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U.S. Public Sector Seeks Partners for Complex Hybrid Clouds

Managed services, managed hosting and colocation providers deliver skills and expertise as agencies quickly modernize IT, ISG Provider Lens™ report says

Many public-sector organizations in the U.S. are turning to service providers for assistance in getting maximum value from hybrid cloud implementations, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens™ Private/Hybrid Cloud — Data Center Services report for the U.S. Public Sector finds that the use of managed cloud services, managed hosting and colocation by U.S. state, local and educational (SLED) agencies has risen by as much as 30 percent since 2020. Demand has grown following digital transformations triggered by the COVID-19 pandemic, which forced agencies to better accommodate remote work and digital constituent services. It is expected to keep growing as agencies seek to cost-effectively manage, scale and secure complex IT infrastructure.

“Many public-sector organizations that have implemented new technologies and services are just beginning to understand what they have created,” said Nathan Frey, partner and lead, ISG Public Sector, for the U.S. “Providers offer essential expertise and infrastructure.”

Agencies are adopting hybrid cloud models to enjoy the benefits of public and private clouds and colocation services for different types of workloads, the report says. They are taking on these complex environments despite a chronic IT labor shortage in the public sector, and managed service providers often provide the necessary coordination.

ISG predicts U.S. SLED organizations’ use of managed cloud services will increase by as much as 15 percent per year through at least 2027. Providers are tailoring services to meet requirements specific to the public sector. In addition to cloud management, scalability and security, providers often help agencies upgrade decades-old systems and move them to the cloud when modernization reveals the limitations of these technologies.

Many agencies that lack IT management and support expertise are using managed hosting, the report says. These services include server maintenance, security updates and troubleshooting for a fixed monthly fee, which makes budgeting easier.

Colocation remains a popular element of public-sector IT modernization, ISG says. As they migrate to the cloud, most agencies discover some legacy applications that require such tight control that they cannot be moved to a cloud or managed hosting platform. Colocation services offer pay-per-use pricing for enhanced security and compliance, scalability and disaster recovery at geographically dispersed sites.

“Colocation adoption is surging in the public sector,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “It gives agencies a secure and reliable foundation for handling growing data and security concerns.”

The report also explores other trends affecting public sector cloud use, including the effects of recent federal grants for SLED IT improvement and providers’ increasing interest in the sector.

For more insights into the cloud challenges of SLED organizations, including the obstacles created by fragmented cloud migration and the complexity of determining which data and applications can be moved, plus ISG’s advice on these topics, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Private/Hybrid Cloud — Data Center Services report for the U.S. Public Sector evaluates the capabilities of 38 providers across three quadrants: Managed Services, Managed Hosting and Colocation Services.

The report names Rackspace Technology as a Leader in all three quadrants. It names Ensono, Kyndryl and Unisys as Leaders in two quadrants each. Accenture, CGI, Equinix, IBM, Infosys, Iron Mountain, NTT Global Data Centers, TCS, TierPoint and Wipro are named as Leaders in one quadrant each.

In addition, Zones is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant.

In the area of customer experience, Green is named the global ISG CX Star Performer for 2024 among private/hybrid cloud service providers. Green earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

A customized version of the report is available from Zones.

The 2024 ISG Provider Lens™ Private/Hybrid Cloud — Data Center Services report for the U.S. Public Sector is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Mexico, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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