Magic Quadrant for Managed Hosting
Managed hosting solutions can be offered on both physical and virtualized infrastructures, including cloud infrastructure as a service. The market is mature, but cloud capabilities are disruptive, and vendors must be chosen with care.
This document was revised on 6 March 2012. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.
Managed hosting bundles Internet data center facilities together with provider managed network, storage and computing services. The infrastructure components may be physical or virtual, and may be dedicated or shared. At a minimum, the provider must manage the server OS, including the guest OS if virtualization is in use; the provider may optionally provide other managed and professional services related to the operations of the infrastructure, excluding management of the application itself. It is a productized, standardized service, with limited customization. It is sold as a stand-alone, without the requirement to bundle it with application development, application maintenance or other outsourcing.
This Magic Quadrant is focused on the enterprise-class, managed hosting market, regardless of whether the hosting is done on physical servers or a virtualized infrastructure. The following services are part of the covered market, and will collectively be referred to as "managed hosting" for the purposes of this Magic Quadrant's definitions:
- Managed dedicated hosting: This service includes physical servers dedicated to a single customer, owned and hosted by a service provider. At a minimum, server OS management must be included.
- Managed utility hosting: This service includes virtual machines (VMs) within a shared, multitenant environment that are owned and hosted by a service provider, and offered to the customer on a flexible capacity basis, generally by the month. At a minimum, server OS management must be included.
- Managed cloud hosting: This service includes a cloud infrastructure as a service (IaaS) platform — a standardized, highly automated environment, where computing resources, complemented by storage and networking capabilities, are owned and hosted by a service provider, and are offered to the customer on demand, generally by the hour. This offering may be public (multitenant) or a private (single-tenant) cloud IaaS. The customer must be able to self-service this infrastructure, but at a minimum, server OS management must be included.
- Managed hybrid hosting: This service mingles managed, dedicated hosting with cloud IaaS. The customer uses a mixture of dedicated physical servers and VMs on a cloud IaaS. At a minimum, server OS management must be included for some of the infrastructure, although the customer may mix a managed and self-service infrastructure.
In addition to server OS management, optional managed and professional services related to infrastructure operations may be offered, such as:
- Management of infrastructure software at the middleware layer, such as Web server software, application servers and database servers
- Management of storage, including backup and recovery
- Management of security
- Management of other 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 services are productized and standardized, although some providers offer customized services for specific customer needs that cannot be met with the standardized services. 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. Others prefer to choose from a menu of a la carte management services. For instance, some need only database administration services, while others want junior-level system administration tasks such as patch management handled for them, but want to do all the complex work themselves. Your choice depends on your needs and IT capabilities.
We separate the concept of a cloud IaaS platform from the concept of services that are delivered on top of that platform. Managed hosting is simply one of many services that can be delivered on a cloud IaaS platform, or more broadly, on an infrastructure that is created using a cloud management platform.
What Use Cases Are Covered by This Evaluation?
This Magic Quadrant is focused 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. (Content changes that do not impact the underlying infrastructure do not count toward the rate of change.)
- Web-based business applications hosting: Managed hosting for corporate intranets and Web-based applications delivered to users primarily within the enterprise. While most of these are custom applications, some may be commercial, off-the-shelf applications; Microsoft SharePoint hosting is a common use. These workloads often are relatively small, and do not have a high rate of change.
- Enterprise applications hosting: Managed hosting for the infrastructure underlying large commercial software applications, such as applications from Oracle, SAP and Lawson. These workloads frequently are complex and require specialized knowledge to operate optimally, but do not have a high rate of change. This is not SaaS — this is simply an infrastructure on which customers place these kinds of applications.
- Managed, on-demand infrastructure for multiple, general-purpose workloads: Managed hosting of flexible, self-provisioned infrastructure for multiple workloads that underlie a group of closely related applications. In the context of this Magic Quadrant, this use case focuses on IT operations management performed by humans; if you are primarily interested in automated IT operations management that is augmented by humans only where necessary, consult the "Magic Quadrant for Public Cloud Infrastructure as a Service."
Normally, these services are used for production environments, but many customers also obtain staging environments and development environments. Many managed hosting workloads are mission-critical, including commerce transactions and high-performance computing.
