The 2014 Magic Quadrant for Cloud-Enabled Managed Hosting (in North America)

Last week, we published our Magic Quadrant for Cloud-Enabled Managed Hosting in North America (subscriber link here, a reprint link for non-seatholders may be available soon).  This Magic Quadrant represents a bit of a shift in focus from our previous “managed hosting” Magic Quadrants, so I thought it would be worthwhile to give a bit more background on our view of the market and how it is evolving.

Gartner Magic Quadrants tend to evolve over time as technologies and buyer expectations mature, and our views on the hosting market are no exception.  Gartner has been publishing Magic Quadrants in the hosting market since 2004 1998, which later became a combined hosting and cloud IaaS Magic Quadrant in 2009 (link) and now the two exist as separate Magic Quadrants.  The first thing that most readers will notice in this year’s MQ is the change in title – Cloud-Enabled Managed Hosting.

This is not simply a cloudwashing of our previous Magic Quadrant for Managed Hosting, the term Cloud-Enabled encapsulates how we view the market as evolving at this point in time.   In a nutshell, Gartner expects that Cloud-Enabled Managed Hosting will evolve managed services over the next several years … much like Infrastructure-as-a-Service has done to infrastructure provisioning and management over the past several years.

For those of you who are in (or have followed) the hosting market for some time — if you think back to what the market was like in 2004, everything about getting infrastructure deployed to customers was very manual.  Manual paper contracts, proposals, visio diagrams, server lists, etc. were emailed back and forth between provider and prospect during the contract execution process.  Upon execution of the contract by the customer (and perhaps faxing the paper copy to the provider), the provider would then order equipment from their supply chain (assuming they didn’t maintain a bit of spare inventory – which was somewhat rare back in 2005) and receive it on their loading dock a few days later.  After that, someone would unbox it and load it up in racks, connect it to the provider’s network, install the requested operating system images, configure any additional software needed, define network addresses, build firewalls, etc. and then turn the environment over to the customer.

Then Infrastructure-as-a-Service came along … and completely upended that part of the market.

In the IaaS world, standardized infrastructure was pre-provisioned well in advance of any specific customer’s order, and ready-to-go at a moment’s notice.  All of the manual processes for ordering and provisioning infrastructure were eliminated in favor of standardization and automation, matched up with pre-staged equipment.  At the time IaaS started coming onto the radar in the latter half of the 2000’s, many in the hosting industry initially looked down on it and downplayed its significance – it was too limited, too rigid, much too standardized, customers actually needed more customized solutions that IaaS wouldn’t be able to address, etc. etc.  It was an easy assumption to make, and one that catered well to the hosting providers and the market they had carved out for themselves.  But as the market evolved, what was initially dismissed as insignificant … actually ended up being a huge market disruptor.

IaaS platforms will continue to innovate, and will inevitably start to consume some of the bare metal infrastructure still being manually provisioned by service providers today.  As that market evolves over time, we will continue to track it in our Magic Quadrant for Cloud Infrastructure as a Service (link).  The services overlay on top of those infrastructure environments, however, will become more of the focus of the Magic Quadrant for Cloud-Enabled Managed Hosting.  The underlying infrastructure capabilities are obviously still important to have, but our focus will move more towards the managed services the provider offers on top of an IaaS stack or a Cloud-Enabled Systems Infrastructure (see Lydia’s blog post on CESI here, or subscribers can read our full Technology Overview note here).  Hence, the name-change to Magic Quadrant for Cloud-Enabled Managed Hosting.

Whether managing customers’ infrastructure and applications in a DevOps or ITIL style, providers that can successfully leverageautomation and standardization to augment (not replace) their human-powered services … will be able to achieve greater scale and better customer satisfaction over time.  Human expertise will always be a part of the equation in the managed end of the market, but automation – when envisioned and implemented properly – can serve as a significant amplifier for an organization’s existing technical expertise, and deliver better customer outcomes over time.  We’re looking forward to seeing how this segment of the market evolves over the next several years.