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Infrastructure Service Providers Cannot “Simply Survive” with “Simple” Infrastructure Services

by Rene Buest  |  September 17, 2018  |  Submit a Comment

Through 2020, cloud infrastructure as a service (IaaS) will cannibalize up to 25% of the infrastructure outsourcing market. A key factor in IaaS growth is the creation of new infrastructure and infrastructure services that support digital operations and enable digital business.

However, while enterprises execute their ambitions to become a digital business, the majority of infrastructure service providers continue to focus on legacy services that do not help their customers achieve the digital outcomes they want. Instead of proactively supporting their customers’ digital journey, most infrastructure service providers still offer simple infrastructure services. However, as more infrastructure providers offer cloud services, market differentiation only with simple server, storage and network resource offerings grows increasingly elusive.

The Roles of APIs in Digital Business

There is one reason why hyperscale cloud providers like Amazon Web Services, Microsoft Azure or Google Cloud Platform have become the foundation for digital business initiatives and transformations of enterprises. These providers understood one simple but fundamental thing about basic infrastructure components:

  • A virtual server in the cloud is just a virtual machine
  • An object storage in the cloud is just a key value store
  • A database in the cloud is just a database
  • A network resource in the cloud is just a network resource

But enterprises seek for more than simple infrastructure services, because none of the basic resources alone provide a real business value that supports their digital business ambitions. Enterprises want and need to exploit a digital infrastructure platform that offers a portfolio of higher-level services that are exposed via APIs. They want a platform that helps them to create new applications and services that provide a value to their digital business initiatives. While setting up their digital platform strategy, almost three-quarter (72%) of organizations regard APIs as important or very important.

Hence, infrastructure service providers finally reached market conditions where they can no longer only deliver simple infrastructure service components (server, storage, and network). This won’t let them differentiate nor compete in the future. Instead, infrastructure service providers that deliver services around their infrastructure offering – to let enterprises consume infrastructure resources – are the fundamental piece for digital transformation ambitions.

To empower their customers and find growth opportunities for their own infrastructure services business, infrastructure service providers must turn their pure infrastructure business into an API-powered digital infrastructure platform.

By 2023, 65% of global infrastructure service providers’ revenue will be generated through services enabled by APIs, up from 15% in 2018.

Learn how to turn the page and become an API-powered digital infrastructure platform by reading the full research note at “Find Revenue Opportunities by Transforming Into an API-Powered Digital Infrastructure Platform”. (paywall)

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Tags: cloud  cloud-computing  digital  digital-business  digital-touchpoint  edge-edge-computing  infrastructure  infrastructure-services  

Rene Buest
Research Director
2 years at Gartner
21 years IT Industry

Rene Buest is a Senior Director, Analyst in Gartner's Tech CEO Research and Advisory team. Primary research coverage is infrastructure services and digital operations as well as managed services and intelligent automation. Read Full Bio

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