The first three use cases are typically tactical sourcing decisions that involve one application, a single group of closely related applications (such as everything 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.
The last, more general use case of managed infrastructure for multiple workloads may be a tactical decision to serve a particular business need (for instance, to service a marketing department that has a greater need for timeliness and agility than internal IT operations can provide), or it may be a strategic decision to migrate some or all of a business infrastructure into a service provider environment. In the latter case, cloud IaaS often is used to drive a data center transformation strategy. For this reason, customers with these needs may prefer to use providers that have extensive professional service capabilities, application hosting capabilities or general data center outsourcing (DCO) capabilities.
No service provider in the managed hosting market does everything well. While all vendors in this Magic Quadrant serve a global clientele, their data center footprints and locations vary significantly. As a result, it is important to match your use case with a vendor that excels in serving that particular need. 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, and thus examines a broad array of business factors; the quality of service delivered comprises 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.
Source: Gartner (March 2012)
AT&T is a global telecommunications carrier with a long track record of leadership in the hosting market. AT&T offers colocation, managed hosting on dedicated hardware and its VMware-based Synaptic Hosting platform, cloud IaaS on its Synaptic Compute as a Service (CaaS) platform, cloud storage and a content distribution network (CDN).
- AT&T is one of the few providers that can deliver enterprise application hosting and management for core ERP systems (SAP, Oracle and SharePoint) in conjunction with colocation, utility and cloud services.
- AT&T has a solid road map around hosted and cloud environments, and extends its as-a-service vision into mobile platforms, collaboration and unified communications. This will eventually allow AT&T to provide cost-effective, scalable integrated communication services.
- AT&T effectively tailors support, account management and strategic planning to the size and scope of its customers. It also has improved its ongoing customer support by adopting formal customer satisfaction programs (Net Promoter scores).
- Use case(s): All use cases are addressed, including complex managed, cloud and ERP application hosting.
- With the expanding product portfolio AT&T delivers, Gartner clients report that the company frequently does not position the right solution for the client or prospect. This has led to AT&T being disqualified from several shortlists later in the competitive process.
- AT&T currently does not support any bridging between managed hosting and synaptic computing as a service as a formal option in its portfolio.
- As with other carriers in the hosting space, many enterprises also use AT&T for network services. Although it provides some limited discounts for cross-bundling services (e.g., MPLS, voice and hosting), AT&T needs to more aggressively standardize and market this option, and show concrete savings to users that choose it as their one provider for network and hosting.
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 and utility computing on its production BT Compute platform, with new functionality tested and deployed on its "innovation" platform.
- The BT vision of the cloud, like that of many network providers, encompasses computing, storage, voice and application support, which is increasingly appealing to enterprises with more and more converged IP networks.
- 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.
- BT is developing a suite of modular cloud pods to support multiple vertical, geographic and availability requirements. These solutions will include multiple hardware, device and software options to hit several different price points.
- Use case(s): Larger global enterprises and government organizations needing business, Web and ERP hosting, as well as those that have managed, on-premises cloud services.
- BT sales capacity in the U.S. is limited, and is focused primarily on certain vertical markets (financial, pharmaceutical, consumer packaged goods [CPG] and healthcare) and Fortune 500 enterprises. Organizations outside these specific vertical industries do not appear on Gartner's client shortlist for managed hosting and IaaS.
- Although BT's initial foray into utility and IaaS offerings have public and private options, Gartner witness BT focusing sales and marketing efforts primarily on more customized, dedicated private deployments.
Carpathia Hosting is a small, independent Web hoster with a focus on the midmarket and the government vertical market, and an emphasis on complex and compliance solutions. It offers colocation, managed hosting, Xen and VMware cloud IaaS, and cloud storage.
- Carpathia continues to develop its core strength in compliance-based hosting platforms. Few providers in the hosting and cloud market provide life cycle management services in government, healthcare and retail compliance environments.
- Carpathia has created cloud offerings that are dynamic and well-suited to enterprises that need both highly and lightly managed requirement. Its ability to support both Citrix XenServer and VMware virtualization will appeal to enterprises that have diverse virtualization requirements.
- Carpathia has one of the most knowledgeable and responsive sales teams, especially in creating solutions for complex, hybrid hosting and cloud environments.
