Magic Quadrant for European Managed Hosting

Transcription

1 G Magic Quadrant for European Managed Hosting Published: 19 June 2013 Analyst(s): Tiny Haynes, Gregor Petri, Douglas Toombs, Bob Gill, Lydia Leong, Sammi Pine Managed hosting solutions, including cloud infrastructure as a service, are offered on physical and virtualized infrastructures. While the European market is mature, emerging cloud offerings are disruptive, meaning that IT buyers must choose vendors carefully. Market Definition/Description Managed hosting services are standardized offerings that bundle together data center facilities and provider-managed computing, network and storage capacity. The individual components in a managed hosting offering may be physical or virtual, and can be dedicated to a single customer or shared among many. At a minimum, the provider must offer server OS management services, including guest operating systems if virtualization is being used. The provider may offer other managed and professional services as options, as they relate to the deployment and operation of the infrastructure, excluding management of the application itself. A managed hosted service is a productized, standardized offering with limited customization. It is sold as a stand-alone service with no requirements to bundle it with other services, such as application development, application maintenance or data center outsourcing. The European marketplace consists of the 27 member states of the EU. Each member state has its own rules on data privacy, as well as a separate language and culture. The scope of this Magic Quadrant focuses primarily on the European marketplace, incorporating the top six countries by GDP (Germany, the U.K., France, Italy, Spain and the Netherlands). In each of these countries, customers expect their native language to be supported. Customers also expect that a service provider will have data center presence. In some countries, such as Germany, strong cultural barriers exist against moving data outside national borders, as service providers need to have a wide data center geographic strategy. This Magic Quadrant focuses on multinational and domestic service providers that have achieved a significant market share in one or more European countries. This Magic Quadrant addresses the enterprise-class European managed hosting market, independent of the type of underlying infrastructure. Managed hosting services may be delivered on: Physical servers: Physical servers are dedicated to a single customer and are owned and hosted by the service provider. At a minimum, the vendor must include server OS management.

2 Virtualized servers: Server virtualization is used to provide virtual machines (VMs) to the customer on top of physical servers that are dedicated to a single customer. At a minimum, the vendor must include guest OS management. Utility infrastructure: Utility infrastructure provides customers with VMs from a shared, multitenant environment that is owned and hosted by the service provider. At a minimum, the vendor must include guest OS management. Cloud infrastructure as a service (IaaS): Cloud IaaS provides customers with self-service via a graphical user interface (GUI) or an optional API composed of compute, storage and network resources, provisioned on demand and in near real time. These resources are owned and hosted by the service provider. The offering may be multitenant ("public cloud") or singletenant ("private cloud"). At a minimum, vendors must include server OS management for nonvirtualized physical servers and guest OS management for VMs. Many customers choose to use multiple infrastructure types within their managed hosting solution. When cloud IaaS is mixed with one or more other types of infrastructure, it is often called "hybrid hosting." Some customers also will choose to mix provider-managed and self-managed infrastructure platforms. Gartner separates the concept of a cloud infrastructure platform from services delivered on top of that platform. Managed hosting is one of many services that can be delivered on top of cloud IaaS, or, more broadly, on an infrastructure that is created using a cloud management platform (CMP). In addition to server OS management, vendors may offer optional managed and professional services, such as: Management of infrastructure software at the middleware or persistence layer, such as Web server software, application servers and database servers Management of storage, including backup and recovery Management of security Management of network devices, such as application delivery controllers Professional services associated with hosting, such as architecture, capacity planning, performance testing, security auditing and data center migration. Managed hosting is typically sold on a one- to three-year contract. Providers vary in the degree to which they allow customers to change the amount of capacity that they purchase over the contract duration. Some only allow capacity increases, not decreases. Some require a contract addendum and extension when capacity is changed. Others are more flexible, allowing capacity changes on a monthly or even a daily or hourly basis without any contract alterations. Managed hosting services are productized and standardized. However, some providers customize services for specific needs that cannot be met by their standardized offerings. Some customers choose a fully managed service in which the service provider manages the system infrastructure (computing, storage and network) and application infrastructure (middleware), but not the application. Other customers prefer to select from a menu of a la carte management services. For instance, some need only database administration services, while others want junior-level system Page 2 of 28 Gartner, Inc. G

3 administration tasks, such as patch management, handled by these services. However, they still want to do the complex work themselves. Which Use Cases Are Covered by This Evaluation? The focus of this Magic Quadrant is on the following common use cases, independent of the infrastructure type or combination of types that are used to serve these workloads: E-business hosting: Managed hosting for e-marketing sites, e-commerce sites, software as a service (SaaS) applications and similar modern websites and Web-based applications. These workloads often are complex and have a high rate of change in the systems and application infrastructure. Web-based business application hosting: Managed hosting for corporate intranets and Webbased applications that are delivered to users primarily within the enterprise. The applications may be commercial software or in-house-developed applications. The workloads often are relatively small, and do not have a high rate of change. Enterprise application hosting: Managed hosting for the infrastructure underlying large commercial software applications, such as applications from Oracle, SAP, Infor and Microsoft. These workloads frequently are complex and require specialized knowledge to operate optimally, but do not have a high rate of change. All three use cases are typically tactical sourcing decisions that involve one application, a single group of closely related applications (such as those associated with an enterprise's video portal), or a single division (such as the e-commerce business unit of a retailer). They are typically best served by a best-of-breed provider that has strong operational expertise with similar solutions. However, many customers expand their use of managed hosting over time, and the choice of a provider may become a strategic decision. It is difficult to find a provider in the managed hosting market that excels in all areas, as some providers may be leaders in some areas but may lag behind their peers in others. As a result, it is important to match your use case with a vendor that excels in serving your particular needs. Smaller providers may do one thing extraordinarily well, but may not have a comprehensive set of services that enables them to address a broad array of use cases. It is also crucial to note that a Magic Quadrant shows the overall position of a vendor in the managed hosting market as it examines a broad array of business factors. However, the quality of service delivered accounts for only about one-third of the rating. A vendor's position in the Magic Quadrant should not be used to determine the relative quality of different services for a given use case. It is crucial to look beyond Magic Quadrant Leaders when selecting a vendor, especially if you have an unusual need. The vendor that is perfect for your needs may be a Niche Player, Challenger or Visionary. Gartner, Inc. G Page 3 of 28

