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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.

CAUTIONS

  • 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.

CAUTIONS

  • 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.

CAUTIONS

  • 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.

CAUTIONS

  • 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.

CAUTIONS

  • 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

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