- Use case(s): Private- and public-sector organizations that require compliance-centric platforms to support; and Web-based business applications and managed infrastructure for virtual data center capabilities for general-purpose workloads.
- Carpathia relies heavily on partners such as Equinix for sales and marketing reach in European and Asian locations. This represents a low-risk strategy for market expansion, but does little to help Carpathia strengthen its market and brand awareness.
- Carpathia has not yet built cloud services in any markets outside the U.S.; this, along with its limited brand awareness outside public sector organizations, will keep Carpathia from growing as fast as its strongly branded competitors.
- Carpathia does not currently provide application management or support ERP applications.
CSC is a large, traditional IT outsourcer with a broad range of DCO capabilities. CSC offers ERP and managed hosting, along with VMware-based cloud IaaS (public and private).
- CSC continues to push the boundaries of hosting and cloud offerings into the desktop, platform and software domains. CSC delivers SAP, Oracle and JD Edwards on its Infrastructure utility platform in both North America and Europe.
- CSC, which relies on core delivery partners such VCE, VMware, Skytap and Cisco, has proactively taken steps to improve cycle times, institute codevelopment practices and reduce redundant delivery costs. These continual steps have improved CSC's ability to rapidly provision the Vblock architecture across its hosting and cloud customer base, as well regain control of its destiny around its configuration and architectures.
- CSC has changed from a distributed, transaction-based support and service delivery model to an ITIL-certified, dedicated support team with service delivery managers who take ownership of client issues.
- Use case(s): Larger enterprises and public-sector organizations for most use cases, including enterprise application hosting, cloud IaaS and managed hosting.
- Despite its rapid innovation cycle, CSC has slowly acknowledged gaps in its service portfolio around comprehensive billing/chargeback, integrated monitoring and asset/configuration management. In North America, CSC has already implemented solutions by Nimsoft and Blazent to address those gaps; the rest of the world deployment time scale is being planned.
- The pricing of CSC's cloud infrastructure and storage services is highly variable, and dependent on region, client size and associated services. Gartner has witnessed several instances where parity of pricing failed to exist in similar contract reviews. CSC standardized its price list for cloud offerings in January 2012.
- CSC does support hybrid cloud environments with dual-site replication, but this is not yet a productized offering for current customers.
Datapipe is a smaller, rapidly growing and independently managed hoster and cloud IaaS provider with a global footprint and presence. Datapipe offers colocation and managed hosting, along with a VMware-based private cloud IaaS called Stratosphere. Datapipe also offers managed services on top of Amazon's infrastructure.
- Datapipe has competencies equivalent to much larger providers, and continues to mature in sales and operations to support additional complexity in customer configurations.
- Datapipe can effectively deliver high-quality, competitively priced managed hosting to enterprises of most sizes, and has greatly improved its ability to provide governance and contract management with larger enterprises.
- Datapipe is one of a limited set of providers that delivers end-to-end PCI compliance services, including device management through several partnerships.
- Use case(s): E-business and Web-based application hosting, and complex managed and managed infrastructures for general-purpose workloads.
- Despite improvements to its cloud platform, Datapipe trails certain competitors in features, including portal usability, role-based access and self-service billing.
- Datapipe's large portfolio of services, including Amazon and RightScale partnerships, can be confusing for enterprises that do not have a blueprint for utilizing cloud services.
- Despite increasing brand awareness, Datapipe must be more aggressive in marketing its capabilities in an increasingly crowded cloud and hosting landscape.
Fujitsu is a highly diversified, global hardware and service organization that targets government, midsize and large global multinationals that have diverse infrastructure requirements. Fujitsu provides complex, managed and ERP hosting, as well as several variants of public, private and on-premises options.
- Fujitsu supports one of the most diverse service portfolios, including complex managed, cloud IaaS and enterprise application hosting. This includes an IaaS-based SAP offering, which currently is a strong global offering.
- Fujitsu has incorporated key partners (Cordys and Microsoft) into its cloud product portfolio to bring its capabilities up to the platform and application level, and to support integration.
- Despite its vast array of hosting and cloud services, Fujitsu provides a single-sign-on management portal, and allows clients with multiple geographic sites to be managed in the country of their choosing.
