Gartner Magic Quadrant: Data Center Outsourcing and Infrastructure Utility Services, North America

As customer workloads shift to Amazon Web ServicesMicrosoft Azure and additional public clouds, there’s a major need for more formalized data center management and outsourcing options. Not by coincidence, numerous data center specialists fill that void in North America. Indeed, Gartner Inc. in July 2016 published its latest Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services in North America Overall, the Gartner Magic Quadrant report included 19 companies. The providers are organized into four quadrants:
  1. Niche Players
  2. Visionaries
  3. Challengers
  4. Leaders
Here's a look look at the companies in each quadrant, along with their various strengths and cautions, all according to Gartner. Within each Gartner Magic Quadrant, ChannelE2E has organized companies alphabetically.

Quadrant: Niche Players

Here are the niche players organized alphabetically.

1. CGI

GARTNER BACKGROUND: Gartner estimates CGI's global infrastructure services revenue was 18% of CGI global revenue or $1.48 billion in 2015, of which global DCO/IUS was $1.24 billion, with North America totaling $519 million. CGI experienced a 12% decline in North America DCO/IUS revenue from 2014 to 2015, and also had a reduction in DCO/IUS staff. CGI's data center outsourcing and utility services strategy reflects the shift to hybrid IT, and it is working with three strategic partners to drive global solutions — Dell, Hitachi Data Systems and Microsoft. In 2015, it launched the Hybrid IT Management offering suite. Gartner estimates CGI has experienced a 10% reduction in managed VMs and a 40% reduction in physical servers. CGI has clients with over 100 servers in its DCO/IUS offering that rely on cloud- based infrastructure with AWS and Azure partners. CGI support for Oracle grew by 2%, and SAP support declined by 1%. CGI data center references had an average revenue of $15 million annually. STRENGTHS
  • CGI is advancing into a number of higher-level services, adding multicloud management capabilities and a service integration and management (SIAM) solution for its customers. In addition, its new "hybrid IT autonomics platform," Unify360, CGI's focus on cloud migration, and vertical integration of software as a service (SaaS) and application modernization (which includes migration from the mainframe) provide a sound strategy for avoiding overexposure to commoditized services.
  • CGI is increasingly relying on partners in its service delivery and go-to-market strategy. Partnerships with Dell (for secure cloud-based solutions for managed virtual desktop integration), Hitachi (for storage as a service, disaster recovery and archiving for private and hybrid cloud services) and Microsoft (for email, Lync, SharePoint and Azure) help CGI stretch its investment. It is also implementing automation and orchestration through IPsoft's services and solutions.
  • Some clients are satisfied with the pricing proposition of CGI, and they report a high level of overall satisfaction with its pricing, services and SLA definitions. Some clients reported CGI has strong depth and breadth of services capabilities.
  • CGI is not resonating in the market, as it has lost revenue in this space and has contracted in key areas of servers supported. It has just introduced a public cloud offering, and the Oracle and SAP offerings did not expand in 2015.
  • Although partnering can help with investment challenges, it can also result in generic offerings and a dependency on a key provider that could change direction, as is the case with CGI's partnership with Dell.
  • A few clients report a lack of flexibility in changing or adjusting service levels. Some clients indicated CGI lacks continued improvement and thought leadership.

2. CompuCom

GARTNER BACKGROUND: Gartner estimates CompuCom revenue was $2 billion in 2015, a year-over-year drop of approximately 5%, with $1.2 billion from services. CompuCom continues both organic and inorganic growth in the DCO/IUS market. CompuCom reported data center revenue of $114 million in 2015, a year-over-year reduction of approximately 9%. Its managed services and remote infrastructure monitoring capabilities can be integrated to provide end-to-end data center support. CompuCom continues to manage the shift to VMs with a 35% increase to over 24,000 and a 30% contraction in physical to over 6,000. CompuCom is expanding service capabilities with a launch of its managed AWS and as a Cloud Solution Provider with Azure for clients in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. CompuCom does not currently offer Oracle or SAP cloud hosting offerings. CompuCom data center references had an average revenue of $7 million annually. STRENGTHS
  • Using a tiered market approach with global enterprise delivery, CompuCom focuses on regional models and tech zones for the SMB market. CompuCom is a good choice for midsize North American-based companies, in particular the financial services, healthcare and retail verticals. CompuCom continues growing in Canada with good customer satisfaction.
  • With reorganization behind it, CompuCom will now focus on its strategy to solidify its core business and cloud partner ecosystem to deliver high-quality cloud solutions to its customer base through its integrated delivery model and solution portfolio.
  • Many clients stated that CompuCom has excellent account management performance, with an overall focus on service delivery and responsiveness. Many clients spoke highly of CompuCom's willingness and ability to learn its clients' business and add resources in a timely manner, as well as the best practices in its ITIL-based change management approach.
  • CompuCom's cloud strategy is focused on selling and managing private and hybrid cloud services while continuing to limit its investments in public cloud IaaS solutions. CompuCom's cloud strategy to manage customers' cloud consumption and integration of cloud portals should be assessed as it was introduced to the market in 2015.
  • CompuCom's lack of ability to deliver SAP and Oracle and its ability to deliver mainframe through SMS (a sister company) should be a consideration for clients interested in expanding in those areas.
  • Some clients reported that CompuCom lacks an initial understanding of the business requirements and risks, as well as the requisite relationship management skills and effective cost reduction and containment processes.