4 Magic Quadrant Figure 1. Magic Quadrant for European Managed Hosting Source: Gartner (June 2013) Vendor and Attenda Attenda, based in the U.K., is a managed hosting and cloud services provider whose specialty is running critical business applications. It offers hosting of e-business and e-commerce sites and business applications from SAP, Oracle and Microsoft. Attenda's customer base includes midsize and large companies that share its focus on the U.K. market, which is one of the largest in Europe. Attenda takes a high-touch approach to managed hosting, with dedicated teams and individuals assigned to establish direct customer relationships. This high-touch approach has attracted customers that are generally enthusiastic about the offering and describe their relationship with Attenda as a partnership, rather than a formal contractual relationship. Page 4 of 28 Gartner, Inc. G

5 Aside from hosting business-critical and Web-facing systems, such as hotel reservation or e- commerce sites, Attenda hosts the back-end SAP systems for many of its customers. It can, in cooperation with a consulting partner, deliver a subscription-based SAP Business All-in-One offering. The organization is growing rapidly, which can lead to some bottlenecks, as some clients report occasional resource problems regarding popular areas such as SAP-related services. The high-touch model, although highly appreciated by customers, can prove more difficult in keeping up with market growth than more productized, off-the-shelf-type offerings. Attenda's main presence is in the U.K., with its portals and support being solely in English. Wider European support is limited to a Frankfurt, Germany, data center. AT&T AT&T is a global communications service provider, headquartered in Dallas, Texas, with a long history of leadership in the managed hosting market. It offers managed hosting on dedicated infrastructure, and public and private IaaS. It also offers co-location and application management services from facilities in North America and Asia, as well as from six data centers in four European countries. AT&T has significant experience in providing managed hosting services. It manages highly complex e-business infrastructures, with particular expertise in e-commerce and enterprise application solutions. It can also manage complex enterprise application hosting in conjunction with its application management business. AT&T is able to use its network as a differentiator for use cases where network access is a heavily weighted criterion, or where end-to-end service management with SLAs is required. The company also has entered into an agreement with IBM whereby AT&T's virtual private networking services are bundled with IBM's global cloud services offerings. Gartner clients frequently express frustration with AT&T's billing processes. Although AT&T provides customers with documentation of these processes, the statements are exceptionally long, and relevant details are hard to find, leading to customer confusion. AT&T has launched programs to simplify the process. The company plans to expand the availability of electronic billing beyond the U.S. and Europe. The company caters to multinational enterprises, especially customers headquartered in North America. In Europe, AT&T sells its managed hosting services through its international sales Gartner, Inc. G Page 5 of 28

6 force, although AT&T can build on the relationships it has established around the communication and network services that it delivers, as it has less of a heritage in managed hosting. While AT&T does provide managed hosting services for some large European customers, it does not have a reputation as a hosting or managed services provider. Customers continue to perceive AT&T as a networking provider. BT BT is a global communications provider with a pedigree in both the managed services and network outsourcing markets. In addition to carrier services. BT provides core managed hosting on its private compute service and utility computing on its BT Compute production service, with new functionality tested and deployed on its "innovation" platform. BT has a comprehensive range of managed hosting and cloud services that can be sold with its existing WAN, consultancy, application management and unified communications portfolio. BT is capable of delivering complete IT and communications solutions using this. BT's data center presence is among the most globally diverse, including capacity in North and South America, Western Europe, and the Asia/Pacific region. This presence allows BT to provide services that adhere to local compliance and data sovereignty requirements. BT has a particularly wide range of supported platforms, middleware stacks and hardware appliances. BT's emphasis is on delivering hybrid cloud services through its managed hosting business with both standardized and customized private and public IaaS platforms, which positions it well to compete for managed solutions. BT's hosting sales capacity in Europe is limited to specialist sales overlay teams, and is focused primarily on certain vertical markets. Although the number of addressed markets has been expanded recently, customers typically see BT as a full-service communication and IT service provider, rather than as a managed hosting provider. BT is focusing on using its cloud platforms to allow it to deliver an increasingly diverse range of IT services, not just managed hosting. We do not believe that BT has focused on pure-play managed hosting in the recent past, and BT's future strategy combines pure-play managed hosting with a range of cloud-enabled services. BT is concentrating on competing for complex, custom-made services, including the hosting of business-critical applications. However, BT has more-limited focus and traction in the more standardized deals that typify managed hosting. Page 6 of 28 Gartner, Inc. G

7 Claranet Claranet is a Pan-European network and managed hosting provider with a presence in multiple countries, including the U.K., France and Germany, and in the Iberian and Benelux regions. It offers hosting, network and application services to midtier companies from data centers in those regions. Claranet has introduced agile process teams to complement its ITIL teams, which helps to meet increased demand for more flexible hosting of Web-based applications. As hosting of complex, Web and e-commerce solutions becomes an important part of Claranet's hosting and network services portfolio, it has invested in creating standard platforms for running families of applications. For example, it offers platforms geared toward hosting applications developed in.net, Java EE, Ruby or PHP. Because hosting is becoming a more important part of Claranet's overall portfolio, its sales force is able to place a greater focus on the managed hosting business than the sales teams of other network-centric providers. Although one of the few European-headquartered providers with a Pan-European presence, Claranet largely caters specifically to different companies and industries in individual countries, resulting in a nonhomogeneous solution portfolio. Claranet does not offer hosting of standard business applications, such as SAP. Claranet's acquisition-based expansion into local markets may present integration challenges as it seeks to combine the capabilities of recent additions, such as U.K.-based Star and Francebased Typhon, into its already geographically diverse portfolio. Colt Colt is an integrated network and IT service provider that specializes in Web and application hosting and cloud IT services. Colt Group, Colt's holding company, is based in Luxembourg. Colt's head office is in the U.K.; it has 19 other offices across Europe and Asia. Colt provides managed hosting services from each of its 20 Colt-owned Tier III data centers in 10 countries. Colt also has implemented a standard enterprise solutions sales delivery approach, known as ADIOM (Assess, Design, Implement, Orchestrate, Manage). Colt plans further geographic expansion. Colt has a strong Pan-European presence, with local support for most Western European languages. Gartner, Inc. G Page 7 of 28

