Managed Services

U.S. Demand for Public Cloud Services Remains Strong

Cloud computing data center.

Demand for public cloud computing and associated services in the U.S. has continued to grow over the last four quarters, according to a new research report from Information Services Group (ISG). 

This growth is attributed to increased digitization of business operations and the need for high-performance computing for business-critical workloads.

Application Modernization and AI/ML Tools Drive Cloud Demand

The 2023 ISG Provider Lens Multi Public Cloud Services report for the U.S. indicates that the demand for cloud services is primarily driven by application modernization and the use of AI and ML tools. Enterprises are utilizing these technologies to overhaul legacy IT infrastructure and are increasingly relying on service providers for expertise in digital transformation and efficient use of public cloud resources.

Bernie Hoecker, partner and Enterprise Cloud Transformation leader at ISG, stated: “Companies need efficient, scalable computing resources without significant upfront investment. Service providers are helping them realize those benefits through public clouds.”

Multi-Cloud Expertise in High Demand

The report from ISG reveals that most U.S. enterprises working with public clouds collaborate with multiple hyperscalers to leverage their respective strengths and avoid vendor lock-in. 

This strategy, however, adds complexity to cloud implementation and usage, leading to a growing reliance on service providers for their multi-cloud expertise. According to ISG, the overall cloud services market in the U.S. has grown by approximately 50 percent in the past year.

Cloud-Native Technologies and FinOps

U.S. companies are increasingly adopting cloud-native technologies, moving away from the "lift-and-shift" strategy to a more microservices-oriented approach using containers, according to the study’s authors. 

This transition is said to enhance scalability, agility, and resilience. FinOps is also gaining importance as a standard requirement to manage rising cloud costs and align cloud investments with business outcomes.

Managed Services and Market Trends

The report notes that public cloud managed services have seen higher adoption rates among large enterprises in the U.S. compared to other regions. This trend is driven by the complexity of multi-cloud management. The adoption rate among midmarket enterprises is growing rapidly as they embrace cloud-native application development.

Jan Erik Aase, partner and global leader at ISG Provider Lens Research, commented: 

“More companies, large and small, are experimenting with different combinations of cloud technologies. They are willing to take risks to become more agile, and service providers are helping them reach that goal.”