3. Fujitsu

GARTNER BACKGROUND: Gartner estimates Fujitsu's global DCO/IUS business had revenue of $1.7 billion in 2015, an increase of 1% compared with 2014. Its North American DCO/IUS business had revenue of $168 million in 2015, which is a $1 million increase from 2014 levels. Fujitsu currently has more than 200 customers in North America. The company's DCO/IUS include a portfolio of data center services that ranges from RIM to cloud IaaS and cloud integration. Fujitsu continues to manage the shift to VMs with a 70% increase to over 6,000 and a 50% gain in physical to over 4,600. Fujitsu launched MetaArc in November 2015 for digital enablement and hybrid management. Fujitsu did not have clients on offerings that rely on cloud-based infrastructure with AWS and Azure partners. Fujitsu does support Oracle and SAP in traditional and hosted cloud services in North America. Fujitsu data center references had an average revenue of $19 million annually. STRENGTHS
  • Fujitsu's NA DCO/IUS business is not large; however, the company's global presence in Europe, Asia and North America with global investments in data center services allows it to offer effective global solutions at competitive rates for global clients.
  • Forty percent of Fujitsu's DCO/IUS deals have a private cloud service component, with SAP having strong representation. The Fujitsu Cloud Integration Platform (FCIP) addresses the problem of SaaS governance with single sign-on. Fujitsu claims that by combining existing tools and capabilities, it has created a reduced-effort, fast-start approach to end-user sign-on and security.
  • Some clients praised Fujitsu for its breadth and depth of services capabilities. Fujitsu also received a high score for having effective and well-designed escalation procedures, operational capabilities and tool expertise.
  • Fujitsu's focus on cloud service brokerage/integration and hybrid infrastructure integration spanning hyperscale cloud appears to be late. Despite its globalization effort, Fujitsu's operations remain heavily skewed toward Asia/Pacific and Europe; however, Fujitsu is currently aligning its global operations. Time will tell if it sparks growth in North America.
  • The Fujitsu offering is evolving to fill a gap. It brought over MetaArc Digital Business Portfolio to North America from Japan in support of digital business services for seamless access to public cloud. The launch of cloud automation services, K5, is expected to positively impact the customer base in 2016.
  • Some clients reported that Fujitsu needs to improve automation initiatives; half of Fujitsu's references reported seeing no automation initiatives that resulted in visible benefits to their organization. Some clients reported that Fujitsu is not flexible with regard to changes or adjustments to SLAs during the contract.

4. Tech Mahindra

GARTNER BACKGROUND: Gartner estimates the Tech Mahindra's DCO/IUS revenue grew 18% globally. The North American revenue increased nearly 10% over 2014. Tech Mahindra managed server environments in 2015, which included a 6% increase in VMs and a 10% gain in physical servers. Tech Mahindra has clients in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. Tech Mahindra does have SAP and Oracle support for design, migration, build and support services. Tech Mahindra data center references had an average revenue of $1 million annually. STRENGTHS
  • Tech Mahindra's strategy includes investment in offerings such as its Managed Platform for Adaptive Computing (mPAC) hybrid cloud management platform, to support its growth in the private and hybrid cloud market. The mPAC solution provides a single point to manage all cloud and legacy data center infrastructure for the customer. This capability works with HP CSA, Azure, VMware and other infrastructure technology.
  • Tech Mahindra has invested in FixStream Meridian (in which it has taken a 75% stake), an analytics platform to manage data center operations. It has also invested in an automation framework called AQT, to enable smart data center operations.
  • Some clients gave Tech Mahindra high marks for responsiveness. Many clients praised Tech Mahindra for having a desire to make the service better. A few clients identified Tech Mahindra's willingness to adopt the client's standards and procedures.
  • Compared with more mature DCO/IUS providers, Tech Mahindra is relatively new, and its growth — Gartner estimated at 10% — is good, but on a small base of business. Tech Mahindra still needs to work on messaging and market recognition.
  • Tech Mahindra has a solid hybrid cloud transition solution for clients, but clients may be challenged with Tech Mahindra, since the company just launched AQT in January 2016 as an automation framework to be a basis for innovation to drive new cost optimization.
  • Some clients observe a need for innovation and new initiatives. Some clients report that Tech Mahindra's resources lack skills depth related to cross-functional domains. A few clients also suggested that Tech Mahindra should improve speed of communication, availability of resources and cost reduction.

5. Zensar

GARTNER BACKGROUND: Gartner estimates Zensar North American DCO/IUS revenue of $224 million, equating to 2% growth from the prior year. Zensar's Infrastructure Management Services portfolio comprises RIM, data center services, end-user computing, and security and compliance, among other services. Zensar continues to manage the shift to VMs with a 90% increase to over 6,700 and a 5% gain in physical to over 107,000. Zensar has clients with 900 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. Zensar supports Oracle with over 12,500 users growing at 25%, and supports a minor SAP workload. Zensar data center references had an average revenue of $1 million annually. STRENGTHS
  • Zensar has been gradually enhancing its portfolio to become a one-stop shop for all infrastructure services. Zensar has several partners in this space, including Nutanix, SimpliVity and Cisco, as well as others, to offer consolidation and simplification of the compute and storage tiers through the latter's next-generation converged data center infrastructure solution platform.
  • Zensar can provide a full array of offerings and scale with delivery to global enterprises, as well as smaller clients, as indicated by the size of the references. This allows for small and midsize clients to obtain effective services in the DCO/IUS space.
  • Many client references praised Zensar's flexibility in creating SLAs. Clients also indicated that senior leadership is actively engaged and treats them more like a partner than a client.
  • IUS and cloud are a small percentage of Zensar's business; Zensar currently lags behind the market leaders in developing and delivering cloud-based solutions. Zensar has been challenged and will be challenged to grow unless it can grow its cloud-based solutions.
  • Zensar has several partners that help deliver its solutions, and while it has a solid ecosystem of partners, having more of its own solutions will help drive market differentiation in the future.
  • Zensar clients indicated they had some issues with depth of skills, the staff's ability to stay current and the proactiveness of the team. Some clients expressed concern for the time required to implement infrastructure changes and Zensar's ability to move quickly to service additional sites.