8 Colt's hosting portfolio is broad, covering managed hosting, application management, private cloud services and a Pan-European network. Colt has invested in automation, providing a very fast provisioning service. Colt's focus on customer satisfaction has led to positive customer feedback from Gartner clients. Colt's telecom legacy has resulted in strong processes that do not provide flexibility in certain back-office areas, such as billing and flexible financial models. Colt lacks broad-reaching mind share outside the financial vertical, where it is reasonably wellknown. As a result, Colt is not being considered for opportunities it might be able to fulfill. Easynet Global Services Easynet Global Services is a Pan-European network provider with six regional data centers that provide managed hosting solutions. Easynet takes a solution-selling approach rather than selling from an existing portfolio. It offers a custom design to clients. Easynet's approach of providing network, hosting and value-added services as part of a solution differentiates it from more traditional hosting providers. Easynet operates on a true Pan-European basis, with data center and sales presence in eight European countries, resulting in a long list of domestic European organizations as customers. Easynet's solution approach means it does not offer much standardization, and even less automation in its services. For example, provisioning is on a next-day basis, whereas other providers can offer a same-day service. Easynet lacks the investment in service platforms. Unlike other providers, Easynet cannot provide lower-cost standard services. Fujitsu Fujitsu is a large, diversified technology company. It has multiple hosting, data center outsourcing, and IaaS and SaaS platforms available to customers to suit their needs. Fujitsu has a long history in IT services and data center outsourcing. It has a large global sales force and a strong European presence. This gives it a large base of captive customers to which it can sell managed hosting services, and it is successful at extending existing Fujitsu Page 8 of 28 Gartner, Inc. G

9 relationships into cloud deals. It has also demonstrated success in attracting new customers to its hosting and cloud propositions. It has very responsive support and good account management. Fujitsu is a global vendor of hardware and software, and consequently has a lower cost base for many hardware components, when compared to most other managed hosting providers. Fujitsu's services are normally aimed at enterprises with more than $500 million in annual revenue, which makes these services not suitable for enterprises with smaller revenue looking for less rigidly contracted solutions. Fujitsu is not considered to be innovative in services and products compared with other managed hosting vendors in this Magic Quadrant. IBM IBM is a highly diversified global technology company that is headquartered in Armonk, New York. It offers a broad array of IT outsourcing services, including managed hosting and utility infrastructure services. IBM offers managed hosting on dedicated or shared servers, as well as on private and public IaaS platforms, from data centers in 10 European countries and locations throughout North America, Latin America and Asia. IBM has a long history of complex Web-hosting services in Europe that are built on a customtailored basis. It has the experience to be able to provide large, complex infrastructures built around clients' unique requirements. IBM is one of the few managed hosting providers that can offer infrastructure capabilities outside the x86 processor-based platform sector, namely for AIX/pSeries and zseries mainframe systems. IBM is able to deliver enterprise applications, such as SAP, on its cloud platform, with some term commitments for certain deployments being as short as one month in length. Although IBM's SmartCloud Enterprise+ (SCE+) platform has promising capabilities, it has been on the market for less than a year and has garnered limited feedback from Gartner clients. With a 99.90% SLA, the IBM SCE+ platform is on the low end of the market compared with other hosting offerings both IaaS and managed hosting and below the 99.95% Gartner typically sees in most IaaS and managed hosting platforms. IBM measures SLAs at the start of a calendar month, not immediately on the provisioning of a virtual machine. Gartner, Inc. G Page 9 of 28

10 The 5% credit offered for SLA breach is at the low end of the market, where some vendors will limit the payouts to 100% of the monthly recurring revenue. IBM bases its new managed hosting and utility infrastructure services offering on SCE+ and labels it as a cloud offering. For that reason, some European cloud-averse customers may look at IBM with caution. Interoute Communications Interoute is a Pan-European network provider connecting the majority of Europe's urbanized areas through a largely fiber-based network, and offering connectivity to major hubs on other continents. Under its Unified ICT portfolio, it offers co-location, hosting and cloud services from local data centers in major European countries. By owning and operating the fiber network that interconnects its data centers, Interoute can offer unique capabilities, such as movement of workloads and data between its international data centers at no cost. Interoute has invested in software-defined networking to accelerate the process of reconfiguring the network, which can be a bottleneck for flexible deployment. Its cloud store initiative offers a wide variety of solutions for deployment of the offered infrastructure. For many of these solutions, it offers managed services, either directly or through partners such as Unisys. Interoute's strategy is centered around standard infrastructure requirements, such as high bandwidth or low latency, rather than around the unique functional characteristics of vertical industries. The cloud store concept, although innovative, focuses on customers that easily deploy software applications on hosted infrastructure, rather than on making these solutions available as SaaS application services. LeaseWeb LeaseWeb, based in the Netherlands, is a provider of cloud, hosting and network services, with a focus on servicing online e-commerce companies and Internet-based startups. LeaseWeb offers a high-speed network, giving access to multiple European countries to its data centers in the Netherlands and facilities in Germany. LeaseWeb also offers its managed hosting services from facilities in the U.S. Page 10 of 28 Gartner, Inc. G

