Hello. This is Stanton Jones and Dave Menninger with what’s important in the IT and business services industry this week.
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Cloud
Bookings for the big three hyperscalers are rebounding on strong demand for AI. Will AI-driven complexity create more opportunity for managed service providers?
Data Watch
Background
IaaS bookings growth was very strong through 2022, then went negative for five consecutive quarters as enterprises responded to the uncertain macroeconomic climate by optimizing their existing cloud investments.
That has changed in 2024: year-to-date bookings for the big three hyperscalers – AWS, Google and Microsoft – are up double digits.
We believe that AI is driving some of this new growth and that it has legs as enterprises plan to increase their consumption of IaaS in 2025.
The Details
- Bookings for AWS, Google and Microsoft are up 14% year to date.
- 40% of enterprises plan on increasing their cloud consumption over the next 12 months.
What’s Next?
AWS, Google and Microsoft have an expanding portfolio of enabling technologies for both data and AI (which is driving some of the aforementioned growth). They want as much of this AI work to stay in their ecosystem as possible, but there is also an emerging trend of interoperability of data and AI services across cloud computing environments.
For example, the new interoperability of Oracle Cloud Infrastructure across AWS, Azure and GCP will make it easier for enterprises to blend AI and data services across cloud providers.
While deploying data and AI services within large clouds may be getting easier, what will likely not be getting easier is managing the entire cloud estate. Enterprise cloud environments are already complex; this shift to an inter-cloud data and AI architecture could introduce even more complexity.
Almost half of enterprises plan on consolidating the number of MSPs they use to manage cloud over the next 12 months. However, given the enormous amount of demand for data and AI services – and the increased complexity this will likely introduce into enterprise environments – this may not be a realistic goal for sourcing and technology leaders in 2025.
About the authors
Stanton Jones
Stanton leads ISG's Index research, helping providers, investors and ISG clients make sense of the global IT services sector. Stanton’s weekly newsletter, the Index Insider, is read by thousands of market stakeholders each week. An ISG Digital Fellow, Stanton has been quoted in Fast Company, Forbes and CIO.com, and has appeared on national cable news.
David Menninger
David manages the software research and advisory for IT and leads the expertise in AI. He oversees the team and expertise areas for software used by IT and for what is used by business. David leads the software research efforts in AI for IT and AI-infused software building on over three decades of experience in data and analytics. For decades, he has brought to market leading-edge analytics and data products in marketing and product leadership positions at Pivotal (a division of EMC), Vertica Systems, Oracle, Applix, InforSense, and IRI Software. David earned his MS in Business from Bentley University and a BS in Economics from the University of Pennsylvania.