Continue to page 2 of 4 to see companies in the Visionaries quadrant

Quadrant: Visionaries

Welcome to page 2 of 4 of our Gartner Magic Quadrant report coverage. Here, we look at companies in the Visionaries quadrant -- which actually features only one company.

1. Accenture

GARTNER BACKGROUND: Accenture has clients with 21,000 servers that rely on cloud-based infrastructure with AWS and Azure partners. Accenture supports Oracle with over 233,000 users, growing at 140%, and SAP with over 118,000 users, growing at 20%. Accenture data center references had an average revenue of $18 million annually. STRENGTHS
  • Accenture remains a highly skilled application-centric provider, focusing on migrating applications and workloads to software-defined platforms via its Cloud Application Transformation Solutions (CATS). Continuing its focus on hybrid IT, Accenture is managing complexity and providing highly automated infrastructure services aligned to its clients' business processes.
  • This past year, Accenture rebuilt its tool solution with the Accenture Cloud Platform (ACP) at the core, providing for ease of use when procuring, provisioning, orchestrating, metering/monitoring, analyzing and billing of services from public cloud providers. The acquisition of Cloud Sherpas, Solium, Enkitec and the evolving role of Avanade to deliver Microsoft, sales force automation (SFA) and ServiceNow skills, plus the dedicated Amazon group to support migrations, are strengthening its capability in supporting clients' cloud-first strategies.
  • Many clients listed Accenture's hybrid infrastructure services solutions as one of its key strengths, citing migrations to the cloud and its ability to decommission applications and reduce legacy costs, the knowledge of its technical resources and its ability to provide ideas and innovative solutions that resulted in improved service delivery. Some clients commended Accenture for its management of the services provided.
  • Accenture remains tentative when competing for infrastructure outsourcing engagements that do not have transformational components or are purely focused on cost reduction. Despite this, Accenture describes two type of deals it pursues — business outcome deals and commodity- focused deals with transformational elements, in which it will handle the integration layers and architectural choices, which may expose customers to substantial lock-ins.
  • While Accenture's operations evolved to meet growing demands of the multisourced hybrid infrastructure world, it continues to transition business to IUS-based deals comprising Cloud Platform, Private Cloud and IUS for ERP (for example, SAP or Oracle). Gartner estimates that 30% of its DCO/IUS revenue in this area is linked to industrialized-based capabilities, indicating that customized, legacy infrastructure services are still a big part of Accenture's deal types.
  • Some clients stated that Accenture's globalized, remote delivery methods needed improvement. A few clients stated that Accenture's escalation procedures are less than optimal, causing some delays in problem resolution.

Continue to page 3 of 4 to see companies in the Challengers quadrant

Quadrant: Challengers

Welcome to page 3 of 4 of our Gartner Magic Quadrant report coverage. Here, we look at companies in the Challengers quadrant. The quadrant includes the following companies sorted alphabetically:

1. Atos

GARTNER BACKGROUND: Gartner estimates Atos' DCO/IUS business surpassed $3.9 billion globally. The company's growth in North America from $229 million last year to $1.2 billion this year is largely the result of its acquisition of Xerox ITO. Atos continues to manage the shift to VMs with a 300% increase to over 65,500 VMs and a 130% increase in physical to over 33,800. Business changes include support for Oracle, with over 100,000 users, and SAP, with over 350,000 users. Atos is starting to offer host servers on AWS and Azure. Atos' initiatives are focused on creating a digital data center with a software-defined layer allowing separation from the underlying physical infrastructure, enabling automated provisioning and management of compute, networks and storage infrastructure. Atos data center references had an average revenue of $39 million annually. STRENGTHS
  • Atos continues to grow with the acquisition of Xerox's ITO business in North America and improved coverage, with twice as many data centers, three times the number of servers under management and a presence in the mainframe service market.
  • Atos is automating its delivery capabilities with IPsoft-based automation. The company expects this, along with the adoption of ServiceNow, to result in an automation resolution rate of over 50% of the Level 1 and Level 2 incidents by 2018, resulting in faster and cheaper services. As part of its Atos Technology Framework (ATF) 2.0, the company is leveraging the Apache Brooklyn project framework to create application blueprints that enable portability across various cloud infrastructure offerings.
  • Some client references spoke positively about Atos' flexibility and agile response to user demands. Some clients emphasized the ability to reduce cost and provide value to their operations.
  • With the Xerox ITO acquisitions, 80% of the revenue came from 25% of the clients. This indicates a smaller customer set that could be a challenge to manage while maintaining a desirable margin.
  • Atos' efforts to manage SAP and Oracle ERP users are significant in the North American market, but the current volume of AWS for public cloud offerings, along with limited Azure public cloud clients in 2015, suggests a market challenge.
  • Some clients indicated Atos was slow in responding to pricing changes, deployment of new products and managing costs downward.