11 LeaseWeb's strategy is to keep its cost low and reliability high by focusing on a high degree of vertical integration, such as in building its own pods, operating its own network and offering its own CDN platform, while leveraging these investments through resellers and implementation partners. Because LeaseWeb's customer base is mainly the fast-growing e-commerce companies, the company is experiencing strong organic growth. Unlike some of its competitors, LeaseWeb is approaching the market from a bottom-up perspective, starting with small customers and relatively simple self-service offerings, and then moving into larger and more complex opportunities. This helps give customers a potential cost advantage, but also creates the risk of losing customer intimacy. With only 10% of its business coming from selling offerings, such as Web presence to traditional enterprises, LeaseWeb has room to grow. However, its image as a low-cost, highvolume provider may hinder LeaseWeb in convincing more risk-averse enterprises of the applicability of its offering to their hosting needs. LeaseWeb will need to adapt its internal security and process governance model that is designed to sell Internet services from its home location to Internet companies throughout Europe, as it must accommodate its geographic expansion to locations in other European countries and in the U.S. Because the company has grown by catering to tech-savvy Internet companies, it offers less support for standard enterprise middleware and software stacks than some of its more traditional competitors. NTT Communications NTT Communications, a wholly owned subsidiary of NTT, is headquartered in Tokyo. The company offers managed hosting on dedicated servers and private or public cloud IaaS. It operates its hosting services from four European countries within its Internet backbone. The company owns its own global IP network and offers co-location services from its data centers. NTT Communications' global network can be a differentiator for use cases where global network access is a heavily weighted criterion. NTT Communications has a solid understanding of business practices, networking and security in Eastern and Western societies, providing additional benefits to customers that expect to have hosting needs that reach into the Asia/Pacific region. Gartner, Inc. G Page 11 of 28

12 NTT is able to provide complex hosting solutions on innovative financial models (such as a revenue share per seat for an airline company) aside from the traditional monthly recurring revenue models. The NTT Communications service offerings require different portals and logins versus the unified portals of other large-scale communications companies. Gartner clients reported that NTT pricing is higher than industry averages, although clients have been satisfied with the level of support provided. NTT Communications is not regarded as a leading innovator in hosting products and services compared with other multinational carriers in this Magic Quadrant. Rackspace Rackspace is a large, publicly traded, managed hosting and cloud IaaS provider with more than $1 billion in revenue. It is headquartered in San Antonio, Texas, and has data centers in Europe, Asia, Australia and the U.S. The company offers managed hosting on dedicated servers, public IaaS based on OpenStack and XenServer, and private cloud solutions based on VMware. On-premises and hosted private cloud solutions are based on OpenStack, and provide hosted Microsoft Exchange and SharePoint, cloud storage, and hosted virtual desktops. The company provides these services from two data centers in the U.K., with another U.K. data center expected to launch in Rackspace is the market share leader in pure-play managed hosting in Europe, and has grown significantly above market rates. Rackspace has a strong cultural focus on superior, high-touch customer service. It is typically an exceptionally responsive provider in the sales process and in day-to-day operations. Rackspace has made significant improvements in the past two years in targeting enterprise customers, including a new enterprise-focused sales force, and an expansion of its professional services capabilities. Rackspace is an extremely cost-efficient provider, with prices that are often significantly lower than those of comparable offerings. However, these prices depend on standardization. Although Rackspace founded the OpenStack project for an open-source cloud management platform and launched an OpenStack-based public cloud IaaS offering in August 2012, most of its managed hosting customers still use dedicated servers. Some servers have VMware-based virtualization. Rackspace does not have a utility infrastructure hosting offering, nor does it offer the full extent of its managed services portfolio on its cloud IaaS platform. Page 12 of 28 Gartner, Inc. G

13 Rackspace does not have data center infrastructure in Europe beyond the U.K. facilities, nor does it have language support other than in English, limiting the appeal for many European customers. Rackspace's enterprise sales force efforts are a relatively new company focus. As a result, it likely will take time for the company to fully execute on the same level as some of its more enterprise-focused market peers. Rackspace's breadth of service portfolio is narrower than other competitors that target the midmarket and enterprise. Some customers have indicated that this can be an issue with more complex hosting requirements. Savvis Savvis, a CenturyLink company, is a large co-location, managed hosting and cloud IaaS provider. The company offers managed hosting on dedicated servers and private or public cloud IaaS, as well as co-location services. The company operates data centers in 20 metropolitan markets throughout North America, as well as locations in Europe and Asia, with many located near major financial exchanges. Savvis can handle extremely complex deals, including large-scale e-commerce and enterprise application hosting needs. It has a very broad portfolio of supported infrastructure, middleware stacks and application environments. Through its acquisition of the IT outsourcing business Ciber in July 2012, Savvis gained a broader set of enterprise application support skills, and could start bringing new applicationcentric services to customers. Savvis has consistently had one of the best end-user portals, which generally covers every product that Savvis offers to customers, including hosting, network, cloud and co-location. Resource management and utilization views across multiple hosting and cloud services can help customers identify where they may have overprovisioned their infrastructure, and could potentially save money. Through its Consumer Brands offerings, Savvis can provide complete online presence management for e-commerce and consumer packaged goods companies, including Web life cycle management, brand protection and social media engagement. Gartner clients have noted diluted focus and quality of support within the business following the spate of acquisitions over the past two years. Savvis has multiple hosting and cloud IaaS offerings in its suite of services, which can leave customers uncertain as to which line of service suits their needs. Savvis only has European data centers in the U.K. and Germany, so it is unable to offer more regional data sovereignty than other managed hosting providers. Gartner, Inc. G Page 13 of 28