- Use case(s): Larger global enterprises needing business, Web and ERP hosting, as well as those that are managed on-premises cloud services.
- Compared with most current, established IaaS offerings in the market, Fujitsu's marketing and product strategy around cloud services is overly complex, and does not resonate as crisply as its competitors' more infrastructure-focused offerings.
- Fujitsu does not have a strong hosting and cloud market presence in North America, which keeps it off most Gartner client cloud service radarscopes. The company must aggressively invest in sales capacity, marketing and promotion to raise awareness, thus ensuring that it enters the competitive landscape.
GoGrid is a smaller, independent IaaS and hosting provider with a growing global footprint and presence. Its primary focus is its Xen-based cloud IaaS service, which it offers as a public cloud, a private cloud and on-premises software. It also offers managed hosting and colocation.
- GoGrid has diversified its marketing and messaging to support more general-purpose enterprise workloads, in addition to being a viable alternative to Amazon Web Services. This, along with the ability to bridge colocation, dedicated and IaaS environments, should land GoGrid on substantially more enterprise shortlists in the future.
- GoGrid's partnerships with Digital Realty Trust and Equinix are addressing a fast-growing segment of turnkey hosted private clouds, which will allow GoGrid to market to larger organizations that want to operate their own private cloud infrastructure at third-party data centers.
- GoGrid has expanded its data center and sales presence in the U.S. and the Netherlands, which will make its offering much more attractive to larger multinationals.
- Use case(s): E-business and Web-based application hosting, complex configurations and managed infrastructures for general-purpose workloads.
- Despite having a reasonably robust service portfolio, GoGrid's marketing and messaging struggles to consistently reach enterprise clients outside the media, technology and telecom vertical industries.
- GoGrid's public cloud IaaS offering, which is developer-centric, continues to provide limited role-based account management, network access control and its own API.
- GoGrid does not provide complex managed services, including database and application management.
Hosting.com is a smaller, independently managed hoster with a focus on small or midsize businesses (SMBs) and midsize enterprises. It offers colocation and managed hosting, along with VMware-based cloud IaaS.
- Hosting.com is extremely responsive in contract and pricing negotiations, and Gartner clients report a positive experience through user acceptance testing and onboarding.
- Hosting.com provides cloud assessment professional services, including application dependency mapping, migration assistance and on-site capacity testing. Most of these professional services are provided to larger enterprises and with considerable price tags.
- Hosting.com has leveraged its vCloud data center certification extremely well to build advanced storage area network (SAN) and hypervisor-based replication capabilities based on VMware's Site Recovery Manager (SRM) 5 to replicate between internal data centers and customer premises sites.
- Use case(s): E-business and Web-based application hosting, and complex managed and managed infrastructures for general-purpose workloads.
- As international expansion continues to be a major cloud adoption driver, Hosting.com still does not have data center capacity outside the U.S., or a communicated plan to support international partnerships or expansion.
- Despite increasing brand awareness around its cloud and recovery services, Hosting.com must be more aggressive in marketing its capabilities in an increasingly crowded cloud and hosting landscape.
- Hosting.com is growing via acquisitions (NeoSpire in 2011 being the most recent). As a successful provider with an attractive revenue profile, Hosting.com is likely to be an acquisition target, although it wishes to remain an independent business.
IBM is a highly diversified technology company, and its cloud computing strategy unifies components of its portfolio of global products and services. It offers colocation (on a limited basis), managed hosting, ERP hosting and cloud IaaS.
- IBM can bring a multitude of resources to bear, including business consulting and professional services, to design complex and custom solutions.
- IBM's SmartCloud for SAP is one of the few offerings addressing a critical need for enterprises that need cost-effective scaling for SAP.
- IBM has a strong deployment of SmartCloud Enterprise in six global data centers (two in the U.S., and one each in Canada, Singapore, Germany and Japan), with 18 expected by the end of 2012.
- Use case(s): Larger deployments for e-business and Web-based application hosting, as well as complex managed hosting for production and test/development.
- IBM's messaging and marketing around SmartCloud does not resonate with all levels and sizes of enterprises, including those looking for low-cost infrastructure management for general-purpose workloads.
- Gartner clients continue to report that IBM sales is difficult to engage, and even unresponsive for smaller configurations, proof of concepts and stand-alone traditionally managed hosting deals.
