The criteria for hosting decisions are also shifting. Products and services have eclipsed price as the most important factor, highlighting the value of tailored solutions and trusted expertise offered by service providers. According to the survey, customers value products and services, company qualities and customer service more than price. Not surprisingly, less than a quarter of survey respondents actually indicated price as the most important factor. This underscores the opportunity for service providers to focus on expanded opportunities as a way to not only expand their relationships with current customers, but to attract and acquire new customers as well.

Hosting service providers are critical to our cloud strategy and future

We’re committed to helping our hosting partners seize these opportunities by enabling them to further blur the lines between on-premises technology and the public cloud by offering powerful hybrid cloud solutions. And we’re proud to say that our service provider ecosystem is the largest in the industry for this reason.

We’ve made some significant progress over the past year, including the launch of our Cloud Solution Provider program, which allows partners to sell integrated offers and services such as Office 365, Intune and other cloud services, as well as their own tools, products and services. We’ve added nearly 7,000 hosting partners over the last 12 months and our Cloud OS Network, a select group of cloud service providers who have embraced our Cloud OS vision, has experienced tremendous growth since its launch in late 2013.

If you are interested in learning more about the study you can review the press release or full survey findings – and be sure to following our hosting handle (@MSFTHost) where we will be sharing survey stats and insights. Click here for more information on Microsoft's Hosting Business. 

¹451 Research “ Beyond Infrastructure: Cloud 2.0 Signifies New Opportunities for Cloud Service Providers ,” March, 2015.