Digital IT Infrastructure Outpaces Physical for First Time
For the first time, more digital IT infrastructure is in use than physical infrastructure, and service providers should do all they can to hold onto already-loyal customers who will continue to spend big on cloud-friendly managed services, application hosting and security.
Currently, 51 percent of IT infrastructure is digital, a figure expected to climb to 57 percent in two years.
In addition, the survey points to burgeoning opportunities for firms that earn revenue in the cloud ecosystem.
Ninety-five percent of cloud customers intend to renew their contract with their primary cloud and hosting provider, and 38 percent plan to increase spending under the renewed agreement.
Already, about 71 percent of cloud budgets are allocated for managed services, application hosting and security, according the report.
“Cloud adoption is a key driver in the digital transformation for organizations of all sizes, and service providers can benefit from adopting a more complete approach to the customer life cycle to help them throughout this process,” said Michelle Bailey, senior vice president of digital infrastructure and data strategy at 451 Research.
The study was based on a survey of more than 1,700 IT decision-makers across small, midsized and large organizations. Researchers targeted nations with a mix of mature and emerging markets, including the U.S., U.K., Australia, Brazil, Germany, India, Japan, Netherlands, Singapore and Turkey.
In addition to illustrating the need for firms to emphasize customer-retention strategies, the study found that eight in 10 customers had contracts spanning a year or more with their cloud or hosting provider. Of those, 43 percent have a contract of two years or longer.
“These findings underscore the opportunity for service providers to drive organic business growth by nurturing long-term customer relationships,” said Aziz Benmalek, vice president of Microsoft’s hosting and cloud service provider business. “By adapting and servicing customers through their entire cloud life cycle and keeping turnover low, cloud service providers will avoid costs associated with churn and new customer acquisition, while benefiting from increased stability and more projectable revenue streams.”
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