- IBM solutions, including managed hosting and application hosting, continue to be premium-priced in the market.
Layered Tech is a smaller, independently managed Web hoster with a focus on compliance, midmarket and enterprises. It offers managed hosting, a VMware-based IaaS offering, an AppLogic-based cloud offering, and colocation and self-managed dedicated hosting.
- With the 2010 acquisition of GSI Hosting, Layered Tech is one of the only providers that can deliver comprehensive PCI Data Security Standards (DSS) and Health Insurance Portability and Accountability Act (HIPAA)-based hosting offerings, including a guarantee that a Layered Tech-hosted infrastructure will pass any compliance-based audit.
- Layered Tech's service offerings are extremely price-competitive, and its sales and account management teams are responsive for presales and implementations.
- Use case(s): Organizations that require compliance-centric platforms, specifically PCI DSS to support Web-based business applications, as well as a managed infrastructure for virtual data center capabilities for general-purpose workloads.
- Layered Tech's message in the cloud space does not reach most enterprises outside those concerned with managing compliant workloads in the cloud.
- Layered Tech does not have any stated plans to provide application management or monitoring for ERP applications.
NaviSite, a Time Warner Cable company, is a managed Web hoster with a focus on the midmarket, and on application management and hosting. It also provides colocation (limited), managed hosting and a VMware-based cloud.
- NaviSite has greatly improved its financial viability and organizational stability with its acquisition by Time Warner Cable. This helps answer longstanding viability concerns held by Gartner and NaviSite prospects.
- The NaviSite portfolio of managed hosting, ERP and e-business-centric application hosting, colocation and cloud IaaS support most use cases for midsize to large enterprise requirements and workloads. NaviSite also offers its managed applications on NaviCloud to reduce cost and provisioning time frames.
- NaviSite, which has generally marketed to midsize enterprises, is winning larger, more complex managed hosting and cloud contracts based on the features, security and scalability of the NaviCloud platform.
- Use case(s): All use cases, including enterprise application hosting, cloud IaaS and managed hosting.
- Despite having an extremely strong portfolio of services and capabilities, NaviSite continues to struggle to consistently market and sell its offerings to a wide audience. NaviSite plans to use the Time Warner Cable sales channel to increase exposure in certain markets, but Gartner has yet to see any traction.
- Unlike its competitors, NaviSite has been slower to build its capabilities beyond the U.K., and into additional global markets including Germany, Singapore, Australia and India.
- Although service and support have notably improved at NaviSite, most customers report variability when customer issues span multiple platforms, including cloud and managed applications.
OpSource, a Dimension Data company, is a cloud and managed hoster that has historically focused on SaaS enablement, but has broadened its target market with cloud-based offerings. It offers managed hosting, public cloud IaaS and a variety of SaaS-enablement services.
- Acquisition by Dimension Data gives OpSource a strong global distribution arm, as well as additional expertise in adjacent hosted offerings, including unified communications and SaaS.
- OpSource's IaaS offering provides market-leading functionality for control (role-based access), security (virtual LAN [VLAN] segmentation and customizable firewalls) and usage reporting at a competitive market price point.
- OpSource's SLAs continue to be among the strongest in the industry.
- Use case(s): E-business and Web-based application hosting, and general-purpose workloads for enterprises, carriers and SaaS providers.
- OpSource does provide application management and billing services for SaaS and Web-based applications, but these do not extend to application management for ERP and packaged applications.
- Since OpSource's historical client base has been technology companies, SaaS and service providers, it has trailed its competitors in providing customized, multitier account management.
- Once a private independent cloud hoster, OpSource is now one component of Dimension Data's cloud strategy. Dimension Data, owned by NTT Holdings, has historically adopted a slower pace of integration, and lags behind the market on product integration and messaging.
Rackspace is an independent cloud IaaS and managed hoster, and is a publicly traded company. It offers managed hosting, hybrid hosting, private cloud IaaS, cloud storage, cloud platforms as a service (PaaSs), cloud monitoring, hosted virtual desktops and SaaS (email and SharePoint). It is the primary sponsor of OpenStack, an open-source cloud stack, and its Cloud Builders business provides traditional, commercial open-source support and the professional services around it.