2. Capgemini

GARTNER BACKGROUND: Gartner estimates Capgemini's DCO/IUS revenue reached $2.5 billion globally in 2015, with North America accounting for $479 million — an increase of 23%. Capgemini has eight North American- based data centers, and has been increasing its focus on RIM, automation, cloud migration, orchestration and brokerage services. The company continues to manage VMs with a 60% increase to over 30,000 and a 244% gain in physical to over 24,000. It has clients with 660 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. Capgemini supports Oracle with over 13,000 users — a reduction of 1% from last year — and SAP, with over 516,000 users and 23% growth. Capgemini data center references had an average revenue of $4 million annually. STRENGTHS
  • During 2015, investments in support of Capgemini's strategic direction included a $4 billion acquisition of Igate to expand its reach into North America. Capgemini's DCO/IUS revenue grew by 19% in North America, where the company is consolidating data centers from 41 to 14 to reduce client costs. A balance of cost savings and customer satisfaction will be key to Capgemini's near- term success.
  • Capgemini's portfolio for automation, autonomics and cognitive and digital assistants with its "Autonomic Computing Platform" is on an aggressive timetable and should allow qualified clients to experience savings immediately as tasks are automated and costs are reduced.
  • Many client references cited strong overall satisfaction with Capgemini. Many stated that Capgemini is flexible with its contract structure and pricing and that they find its account managers to be open to negotiation for change requirements and treat the customer more like a partner. Capgemini also received high scores for the depth and breadth of service offerings and for having well-defined procedures for escalation.
  • While Capgemini is accelerating its commitment to data center consolidation, it must make sure clients are satisfied with its fledgling public cloud offerings (with most of the cloud developments taking place in 2016 and early 2017), the lack of growth of Oracle's offerings and minor mainframe volume.
  • Capgemini was challenged by a lack of price reductions and price variability. This approach will change as it works to implement competitive pricing based on its total cost of operation (TCO) reduction. This needed change will help as clients get used to paying for what they use, with on- demand rates and variations expected with cloud-based infrastructure offerings.
  • Some clients reported that Capgemini has room for improvement in the area of automation and needs to improve its hybrid management offering (AWS/Azure).

3. Cognizant Technologies

GARTNER BACKROUND: Gartner estimates Cognizant's DCO/IUS worldwide business is around $827 million, and Cognizant's 2015 North American DCO/IUS revenue exceeded $650 million, a 24% year-over-year increase. Founded on its "constantly ready infrastructure" (CRI) framework, Cognizant's key strengths continue to be a business-aligned infrastructure strategy that focuses on a vertical market alignment approach. Cognizant continues to manage the shift to VMs with a 75% increase to over 225,000 and a 30% contraction in physical to over 47,000. Cognizant has a small client base that uses cloud- based infrastructure from AWS and Azure partners. Cognizant supports Oracle with over 130,000 users, growing at 5%, and SAP with over 190,000 users, growing at 30%. Cognizant data center references had an average revenue of $7 million annually. STRENGTHS
  • Cognizant achieved a growth rate of 24% by leveraging industry-specific platforms and industry- specific digital processes and technology expertise. Its CRI framework indicates an understanding and response to the market dynamics of a digital world. This has helped Cognizant to commit to year-over-year efficiency gains in the majority of its recent contracts. These initiatives support IT efficiency, process industrialization and business innovation activities.
  • Cognizant has made sound evolution toward a software-defined data center to support the new customer demand patterns. Cognizant's automation approach is based on OnTarget (ITIL-based) and Cloud360 (automation-based, orchestration and governance), and the use of third-party tools and services like IPsoft, Ayehu and Arago.
  • Some clients commended Cognizant on its flexibility, continuous improvement processes and activities, as well as its attention to cost management. A few clients stated that Cognizant provided excellent value for the money, while providing timely, proactive, high-quality operations.
  • Cognizant has a heavy reliance on partner-owned data centers, with only two Cognizant-owned data centers in North America. This is an asset-light model that will work well for clients as long as data center costs remain competitive.
  • Cognizant faces a challenge as it works to deliver effective services to clients looking for public cloud offerings. The ability to offer a compelling broker solution for all cloud services in the present and near future will be a requirement, as clients with a cloud-first strategy can't wait.
  • Some clients stated that Cognizant's responsiveness to new requirements is subpar, and it needs to improve its approach to continuous improvement activities. Additionally, some clients stated that Cognizant was less than creative, and did not look for a better way to perform the day-to-day relationship management activities. Some clients reported that Cognizant's inflexibility was a problem, as it used the contract to avoid having to perform some related tasks.

4. Dell

GARTNER BACKGROUND: Dell's data center and cloud strategies revolve around four customer imperatives — transform, connect, inform and protect. Its data center services are delivered through nine Dell-owned multiclient data centers, plus 39 managed customer and colocation sites. While Dell does not report DCO/IUS revenue, Gartner estimates that its North American DCO/IUS revenue was $800 million this past year. Currently, the company is focused on the data center infrastructure, compute, network, storage and server markets. Dell consolidated workloads globally, resulting in VMs declining 1% to over 72,000 and an 18% decline in physical to over 37,000. Dell has clients with 7,078 servers in its DCO/IUS offering that rely on cloud-based infrastructure between its hosted private cloud and its public cloud partners AWS and Azure. Dell supports Oracle with over 60,000 users, growing at 20%, and SAP with over 32,000 users, growing at 19%. Dell data center references had an average revenue of $19 million annually. On 28 March 2016, NTT Data announced the acquisition of the Dell Services division, valued at $3.5 billion business. The acquisition is estimated to be completed during the fall of 2016, and organizations should be early and diligent in addressing changes as NTT Data brings the service offerings of both entities together. STRENGTHS
  • Dell is focused on continuous portfolio enhancement, with innovative offerings in the DCO/IUS and cloud areas. Dell has focused on client satisfaction, resulting in very positive feedback in the market on Dell's ability to be an effective technology partner for hardware, software, services and security.
  • Dell has worked to drive new security functionality and deliver industry-based solutions as it leverages industry insight from its large hardware installed base.
  • Some client references stated that Dell meets or exceeds its delivery of contracted-for SLAs. Dell had strong overall customer satisfaction results among client references, with an emphasis on its partnering approach.
  • Dell has not had effective growth in virtual servers, and its public cloud offering is minimal. Dell has also agreed to sell its services portfolio to NTT Data, which could result in a loss of momentum due to the distraction of an ownership change.
  • While Dell works to secure funding to acquire EMC, the services group has been challenged with the ability to invest in its products and capabilities.
  • Some Dell clients stated that Dell needs more initiatives around automation, citing that they are not able to see the results of Dell's efforts in this space.