14 SFR SFR is the largest new provider of communication services in Europe. The company is part of the French media conglomerate, Vivendi, and is an investor in the French cloud startup, Numergy. SFR has an extensive data center presence in France. It also delivers its own IPTV services to French viewers. Combined with its communication and call center capabilities, SFR forms an attractive proposition for customers needing high bandwidth and low latency. SFR is the only large provider in France that has obtained a government license to host healthcare-related information. As a communication service provider, SFR offers a range of hosted messaging and unified communications solutions. It has established a long-term partnership with HP, its infrastructure provider. Because SFR operates predominantly in France, its hosting offering does not apply to customers looking for a multinational or Pan-European solution based outside the country. Organizations offering media content to French consumers and choosing SFR for its extensive local data center presence need to be aware that SFR may introduce competing consumer offers. The SFR sales team is focused predominantly on selling traditional communication service, with an eye to promote managed hosting sales through an overlay team. SunGard Availability Services SunGard Availability Services is a large IT availability and business continuity provider headquartered in Wayne, Pennsylvania. It offers managed hosting on dedicated servers and a virtualized utility hosting platform, as well as co-location services from more than 30 data centers throughout North America and multiple locations across Europe. SunGard is strong in recovery and availability services, as it can design highly available platforms to meet customers' needs, even incorporating legacy systems into plans. SunGard is overhauling its business from the top-down and sharpening its focus on service capabilities, delivery and customizing needs of complex accounts. SunGard has a sharper focus on managed hosting in Europe than in North America. Page 14 of 28 Gartner, Inc. G

15 SunGard's solution engineering is improving, but its standard managed hosting SLA is still based on a rolling three-month period in which targets must be missed in two of the three months for the customer to qualify for a credit a significantly weaker guarantee than is typical in the industry. Although SunGard supports standardized application use cases, as it moves toward customized workloads the company may find it challenging to generate cost synergies compared with standardization and automation. SunGard's European presence is limited to Northern Europe. This puts SunGard at a disadvantage compared with other Pan-European hosting providers. Verizon Terremark Verizon Terremark, formed by Verizon's acquisition of Terremark in 2011, is the combined hosting co-location and cloud business unit of Verizon with Terremark. The company offers managed hosting on dedicated servers and private or public cloud IaaS. It also offers co-location services from 25 data centers throughout North America, with multiple locations in Europe, Asia and Latin America. Verizon and Terremark both have long and successful histories in the managed hosting business. Customer service for the historical Terremark base has improved significantly since Verizon acquired Terremark. Verizon Terremark is able to use its network as a differentiator for use cases where network access is a heavily weighted criterion, or where end-to-end service management with SLAs is required. Verizon Terremark's Enterprise Cloud Managed Edition offers customers the ability to provision dedicated physical servers as well as virtual servers, with billing available in daily increments. Although the integration of legacy services has been completed, Verizon Terremark has not been able to consolidate its service offerings into a single portal, requiring users to sign into different portals to manage different infrastructure stacks. While Verizon Terremark is rewriting its SLA for high-availability managed hosting solutions, its current SLA for 99.5% availability places it below those of its market peers. Verizon Terremark's sales focus is mainly on multinational enterprises with a European presence. Verizon Terremark does not market widely to domestic organizations in Europe. Gartner, Inc. G Page 15 of 28

16 Vodafone (Cable & Wireless) Cable & Wireless Worldwide, recently acquired by Vodafone, is a global telecommunications provider with a wide range of managed voice, data, hosting and IP-based network services and applications. Established in the 1860s, Cable & Wireless has a long international history. Its managed hosting activities are focused on larger U.K. and Ireland-based organizations, such as FTSE 500 companies and public-sector organizations. Cable & Wireless' combination of co-location, managed hosting and cloud products is especially attractive to customers already using its communications and network offerings. Under its new parent, Vodafone, which is creating a dedicated hosting and cloud services unit focused on enterprise customers, Cable & Wireless has aggressive plans to grow its sales force and expand its geographic footprint in the broader European market. Customers indicate that Cable & Wireless can sometimes be slow in responding to requests, as it takes a long time to go through Cable & Wireless' internal systems or department structure. Vodafone's core capabilities center around communications services, leaving the managed hosting arm as a separate business unit. There is potential for Vodafone to lose focus on managed hosting and concentrate instead on its higher revenue business, as has been the case with other acquisitions of communications companies. Bringing Cable & Wireless' hosting offering together with the formerly independent Vodafone hosting and data center offerings in Turkey and Vodacom in South Africa may prove challenging. Cable & Wireless' experience in the U.K. government sector, although useful, is less exportable to other countries in the commercial sector. Vendors Added or Dropped We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor. Because the Magic Quadrant for European Managed Hosting is a new Gartner offering, no vendors have been added or dropped Page 16 of 28 Gartner, Inc. G

17 Inclusion and Exclusion Criteria The inclusion criteria are used to determine which vendors will be covered in this research. Included vendors must meet the following criteria: They must sell managed hosting as a stand-alone service, without the requirement to bundle it with application development, application maintenance or other IT outsourcing/data center outsourcing. They must have managed hosting offerings that can be delivered on demand, with flexible contracts that allow infrastructure capacity to be changed monthly (or more often). Their service must be enterprise-class, offering 24/7 customer support (including phone support) and SLAs. Products and Services Excluded From This Evaluation This Magic Quadrant exclusively covers managed hosting services. As a result, the following services are excluded from this evaluation: Co-location: Although many managed hosting providers also offer co-location, the quality of co-location offerings is not evaluated in this Magic Quadrant, and this Magic Quadrant should not be used to select co-location vendors. Self-managed cloud IaaS: Many businesses want a self-provisioned, self-managed dynamically provisioned infrastructure; they want to take advantage of the cost-efficiencies of a provider's scale and automation tools, but do not want to relinquish control. If your interest is primarily in self-managed cloud infrastructure, see "Magic Quadrant for Cloud Infrastructure as a Service." Data center outsourcing (DCO) and infrastructure utility services, and remote infrastructure management (RIM): While many DCO providers may manage the infrastructure for Web applications as part of a DCO contract, this Magic Quadrant only evaluates managed hosting that is sold as a stand-alone service within provider-owned data center facilities, and explicitly excludes hosting that may be done as part of a more general DCO or RIM contract. DCO providers are covered in "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, North America" and "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Europe." Application management services: While some managed hosting providers may have some expertise in understanding how best to run the infrastructure underlying specific applications, we consider managed hosting services to stop below the application layer; application-layer services are part of the application management market. Magic Quadrants that cover this market include "Magic Quadrant for Oracle Application Management Service Providers, Worldwide" and "Magic Quadrant for SAP Application Management Service Providers, Worldwide." Gartner, Inc. G Page 17 of 28