- Rackspace has taken demonstrable steps to develop an enterprise-centric service offering to dispel the notion that it only supports SMBs and Web-centric organizations. This has involved hiring senior-level sales and management, defining segment-specific sales and support, and global expansion, as well as providing dedicated resources for onboarding and implementations. Rackspace also created a unit called Rackspace Advisory Services, which provides readiness assessments, custom design services and cloud strategies.
- Rackspace provides a commercial service called RackConnect, which allows customers to bridge multiple environments (dedicated, public and private cloud) over the same virtual network with security and access control. Rackspace is one of the few providers in this Magic Quadrant that has this capability in general release at publication time of this research.
- With the formation of Rackspace Cloud Builders (formerly Anso Labs), Rackspace has vastly improved its ability to provide managed services for OpenStack-based private clouds inside and outside Rackspace data centers. Gartner believes that the OpenStack consortium will be a strong alternative to private cloud platform competitors, though it is far from an enterprise turnkey solution, as it lacks advanced monitoring and compliance reporting.
- Use case(s): E-business and Web-application-centric hosting, and cloud IaaS.
- Rackspace's focus on augmenting its hosting portfolio with public and private cloud offerings has left a void for enterprises that are looking for considerable application management capabilities for custom and packaged ERP applications.
- Gartner witnessed a slight dilution of focus and quality of support in Rackspace in 2011. This manifested in customer feedback in presales and ongoing customer engagements, and was most evident when customer requirements became increasingly tailored to existing customer business processes.
- Unlike its peers in the market, Rackspace has been slower to build its capabilities beyond the U.K. and into additional global markets, including Germany, Singapore, Australia and India.
Savvis, a CenturyLink company, is a cloud and managed hoster with a substantial global footprint, as well as a long track record of leadership in the hosting market. It provides colocation, managed hosting, proximity services and a VMware-based IaaS offering.
- Despite being acquired by CenturyLink, Savvis has maintained a nearly autonomous business unit, with most of its executives, products and data center geographies intact. This, however, could change as the broader CenturyLink market strategy is unveiled in 2012.
- Savvis maintains one of the most aggressive expansion plans for foundation hosting and cloud services, including additional nodes in Europe, Asia/Pacific, India and South America.
- Savvis continues to lead the market with one of the broadest and most relevant product portfolios in the industry. Savvis also develops and refines its service portfolio on aggressive cycles, which allows it to launch services into the market sooner than its peers.
- Use case(s): E-business and Web-based application hosting, and complex managed and managed infrastructures for general-purpose workloads.
- The acquisition by CenturyLink could place the managed hosting and cloud business in competition for capital funding, sales resources and marketing resources with CenturyLink's other carrier services.
- Despite having a deep product portfolio, Savvis currently does not provide application management for ERP and packaged applications.
- The focus of Savvis' parent company, CenturyLink, is primarily as an incumbent local-exchange carrier in the Southern and Midwestern U.S., serving consumers and small businesses. Only two business units focus on larger national and international business requirements — CenturyLink BMG (formerly Qwest BMG), which serves midsize and large businesses, and Savvis, whose solutions are premium-priced and target large (multinational) enterprises.
SoftLayer is an independent Web hoster with a growing global footprint and an SMB focus. It also offers cloud storage, a cloud CDN in partnership with Internap, private cloud IaaS, colocation, dedicated hosting and managed hosting.
- SoftLayer continues to invest and build market-leading automation and self-service capabilities into its client provisioning portal.
- Pricing for SoftLayer dedicated and cloud services are among the most aggressive in the industry, and allow clients to deploy images on dedicated or virtualized hardware for relatively little incremental cost.
- Although not a carrier, SoftLayer has built a large, high-capacity global private and Internet-centric peered network between its global data center locations. This allows enterprises to multihome connections from multiple carriers, as well as providing capacity for bandwidth-intensive applications.
- Use case(s): Self-managed e-business and Web-based application hosting, and complex managed and managed infrastructures for general-purpose workloads.
- Despite the acquisition of the Planet, which included managed services, Gartner clients report that SoftLayer's managed services are more automated, rigid and focused solely on run-state environments, and less on business process.