5. Infosys

GARTNER BACKGROUND: Gartner estimates Infosys had more than $9.5 billion annual revenue for the year ending March 2016. In 2015, Infosys' DCO/IUS revenue in North America grew by 13% to $600 million, making North America Infosys' largest DCO/IUS revenue producer. Infosys has adopted design-led thinking and changed its approach to optimizing customer experience by redesigning customer engagement processes around run, modernize, migrate and secure. Infosys continues to manage the shift to VMs with a 9% increase to over 124,000 and a 1% gain in physical to over 70,000. Infosys has clients with 300 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. Infosys supports Oracle with over 860,000 users, growing at 3%, and SAP with over 380,000 users, growing at 6%. Infosys data center references had an average revenue of $8 million annually. STRENGTHS
  • Infosys' growth in the North American market has slowed, but continues at a good pace of 13% with a client count increase of 19%. This underpins its integrated approach toward traditional infrastructure management and next-generation, cloud-based services, as well as its focus on hybrid IT management with the Infosys Infrastructure Management Suite (IIMS), which includes the Infosys Cloud Ecosystem Hub (CEH). Infosys hopes to drive a 50% reduction in data center operations cost using IIMS
  • Infosys continues to focus on human capital and reskilling its workforce with an investment in Infosys Mana, its knowledge-based AI platform and reuse (ongoing project productivity performances reported quarterly), zero distance (innovation and ideas generation) and partner orchestration.
  • Many clients provided positive feedback on Infosys' skills and depth of knowledge. Some stated that Infosys can scale quickly with effective resources.
  • The staff count in North America is up 50%; by contrast, revenue increased by only 13%. This may solve some strains due to attrition, but could also result in margin erosion.
  • Most of Infosys' investments are aimed at long-term growth. Its investments in innovation and commitment to operating cost reduction through innovation are at odds in the short term with the current hiring increase and low double-digit growth performance.
  • Some clients report that Infosys experiences challenges with consistency, and its ability to scale on-site resources for certain older technology is limited. Some clients also note that Infosys has language barriers, and some cultural barriers are a challenge.

6. Sungard Availability Services

GARTNER BACKGROUND: Gartner estimates Sungard Availability Services (Sungard AS) had close to $1.6 billion in annual revenue in 2015 and operates in 11 countries, serving over 6,600 customers. Gartner estimates DCO/IUS revenue in North America to be $960 million in 2015, a growth of almost 10%. Sungard AS provides cloud and managed IT services, disaster recovery services, business continuity management software and consulting services for its major businesses in North America, Europe and India. It has 19 data centers in the U.S. and three in Canada. Sungard AS continues to manage VMs with a 120% increase to over 3,000 and a 600% gain in physical to over 14,800. Sungard AS has a new brokerage service that uses cloud-based infrastructure with AWS and Azure partners. Sungard AS supports Oracle with over 5,000 users, growing at 40%, and SAP with over 6,200 users, growing at 27%. Sungard AS data center references had an average revenue of $20 million annually. STRENGTHS
  • Sungard AS taps its history in disaster recovery to deliver resilient solutions to ensure that critical applications are available. Sungard AS has a full range of services, including hybrid infrastructure platforms, enterprise cloud, managed hosting and colocation for a fully managed, end-to-end infrastructure solution.
  • Sungard AS's foundational mission-critical, recovery-based solution that is integrated with consulting services provides support to fully recover production operations to help ensure the right solutions to meet business needs.
  • Many clients stated that Sungard AS's strengths include uptime reliability, solid and high- performing platform administration solutions, with a dedicated team of highly qualified technical and account management, all supported by its foundational high-availability infrastructure services capabilities. A few clients report that Sungard AS is cost-competitive, provides a broad base of services and is very flexible in delivering its services.
  • Sungard AS's move into the managed data center services business with an emerging cloud brokerage solution is a large load to take on and could stretch Sungard AS's cloud management and solution architect resources. Therefore, clients considering Sungard AS should make sure these issues will not interfere with the delivery of their required services.
  • With a large percentage of its customer count remaining in the business recovery and disaster recovery arenas, Sungard AS will continue to need to balance the transition of those clients to IUS and cloud-based solutions.
  • A few clients indicated that Sungard AS must shorten the time to make changes and respond to new requests to add clarity and flexibility.

