Digital Business Infrastructure Operations Will Significantly Outpace Traditional Infrastructure Managed Services

Digital business blurs the digital and physical worlds, and it pushes services from the cloud beyond the edge to the digital touchpoint. Here, the interaction of people, business, data and things dynamically create value through transient business moments. Digital business initiatives mandate that enterprises interact much closer and in real time with their customers to help reduce cost and customer effort, and improve customer experience. Creating a business moment at the digital touchpoint is the new scalable way of engagement.

Digital touchpoints will become ubiquitous and will help drive the digital economy. The digital touchpoint is defined by the environment where end consumers directly interact with the services of a digital business. A touchpoint can be any kind of interaction with a digital device, product or service. Examples include websites, smartphone apps, virtual assistants, augmented reality (AR)/virtual reality (VR) technologies, chatbots, wearables, kiosk terminals, ATMs, home appliances and automobiles, and industrial solutions, such as a robotic arm. The digital touchpoint is everything a digital business can exploit to create an interaction for and together with its customers.

“Keeping the Lights On” Mentality Doesn’t Drive Client’s Digital Business Ambitions

However, the majority of infrastructure managed service providers (MSPs) still focus on operating and managing their client’s internal enterprise IT environments (e.g., “keeping the lights on”). As organizations adopt cloud infrastructure, providers add cloud managed services to their portfolios. But even today, these activities predominantly focus on cloud migration strategies of traditional infrastructure — using the cloud to handle enterprise IT workloads. As a result, many infrastructure MSPs are missing an increasingly important opportunity, since about one in three business leaders (31%) says their organization is planning to engage with a MSP while operating digital business solutions.

While many infrastructure MSPs still position their offering as a dedicated service to allow IT to offload low-value tasks and focus on core competencies, demand in the MSP market is changing. Our “Magic Quadrant for Data Center Outsourcing and Hybrid Infrastructure Managed Services” shows that more than 80% of digital infrastructure deals are transformational. While managing internal IT environments and digital business may sound the same, their support of specific business outcomes and business value is actually very different. In particular, internal enterprise IT workloads are not transformational, do not contribute to business outcomes and do not create specific business value.

Digital business workloads directly support digital business initiatives at digital touchpoints and are bound to specific business outcomes that add business value, improve customer satisfaction and increase quality through digital business operations. High-performance organizations are transforming to digital business with urgency and are demanding support for digital business workloads that have very specific characteristics in terms of “what is managed” and “where it is managed” compared to internal enterprise IT workloads.

Digital Business Infrastructure Operations Support the Technology Operations of Client’s Digital Business Ambitions

Digital business infrastructure operations (DBIO) are ongoing managed services contractually engaged by clients with the objective of managing, operating, and continually optimizing the necessary infrastructure that supports digital business solutions and delivers digital business outcomes.

DBIO manages the technology infrastructure of digital touchpoint environments as the foundation of digital business solutions. This includes monitoring the communications infrastructure, managing and tracking security requirements, operating embedded devices and analytics, and optimizing the technology infrastructure to support digital business operations, thus, addressing complete end-to-end digital business requirements.

The $1.6 billion digital business infrastructure operations market is forecast to grow at a five-year CAGR of 54% in U.S. dollars through 2023. This is driven by opportunities arising from continuously evolving digital business initiatives and an increasing number of digital touchpoints.

DBIO is a nascent market composed of managed services tied to specific business outcomes to exclusively support technologies that are used to operate a digital business infrastructure environment (for example, infrastructure foundation for digital customer-facing solutions). While DBIO is complementary to traditional infrastructure managed services, it does not include any kind of legacy workload (in other words, mainframe for financial services, ERP, payroll and HR systems, and other internal enterprise IT systems).

In our research note “Forecast Analysis: Digital Business Infrastructure Operations, Worldwide” we provide essential insights into the following market impacts and forecast assumptions for the DBIO market segment:

Digital Business Infrastructure Operations: By 2023, 35% of global infrastructure managed service providers will gain at least 50% of their revenue through managing the digital touchpoint environments of their clients.

Increasing Number of Digital Touchpoints: By year-end 2021, more than 50% of large enterprises will deploy at least one edge computing use case to support IoT or immersive experiences, compared to less than 5% in 2019.

Ubiquitous Connectivity Matters: By 2024, at least 50% of digital business solutions in production will be IoT-enabled, up from 10% in 2019.

Rising Cybersecurity Threats: By 2022, 75% of all processing and data collection will be conducted outside the traditional data center, up from 40% today.

Infrastructure MSPs can leverage our analysis and recommendations to realign their product strategy toward managing digital touchpoint solutions for their clients and help them achieve their digital business ambitions.

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