- Aside from database fine-tuning and management, SoftLayer does not provide other management services above the OS, including content management, ERP or collaboration.
- Although SoftLayer has made incremental progress, its brand and marketing message, which focuses on self- and lightly managed services, predominantly resonates with technology companies, SMBs and startups.
SunGard Availability Services is a private, large business continuity solutions provider with global reach. It offers colocation, managed hosting ERP hosting and VMware-based cloud IaaS.
- SunGard has a deep portfolio in consulting, managed infrastructure, network, application and software services, in addition to colocation, hosting and cloud IaaS.
- SunGard excels at providing incumbent customers with a simple on-ramp from colocation and basic managed services to IaaS and private cloud services. It also is a strong provider of SAP application management and hosting.
- SunGard has a consistent ITIL V3-centric operations methodology, and support for PCI-DSS in all data center locations.
- Use case(s): E-business and Web-based application hosting, ERP and complex managed hosting.
- SunGard has improved its operational agility and responsiveness for critical issues, but Gartner clients report that less critical issues and modifications continue to take longer than market peers to resolve.
- Although SunGard has shown improvement, Gartner clients continue to report that its engineering support is rigid, is conventional and does not think outside the box to solve client issues, resulting in longer issue resolution times.
Terremark, a Verizon company, is the result of Verizon's 2011 acquisition of Terremark, a cloud IaaS and managed hoster. Terremark also offers private cloud IaaS, managed hosting and colocation on global basis.
- Terremark 's comprehensive service portfolio provides solutions for most enterprise workloads (excluding application management) in most industrialized and emerging markets. The acquisition cloud broker CloudSwitch will further allow clients to bridge multiple environments.
- Terremark has made strong strides to improve customer support from presales responsiveness to minimizing ongoing operational issues. It also has improved SLAs to include device- and transaction-based metrics.
- Terremark continues to be a very strong provider for the managed and cloud services public sectors, compliance and financial services, including PCI VM isolation.
- Use case(s): E-business and Web-based application hosting, and managed infrastructures for general-purpose workloads.
- Terremark does provide business application monitoring, but does not provide application management, consulting or support services (Basis, etc.) for SAP, Oracle, JD Edwards or Lawson.
- Although the integration of Terremark into the larger Verizon portfolio has not produced any significant performance issue or customer churn, Gartner has witnessed noticeable senior-level management and sales and account management turnover. This has the potential to alter the vision and execution of the Terremark infrastructure division, which competes for funding and capital with other core Verizon communication services.
- As enterprises move toward consolidating services and contracts to save money and increase leverage, Verizon has not effectively created incentives for them to purchase Terremark services in conjunction with network, wireless and unified communications services.
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, a changed evaluation criteria, or a change of focus by a vendor.
- BT Global Services
- Amazon Web Services
- NTT Communications
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 outsourcing.
- They must have the ability to scale an application on demand using a shared, multitenant infrastructure; specifically, they must have a utility hosting platform, or a public cloud compute IaaS offering.
- This service must be enterprise-class, offering 24/7 customer support (including phone support), SLAs and the ability to scale an application beyond the capacity of a single physical server.
- They must have significant market presence, as indicated by a projected 2011 managed hosting revenue of at least $50 million.
- They must have demonstrable global presence. They must have data centers in at least two major geographies (North America, Western Europe or Asia); or they must have at least two data centers in different cities, and derive at least 20% of their revenue from customers outside the region in which they have their headquarters.
Products and Services Excluded From This Evaluation
Please note that this Magic Quadrant exclusively covers managed hosting, and managed hosting only. That means the following are explicitly excluded from this evaluation:
- Colocation: Although many managed hosting providers also offer colocation, the quality of colocation offerings is not evaluated in this Magic Quadrant, and this Magic Quadrant should not be used to selection colocation 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, consult "Magic Quadrant for Public Cloud Infrastructure as a Service."
- DCO, remote infrastructure management (RIM) and application management services: 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 Internet 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 the "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, North America" and "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services, Europe."
- Cloud management platforms (CMPs): Cloud-building hardware and software — software such as Citrix CloudStack, OpenStack and BMC Cloud Lifecycle Manager, as well as turnkey solutions such as HP CloudSystem Matrix — are not evaluated in this Magic Quadrant, which is restricted solely to services.