18 Cloud management platforms (CMPs): Cloud-building hardware and software software such as BMC Cloud Lifecycle Management, Citrix CloudPlatform and OpenStack, as well as turnkey solutions such as HP CloudSystem Matrix are not evaluated in this Magic Quadrant, which is restricted solely to services. Thousands of service providers across Europe offer managed hosting services of some type, and hundreds focus primarily on this market or derive a significant amount of revenue from it. Many small providers provide an excellent level of service, so do not allow the lack of inclusion in this Magic Quadrant deter you from evaluating such providers, since we do not consider service quality when determining inclusion. Insufficient revenue and geographic presence alone could disqualify otherwise excellent providers. Evaluation Criteria Ability to Execute The most heavily weighted criteria for a managed hoster's Ability to Execute are its service offerings and service excellence, as reflected in customer experiences with sales, support and operations. Overall business viability, as reflected in the ability to successfully service a customer over a threeyear period without significant disruption, and the service provider's track record, also contribute to this rating. Here, Gartner emphasizes immediate capabilities for the use cases that we see most often. Table 1 lists the relative weighting of the various criteria in terms of a vendor's Ability to Execute in this market. Table 1. Ability to Execute Evaluation Criteria Evaluation Criteria Product/Service Overall Viability (Business Unit, Financial, Strategy, Organization) Sales Execution/Pricing Market Responsiveness and Track Record Marketing Execution Customer Experience Operations Weighting High Standard High Standard Low High Standard Source: Gartner (June 2013) Page 18 of 28 Gartner, Inc. G

19 Completeness of Vision The market for managed hosting is evolving at a rapid pace. It is vital that service providers offer a vision for the future needs of customers, as well as adapt their offerings to meet those needs. The full context of a provider's vision is important, as cloud computing continues to dramatically alter the marketplace. We also critically evaluate the provider's approach to growing the business, including its strategy for marketing and sales, international expansion, and vertically focused market solutions. Table 2 lists the relative weighting of the various criteria in terms of a vendor's Completeness of Vision in this market. Table 2. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Weighting High Standard Standard High Low High Standard Standard Source: Gartner (June 2013) Quadrant Descriptions Leaders Leaders that have proved they have staying power in this market, can frequently innovate on their existing products and can be relied on for enterprise-class needs. They have proved their technical competence and ability to deliver services to a wide range of customers. They address multiple use cases with stand-alone or integrated solutions. New managed hosting customers should sign two-year contracts with these companies, whereas enterprise application hosting customers should aim for longer contracts in the three- to five-year time periods. Satisfied customers renewing a contract with one of these firms should sign a three- Gartner, Inc. G Page 19 of 28

20 year deal. Cloud IaaS customers should buy these services on demand when the pricing structure makes sense to do so, or in contracts of one year or less. Challengers Challengers have a track record of delivering good service capabilities, but they are trailing the market's evolution. They are typically companies that have solid traditional managed hosting services, but have not exploited technology and market demand to build cloud services. New managed hosting customers should sign two-year contracts with these companies, whereas enterprise application hosting customers should aim for longer contracts of three- to five-year duration. Satisfied customers renewing a contract with one of these firms should sign a three-year deal. Cloud IaaS customers should buy these services on demand when the pricing structure makes sense to do so, or in contracts of one year or less, and should exercise caution, as these vendors are likely still developing their cloud services. Visionaries Visionaries have an innovative and disruptive approach to the market, but their services may be new and unproven, and frequently have limited service portfolios. Visionaries have an early-mover advantage in providing cloud services, as well as road maps that may make them into Leaders in the future. Because the business of Visionaries can change radically in a short period, we recommend that customers buy these services on demand, or in contracts of one year or less. Niche Players Niche Players are typically specialists with more focused product portfolios, or are emerging vendors in the market. They may serve one use case particularly well, better than a more generalized vendor in their area of specialty. New and renewing customers of stable, narrowly focused Niche Players should sign a two- or three-year contract. New and renewing customers of emerging Niche Players whose businesses are still rapidly evolving should buy services on demand, or in contracts of one year or less. If you are using managed services, be wary of making short-term, tactical choices, as it can be inconvenient and expensive to change providers. Context Despite living in the media shadow of cloud computing, managed hosting continues to be the most appropriate solution for many organizations that desire to outsource the infrastructure and IT operations management associated with an application or website. Most organizations prefer to source the infrastructure on a flexible, pay-as-you-go basis, where capacity can be adjusted to meet demand. Consequently, in addition to offering dedicated servers, managed hosting providers frequently offer shared and virtualized utility infrastructure platforms, or cloud IaaS. Indeed, some managed hosting providers are primarily or solely focused on delivering their solutions on cloud IaaS. Page 20 of 28 Gartner, Inc. G