7. Unisys

GARTNER SAYS: Gartner estimates Unisys had a 2015 global DCO/IUS revenue decline of 12% to $486 million, of which $300 million (with an 8% decline) is in North America. Unisys offers complete managed services solutions to align IT infrastructure to its customers. Technology development around software-defined enterprise, bimodal IT, cloud and security helps Unisys deliver a strong message to its customers on its readiness for future challenges. The company operates 36 data centers globally, with 14 residing in North America. Unisys continued to grow virtual and physical servers by 20% to over 14,000. Unisys has clients with 115 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. Unisys supports Oracle with over 3,500 users in a new offering and SAP with over 160,000 users, growing by a factor of 10. Unisys data center references had an average revenue of $6 million annually. STRENGTHS
  • Unisys continues to modify its vision with an approach that includes establishing new digital business models, providing new products and services, and better engaging its customers, employees and partners. Unisys has an effective capability with AWS through its Unisys Stealth services. Cloud and infrastructure services integrate well for digital business via the Unisys secure digital enterprise. This allows a secure digital enterprise that includes speed, scale and big data analytics, all in a secure environment.
  • Unisys has a foundation for renewed growth with services designed to take clients to a "Business as a Service" and hybrid IT environment, along with its digital infrastructure services solution, underpinned by value-based offerings and transformational program services.
  • Many clients stated that Unisys provided excellent day-to-day delivery performance. Some clients reported that Unisys was flexible in meeting their business requirements and was responsive with customer service during problem times.
  • While easing slightly, as Unisys grows its commercial practice, the company continues to have a strong dependence on federal and other government contracts. This means that it must double its effort to reduce government deals as a part of its total infrastructure service portfolio. Relying on a single sector is risky.
  • While Unisys increased its cloud-based revenue, it has yet to generate the increased revenue that it needs to join some of its competitors as leaders in the cloud-based solution space. Continued investment in communicating its cloud-based resources and competencies in North America (indeed across the globe) is needed, as is a new approach for the Unisys sales force to sell cloud solutions more similar to the market than traditional services. Doing so will go a long way toward reversing the declining revenue stream.
  • A few clients stated that Unisys needs more staff with knowledge and experience in web application support, and that it needs to continue to minimize resource turnover as much as possible. Some clients also stated that Unisys needs to provide better costs for changes and make commitments quicker than it does today. Finally, some clients stated that Unisys must transition more quickly to a cloud broker/integrator service provider.

8. Wipro

GARTNER BACKGROUND: Gartner estimates Wipro's global DCO/IUS revenue reached $1.4 billion in 2015, an 18% increase from 2014, with $650 million of that revenue coming from North America, which is 15% growth during the same time frame. It achieved this growth through significant cloud hybrid transformation deals and associated managed services with automation capabilities. During the past year, Wipro launched new services such as its Cloud Command Center, cloud brokerage services, a mainframe- as-a-service offering, connected intelligence IoT program, DevOps and a number of open-source- based data center solutions. Wipro continues to manage the shift to VMs with a 70% increase to over 390,000 and a 3% reduction in physical to over 140,000. Wipro has clients with 3,000 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. Wipro supports Oracle with over 2.4 million users, growing at 7%, and SAP with over 830,000 users, growing at 136%. Wipro data center references had an average revenue of $28 million annually. STRENGTHS
  • Wipro's digital innovation approach is to drive hybrid IT and a boundaryless data center, as well as focus on competitive automation as a market. A cloud-first approach with outcome-based and utility pricing is at the core of the new value proposition, with extension to mainframe services.
  • Increasing its hybrid infrastructure deals across the globe has Wipro positioned across top integrators and management for AWS and Microsoft. Wipro demonstrated significant client and revenue growth. Wipro is delivering on the promise of hyperscale efficiencies and automation, further demonstrated by its Holmes tool, which is adding notable value to key clients.
  • Many clients stated that Wipro is effective at delivering continuous improvement, is flexible in its approach to deal changes, and responds quickly and succinctly to new requests and changes to existing solutions. Some clients were delighted by Wipro's ability to deliver vertically integrated solutions in a simple, seamless manner.
  • Wipro has offices in Broomfield, Tempe, Omaha, Atlanta, Leonia and Canada, as well as Mexico; however, nearshore capabilities remain limited at this time, and offshore resources, while plentiful, remain less than optimal at delivering solutions that a bimodal world requires.
  • Due to continued rapid growth, Wipro is experiencing challenges with customer satisfaction. Early signs of improvement are evident as Wipro implements the largest transformation in its history, the "Drive" delivery and customer satisfaction program, which is focused on restructuring, sales, delivery and customer satisfaction.
  • Some clients highlighted that Wipro has yet to fully develop and deliver on its hybrid cloud solution. A few clients stated that contract changes can take a little longer than expected. Some clients stated that Wipro needs to strengthen on-site delivery leadership to grow its accounts being addressed by "Drive."

Continue to page 4 of 4 to see companies in the Leaders quadrant

Quadrant: Leaders

Welcome to page 4 of 4 of our Gartner Magic Quadrant report coverage. Here, we look at companies in the Leaders quadrant. The quadrant includes the following companies sorted alphabetically:

1. CSC

GARTNER BACKGROUND: During 2015, CSC's focus on restructuring included the separation of the U.S. federal workload into the CSRA entity in November. Cost optimization and product development improved its service margins, while Gartner estimates its global DCO/IUS revenue decreased by 17% to $2.5 billion, and North America decreased by 9% to $1.1 billion. This decline is partially because the company is driving more "as-a-service" models, replacing traditional managed services, and partially because of  intense pricing competition. CSC managed servers have VMs declining 4% to over 46,000 and a 39% growth in physical to over 42,000. This is partially due to expansion in new business with the acquisition of Fixnetix, Axon and Fruition Partners. CSC has over 20 North American clients and 1,000 servers in its next-generation DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. CSC supports Oracle with over 650,000 users and SAP with over 500,000 users, with both areas growing at 7%. CSC's IaaS strategy takes a bimodal approach — both legacy and cloud — with integrated and automated delivery to support digital business transformation. CSC's data center references had an average revenue of $12 million annually. On 24 May 2016, HPE announced that it will spin off its $18 billion enterprise services business and combine it with CSC's $8 billion business. While the merger will not materially affect the two organizations until early 2017, organizations should be early and diligent in addressing changes as the two vendors figure out redundancies and organizational requirements to fill critical skills gaps in a timely manner. STRENGTHS
  • CSC's strategy is moving to an asset-light infrastructure delivery, consolidating assets and increasing its reliance on cloud and hosting partners. Most of its engagements are now "as a service," with exponential growth of deals lower than $1 million in total contract value.
  • CSC has launched its next-generation delivery centers and managed cloud offerings with the CSC Agility Platform to provide seamless integrated and automated delivery across CSC-offered private clouds and market-available public clouds for key verticals, including banking, manufacturing, insurance and healthcare.
  • Some clients report that CSC's service delivery activities meet or exceed expectations. A few clients report hosting services are a strength, along with flexibility and quality of service.
  • Despite strong growth in its as-a-service pipeline and deals, CSC lost business in DCO/IUS revenue during 2015. CSC must be able to sell quickly to existing customers and new prospects to compete against emerging offerings in a market where small or midsize clients are increasing while megadeals are decreasing.
  • CSC has continued to make changes to its offering portfolio with the divestiture of the U.S. public sector, while acquiring expertise in ServiceNow with Fruition Partners and the brokerage market with CSC Fixnetix's low-latency data center capabilities. This continued change in the offerings will challenge CSC, as it will require new marketing, management and expandable delivery capabilities to grow the offerings and maintain high service satisfaction.
  • Some clients expressed dissatisfaction when it comes to CSC's asset procurement and management. Some clients reported that access to skill sets and the number of FTEs on the account were a weakness.

2. HCL Technologies

GARTNER BACKGROUND: Gartner estimates HCL Technologies' (HCL's) worldwide DCO/IUS revenue of $1.8 billion increased 16% in the last year, driven by $870 million in North American revenue, which grew 14% during 2015 . HCL's focus on automation and its investment in third parties' next-generation data centers are creating a positive perception of the company's DCO/IUS strategies. Gartner's estimate of HCL infrastructure size includes VMs with a 72% increase to over 390,000 and a 3% contraction in physical to over 140,000. HCL has clients with 14,000 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. HCL supports Oracle with over 360,000 users, growing at 15%, and SAP with over 350,000 users, growing at 9%. HCL data center reference revenue averaged $16 million annually. STRENGTHS
  • HCL demonstrated one of the highest growth rates in 2015. HCL's creation of megadeal pursuit teams is paying off as it pursues large renewal business with its strategy of increasing localization. HCL has become more selective on RFPs and is promoting more profitable offerings.
  • HCL has a wide range of products and services around hybrid infrastructure management capabilities such as MyCloud, Cart, HCL Gold Blue Print and MTaaS, as well as other intellectual property rights (IPR) around PaaS, data analytics, enterprise applications and disaster recovery.
  • HCL continues to develop Watson technology capabilities, along with its next-generation data center that is based on a twin data center reference architecture, and a hybrid cloud built on specific workloads. HCL has already delivered MyCloud Control, mostly for use in private cloud, but also in IUS/SaaS to control the SoftLayer, AWS and Azure platforms.
  • Many clients cited high satisfaction overall with HCL, giving high scores for being very flexible with regard to changes or adjustments with SLAs, having robust standardized methodologies, and for workload transitions being well-planned and executed. Many clients also said HCL provides good value for the money, has a strong breadth and depth of service capabilities, and has the staffing and resources needed to meet widespread geographical coverage.
  • HCL's client base has a large share of the data center capacities in-house. This is an opportunity for HCL, but could also be seen as an offering mismatch, with clients deciding to retain data center workloads rather than outsourcing them to HCL.
  • HCL is following an asset-light approach to data center and will continue to effectively manage all risks through third-party supplier contracts. As clients move to the cloud and require hosted private cloud capabilities, the use of third-party data centers will be critical to HCL.
  • Clients are concerned with HCL's ability to be a thought leader and challenges with HCL experience specific to their industry. Some clients were concerned about HCL having effective partnerships that will deliver value.

3. HP Enterprise

GARTNER BACKGROUND: Based on Gartner's estimate and Hewlett Packard Enterprise's (HPE's) financial reports, 2015 results included over $1.8 billion in total DCO/IUS revenue in North America, down 6% from 2014. HPE continues to evolve its offerings with the announcement to offer public cloud services from partners AWS and Azure. HPE continues to manage the shift to VMs with a 46% increase to over 240,000 and a 30% decrease in physical to over 170,000. HPE supports Oracle with over 3.2 million users and SAP with over 2.3 million users, with both areas growing at 3.5%. HPE announced that it is starting to offer public cloud brokerage services. On 24 May 2016, HPE announced that it will spin off its $18 billion enterprise services business and combine it with CSC's $8 billion business. While the merge will not materially affect the two organizations until early 2017, organizations should be early and diligent in addressing changes as the two vendors figure out redundancies and organizational requirements to fill critical skills gaps in a timely manner. STRENGTHS
  • HPE offers an array of services in the North American market addressing all industries, including managed servers, MIPS and storage in more than 30 data centers. HPE has the global footprint to compete for large-scale global DCO/IUS deals.
  • HPE's focus on infrastructure, utility and cloud-based services includes 1,500 clients globally, of which approximately 33% are located in North America. HPE offerings are based on its investment in the Helion cloud brand and its acquisition of Eucalyptus to enable AWS-compliant private clouds.
  • Some clients stated that HPE has many ITIL-certified personnel and processes, which help it to consistently deliver services and consistently overachieve on SLAs. Clients stated that the HPE account team is very effective and can be a strong advocate for their needs within HPE. Clients also reported that HPE is effective at acquiring onshore or offshore resources with competent skills.
  • HPE's new strategic plan to not offer its own public cloud and instead embrace existing public cloud offerings is behind many competitors for this specific area. This delay in offering support for public cloud may have helped contribute to the Gartner-estimated DCO/IUS revenue erosion of 6%.
  • HPE has a small number of customers trialing its Helion Openstack hybrid cloud platform, but it has yet to deliver any significant use of its AWS-compatible private cloud offering, Eucalyptus. HPE's ability to lead with a cloud brokerage service with seamless operations will be proven with its new offering over the next 12 months.
  • Some clients reported challenges with change requests taking too long to get pricing. HPE is challenged with delivery timelines. Some clients are challenged with HPE's lack of technical depth in some areas of the operations.