21 Most solutions for complex needs are hybrids, mixing different types of infrastructures to achieve cost-effectiveness, and to meet the customer's range of availability, performance, security and IT operations requirements. For instance, customers may need test and staging servers hosted on an IaaS platform, their front-end Web and application servers on a utility infrastructure, and their database on dedicated physical servers. This has spurred providers to develop and productize hybrid hosting services that interconnect co-location, traditional hosting environments and cloud IaaS within unified networking and security contexts. Managed hosting is typically sold on a one- to three-year contract via a consultative sale, and buyers should expect to interact at length with the solution architects of prospective providers to achieve the solution that is right for their needs. Every provider's solution will be subtly different, and service and support quality vary tremendously across the industry. Consequently, managed hosting providers should be chosen with care. Market Overview The European market for managed hosting is mature albeit fragmented, but the introduction of cloud IaaS has driven significant evolution in the market over the last five years. There is a stronger emphasis on automation, flexible contracts and capacity on demand. This Magic Quadrant covers only solutions that include managed services, emphasizing complex implementations that require significant human labor on the part of the service provider, regardless of whether the underlying infrastructure platform is composed of physical servers, virtualized servers, cloud IaaS or some hybrid combination. For self-managed cloud IaaS, or cloud IaaS with an emphasis on highly automated management, rather than having humans perform managed services, see "Magic Quadrant for Cloud Infrastructure as a Service." Buyers of managed hosting should be aware of the key aspects of the market that we explain below. The Infrastructure Platform Is a Means to an End Increasingly, prospective managed hosting customers approach sourcing a solution with the attitude of "I want to be in the cloud." However, for many customer needs, cloud IaaS is not the ideal solution from a technical or a cost perspective. Instead, consider the goals you are trying to achieve. Each component of your application needs a particular level of availability, performance and security, which results in different demands on the underlying infrastructure. You may also have scaling-related business needs, such as the ability to quickly scale up and down in response to unpredictable spikes in demand. You also may need to handle seasonal needs without overbuying capacity at other times, or require the ability to rapidly add new batches of capacity (for instance, for the launch of a new initiative or the turn-up of a new customer). Some scaling needs must be addressed technically. For example, if you may need to add large amounts of capacity with five minutes' notice, VMs will be a must, but some needs especially seasonal ones often can be addressed by flexible contracting. Gartner, Inc. G Page 21 of 28

22 Managed hosters may offer both nonvirtualized physical servers and virtualized servers. Virtualized servers may be single-tenant (not shared with other customers), or multitenant (shared with other customers). There may be self-service provisioning for some or all of these resources. The use of virtualization, or the existence of self-service, does not singularly make a service into a "cloud" service. Because the word "cloud" is used inconsistently within the industry, ignore the labels used by the providers. Instead, look at the technical characteristics of the service, as well as the contract language, and ensure that they meet your technical needs and business goals. The more complex your needs, the more likely it is that your best solution will be a hybrid blend of different infrastructure approaches. Cloud IaaS Often Is Not a Well-Integrated Solution Many managed hosting providers initially architected their cloud IaaS platforms primarily with a selfservice model in mind that is, environments the customer would self-provision and self-manage. Consequently, they did not pay sufficient attention to integration issues with their other offerings, and were unsure how to offer managed services on the platform. As a result, many providers do not seamlessly integrate their cloud IaaS solutions with the rest of their environments. Specifically: The cloud IaaS solution tends to be on its own segregated technology infrastructure and LAN. It may not be located in the same data centers, or all the data centers, in which the provider offers other managed hosting services. The provider might not have integrated customer support across all its offerings. A different and lower level of support might be provided for its cloud IaaS. The provider might not offer the same managed services on cloud IaaS that it offers on dedicated servers or utility hosting, as it might price and perform those services differently, or those services might not be available. The portal for cloud IaaS might be segregated from the provider's main customer service portal, and features that are included for dedicated servers or utility hosting, such as system monitoring, may not be included or available with cloud IaaS. Additional costs may be associated with a hybrid cloud solution, such as the requirement that the customer use a load balancer or firewall to bridge the cloud and noncloud environments. If you use a hybrid solution that includes cloud IaaS, you must carefully investigate how the provider's service will differ across the infrastructure platforms in use. Cloud IaaS Is Evolving Rapidly The cloud IaaS market as a whole is growing rapidly, and new providers are flooding the market, often with incomplete offerings and strategies that revolve around "not being Amazon Web Services." This approach characterizes many offerings that have been launched by managed hosting providers, data center outsourcers and others that have entered this space from a related business model. Page 22 of 28 Gartner, Inc. G

23 Furthermore, rapid market evolution, along with the very fast evolution of technology through the stack from hardware to applications, is driving a rate and level of change that provides significant management challenges for service providers. This speed of this evolution is making it difficult for customers to decide which solutions they will adopt, because providers may release new features several times during a quarter, and the providers are evolving their service models. In some cases, service providers have ended up building multiple cloud IaaS offerings, or multiple versions of the same core service, as technology has evolved and the providers have learned difficult lessons about the technology and cloud IaaS business. Providers that have grown through mergers and acquisitions may have multiple cloud IaaS platforms. The multiple infrastructure platforms used by managed hosting providers are an artifact of market and technology immaturity. The cloud IaaS platforms are usually cutting-edge implementations unburdened by the provider's legacy managed hosting systems. As a result, they may lack the functionality provided by those systems. Gartner expects that successful service providers will, within the next five years, fully converge their infrastructure platforms, and will provide these capabilities: The ability to provision both physical servers and VMs from a shared pool of capacity that allows hardware components to be dedicated to a customer on an as-needed basis, or shared among customers The ability to offer multiple infrastructure tiers, with differing levels of cost, availability, performance and security The use of a unified management portal that can manage a physical and virtual infrastructure, with views for the provider, the customer and third parties such as resellers A unified approach to support and manage service options across all infrastructure options Few providers offer fully converged infrastructure platforms now. Even those that are well on the path toward convergence frequently support and sell a legacy managed hosting platform, along with whatever their infrastructure solution is going forward. All Infrastructure Requires Management All infrastructure types require management. Prospective customers often believe that cloud IaaS requires less management, as they frequently assume that because they're in the cloud, IT operations management functions, such as patch management, backups and disaster recovery, are automatically done for them. In general, this is not true, as providers may bundle managed services with cloud IaaS. Some are beginning to automate these aspects. Provider approaches to managed services vary enormously across the market. However, they can be broadly classified into "OS and below" and "everything excluding the application." We refer to these as simple managed hosting and complex managed hosting, respectively: Gartner, Inc. G Page 23 of 28

24 Simple managed hosting customers typically want to handle most operations themselves, but would like the provider to handle routine issues on a 24/7 basis, and to perform routine IT operations management tasks like patch management and backups. Complex managed hosting customers typically want the provider to take ownership and responsibility for the infrastructure so that they only need to deal with the application. The customer may choose to retain certain responsibilities for instance, doing database administration themselves but the provider essentially functions as the customer's IT operations team for this infrastructure. Regardless of what solution you choose, you will need to choose what responsibilities you retain, and what responsibilities will be the provider's. You may also have some equipment that you decide to provide and manage yourself. Most managed hosting providers offer a co-location option for this purpose. Standardization Brings Benefits Many managed hosting providers will do extensive customization of a customer's environment. However, the more your environment deviates from the provider's norm and blueprints, the more you pay and the less consistent your service is likely to be. If you deviate from the standard, you don't gain the benefit of as much of the provider's automation and tools. Therefore, it is more costly for the provider to serve you, and more things will be done manually, which introduces a greater risk of error. Standardization becomes particularly important when you consider using a provider's utility hosting or cloud IaaS platforms. These environments are highly standardized, so you can only use them if you can accept the way they are architected. If you need customization in your managed hosting environment, ask the provider the difference in cost between its standard and customized approaches. Ask yourself if the customizations you need generate business value, or are just a matter of satisfying the tastes of your IT personnel. For instance, a custom file system layout that places packages in a different place than the provider's standard generates no business value, and may mean that you cannot use the provider's standard patch management approach. Even some customizations done for cost reasons may turn out to be a bad idea. For instance, a particular set of parameters for performance-tuning a server may result in more of a cost penalty for deviating from the standard configuration than you save by getting more efficiency from the server. Customer Service Is the Key Differentiator Most established managed hosters have very high levels of operational reliability and excellent reactive support when customers have issues. However, providers vary significantly in their ability to respond promptly to customer requests that aren't directly related to an outage or other immediate operational emergency. Many providers are weak in responding when the customer's request is either complex or when it crosses multiple groups within the company. For example, a customer may have a persistent problem with network performance and systems, but no one in the organization will take responsibility for resolving the difficulty. Page 24 of 28 Gartner, Inc. G

25 Proactive support is even more of a differentiator. Some providers excel in anticipating a customer's needs, and in partnering with customers to achieve their operational goals. Providers also differ widely in their ability to manage complex projects. When evaluating your needs, consider the complexity of your environment, frequency of changes in your environment and scope of those changes. If you have frequent application or infrastructure changes (not content changes), you will need to work closely with your provider on a daily basis. If you have large-scale project work, such as new deployments, be sure your provider has the appropriate project management resources available. When choosing a provider, ensure that you are comfortable with their implementation process, change management and project management. More than anything else, the provider's service organization is likely to determine your level of satisfaction with your managed hosting experience over the long term. Evaluate your prospective account team carefully. The Vendor Landscape Is Dynamic This is a time of great opportunity and great risk for service providers in this market. New entrants are altering the landscape, and established hosters that previously had lagged behind in the market have made bold investments in an attempt to overtake established competitors. Most providers are aggressively investing in innovative new solutions that exploit the proliferation of technology capabilities coming into the market. Mergers and acquisitions have become commonplace as vendors seek to decrease their time to market and obtain technology engineering expertise to build market share. We expect that mergers and acquisition activity will continue on a global basis. Because the vendor landscape is highly dynamic, buyers of managed hosting are subject to greater sourcing risk. It is difficult to predict which vendors will be good long-term bets, as neither small vendors nor large ones can be considered safe. In general, shorter-term contracts are preferable in this market; a one-year or two-year contract is best. Recommended Reading Some documents may not be available as part of your current Gartner subscription. "Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market" "Evaluating Cloud Infrastructure as a Service" "How to Write a Managed Hosting Service RFP" "Getting the Best Service From Your Managed Hosting SLA" "Data Center Outsourcing, Hosting or Cloud? Use Gartner's Market Map and Compass to Decide" Gartner, Inc. G Page 25 of 28

26 Evaluation Criteria Definitions Ability to Execute Product/Service: Core goods and services offered by the vendor that compete in/ serve the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/ partnerships as defined in the market definition and detailed in the subcriteria. Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products. Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel. Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness. Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This mind share can be driven by a combination of publicity, promotional initiatives, thought leadership, word of mouth, and sales activities. Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, SLAs, and so on. Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems, and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. Completeness of Vision Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those with their added vision. Page 26 of 28 Gartner, Inc. G

27 Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements. Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base. Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements. Business Model: The soundness and logic of the vendor's underlying business proposition. Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets. Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes. Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market. Gartner, Inc. G Page 27 of 28

28 GARTNER HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford, CT USA Regional Headquarters AUSTRALIA BRAZIL JAPAN UNITED KINGDOM For a complete list of worldwide locations, visit Gartner, Inc. and/or its affiliates. All rights reserved. Gartner is a registered trademark of Gartner, Inc. or its affiliates. This publication may not be reproduced or distributed in any form without Gartner s prior written permission. If you are authorized to access this publication, your use of it is subject to the Usage Guidelines for Gartner Services posted on gartner.com. The information contained in this publication has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information and shall have no liability for errors, omissions or inadequacies in such information. This publication consists of the opinions of Gartner s research organization and should not be construed as statements of fact. The opinions expressed herein are subject to change without notice. Although Gartner research may include a discussion of related legal issues, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner is a public company, and its shareholders may include firms and funds that have financial interests in entities covered in Gartner research. Gartner s Board of Directors may include senior managers of these firms or funds. Gartner research is produced independently by its research organization without input or influence from these firms, funds or their managers. For further information on the independence and integrity of Gartner research, see Guiding Principles on Independence and Objectivity. Page 28 of 28 Gartner, Inc. G