4. IBM

GARTNER BACKGROUND: Gartner estimates IBM's 2015 revenue to be roughly $9.5 billion worldwide in the DCO/IUS space, with the North America DCO/IUS revenue remaining flat for 2015 at a Gartner-estimated $4.5 billion. IBM remains the largest competitor in this market across cloud and traditional environments. IBM's plans to increase revenue from its current strategic imperative (data, cloud and systems of engagement) from $25 billion in 2014 to more than $40 billion in 2018 appear to be on target, with $28.9 billion achieved in 2015. IBM offers two cloud platforms — the IBM Cloud Managed Services (previously known as SmartCloud Enterprise) and SoftLayer and brokerage access to all cloud models including Google, VMware, AWS and Azure. IBM is the largest mainframe management service business, with over 1 million MIPS under management. IBM supports 570,000 servers, attaining a 13% growth rate. IBM delivers in midsize and large infrastructure service deals and can scale to megadeals, with its key focus around verticals like manufacturing, financial, communication services, retail and distribution. IBM's data center references had an average revenue of $62 million annually. STRENGTHS
  • IBM continues to make multibillion dollar investments in cognitive computing, automation and analytics tools to enable clients' digital transformation agendas and support IBM's evolution from a system integrator to a "services integrator," based around hybrid cloud. IBM seeks to bring together the full breadth of its integrated offerings and industry expertise in all industries. IBM offers a hybrid mix of services split between traditional, public and private cloud, and provides expertise on managing hybrid complexity, cloud brokerage and orchestration.
  • IBM continues to grow its cloud revenue. For 2015, IBM committed to investing $1.2 billion to expand its global cloud operations, addressing all major geographies to increase the reach and capability of its business's IT operations.
  • Many clients lauded IBM for its global presence, breadth of services offered, availability of expertise, scalability, reliability and security. Many clients praised IBM for its standardized services that can be augmented with broad offerings in public and private cloud.
  • IBM's internal restructuring is starting to impact its revenue, which remained flat for DCO/IUS in 2015. This will continue to be a challenge as more client deliverables move to cloud-based services with a primary focus on cost optimization that may not play to IBM's strengths. In response, IBM has reduced its services portfolio from 255 to 95 distinct services during 2015. Customers who work with IBM should determine whether they may be impacted by these rationalization and standardization efforts.
  • As IBM manages its strategy of brokerage services between its own SoftLayer cloud and enabling client use of alternative cloud services such as AWS or Azure, it must also address the market issue of scaling the operations to allow effective service for small cloud clients, which have continued concerns that IBM will not be responsive to their needs.
  • Some clients report that IBM lacks agility and is slow to respond to client requests. Some clients also rate IBM low in cost competitiveness, cost of upfront capital expenditure (capex) and cost of specific service elements like storage.

5. Tata Consultancy Services

GARTNER BACKGROUND: Gartner estimates Tata Consultancy Services' (TCS's) DCO/IUS revenue globally totaled $1.5 billion, with North American revenue reaching $805 million in 2015, an increase of nearly 38% over 2014. During 2015, Gartner observed that TCS is embracing the ability to drive transformation and cloud migration. TCS managed the shift to VMs with a 30% increase to over 540,000 and a 25% gain in physical to over 185,000. TCS has clients with 18,000 servers in its DCO/IUS offering that rely on cloud-based infrastructure with AWS and Azure partners. TCS supports Oracle with over 500,000 users and SAP with over 1.1 million users. TCS data center references had an average revenue of $20 million annually. STRENGTHS
  • TCS is actively implementing ignio as a cloud-based SaaS model. This neural automation system is in production with clients, and is currently achieving 40% productivity improvement in labor requirements, as well as exponential improvement in business process efficiency .
  • TCS is investing in Canada with the addition of data center space to serve the market locally. It has effective offerings in hybrid cloud, and has embraced the use of public cloud for customers with 90% of the cloud workload in Azure and AWS and 10% in the TCS cloud.
  • Many clients commented that TCS provided a cost-effective solution, and was flexible in meeting the client's needs. Clients also commented that TCS's standardized approach led to consistent deliverables and a high quality of service.
  • Growth and success in the North American market are still predicated on an asset-light model that leverages client-owned data centers and colocation. With the expected growth of the TCS cloud and ignio offered in a cloud, the need for TCS data center space will prompt the need for additional public cloud resources.
  • TCS is depending on automation and the abilities of ignio to maintain an effective labor pool, while meeting the 38% growth goal for services. While currently on track, this may lead to labor challenges if the planned effort to add 40 new clients to ignio in 2016 does not happen.
  • Some clients report that TCS must improve its on-site resource skills for technical strength, and that TCS lacks innovation and thought leadership in existing client relationships.

Graphic: Gartner Data Center Outsourcing & Infrastructure Utility Services: North America Magic Quadrant Chart

Now that you've read about each company a bit, here's a look at each company's position on the Magic Quadrant chart... gartner-magic-quadrant-data-center-outsourcing
Here endeth the Magic Quadrant recap.  
Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.