Vendors Considered, but Not Included
This Magic Quadrant is global, but most participants are U.S.-based organizations. This primarily reflects the fact that successful U.S.-based service providers tend to become global, while many successful providers in other parts of the world choose to remain regional players. It also reflects that fewer providers outside the U.S. have launched cloud IaaS offerings. However, we see a strong demand for these services on a global basis, driven by multinational corporations that need to expand operations or increase market penetration outside their headquarters region, and by cloud-driven interest in countries that previously had not had a significant demand for managed hosting.
Many markets, including Australia, Brazil, China, Japan and India, are currently underserved. Furthermore, many European companies prefer in-country services; markets such as France, Germany and Switzerland also are underserved. These countries, along with Canada, the U.K., and the Netherlands, are targets of provider expansion, especially in the form of additional data centers for cloud IaaS.
Some providers did not qualify for this Magic Quadrant due to their inability to demonstrate sufficient revenue to qualify for inclusion. The following are some smaller vendors we considered, but were not able to include. They are noted here because they are distinctive in the market in some way.
- Bluelock: A U.S.-based, VMware-certified vCloud data center service provider focused on cloud IaaS. It is profiled in greater detail in the "Magic Quadrant for Public Cloud Infrastructure as a Service," where it is rated a Leader.
- FireHost: A U.S.-based provider focused on providing cloud IaaS solutions to companies with compliance needs, including PCI-compliant hosting.
- Internap: A U.S.-based provider focused on an application-fluent network service strategy that includes infrastructure services.
- Secure-24: A U.S.-based provider focused on enterprise application hosting, with deep competencies in SAP and Oracle applications.
Thousands of providers offer managed hosting services, and hundreds that focus on this market or derive a significant amount of revenue from it. Many small providers can provide excellent services. Do not let lack of inclusion in this Magic Quadrant deter you from evaluating such providers, since we do not consider service quality when determining inclusion, and insufficient revenue and geographic presence often disqualify otherwise excellent providers.
The most heavily weighted criteria for a hoster's ability to execute are service offering and service excellence, as reflected in the customer experience with sales, support and operations. Overall business viability, as reflected in the ability to successfully service a customer over a three-year period without significant disruption, and the service provider's track record also contribute to this rating. Here, we emphasize immediate capabilities for the use cases that we see most often.
Table 1 shows weightings for our specific evaluation criteria.
Source: Gartner (March 2012)
This market continues to experience rapid evolution. Consequently, it is vital that service providers understand the future needs of customers, have a realistic but aggressive road map for cloud services and are able to exploit new technologies in innovative ways. The full context of the vendor's vision is important, as cloud concepts may pervade its entire business. We also evaluate the vendor's approach to growing its business, including its strategy for marketing and sales, international expansion and vertical market solutions.
Table 2 shows weightings for our specific evaluation criteria.
Source: Gartner (March 2012)
Leaders 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; enterprise application hosting customers should sign three- to five-year contracts with these companies. 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, or in contracts of one year or less.
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; enterprise application hosting customers should sign three- to five-year contracts with these companies. 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, or in contracts of one year or less, and should exercise caution, as these vendors likely have not proved themselves in cloud services.
Visionaries have an innovative and disruptive approach to the market, but their services are new and unproved, 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 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 are typically specialists with more limited product portfolios, or are emerging vendors. They may serve one use case particularly well, and may be 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.
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 also offer shared and virtualized utility hosting platforms, or cloud compute IaaS. Indeed, some managed hosting providers are primarily or solely focused on cloud IaaS.
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 utility hosting, and dedicated database servers. This has spurred providers to develop and productize hybrid hosting services that interconnect colocation, 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. Managed hosting providers should be chosen with care.
The market for managed hosting is mature, but the introduction of cloud IaaS has driven significant evolution in the market over the last three years, adding use cases related to managed cloud IaaS solutions. 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 comprises 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 humans performing managed services, consult "Magic Quadrant for Public Cloud Infrastructure as a Service."
Buyers of managed hosting should be aware of the key aspects of the market that are detailed 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 perspective or a cost perspective. Instead, you should 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 of 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, the ability to handle seasonal needs without overbuying capacity at other times, or 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 instance, if you need to add large amounts of capacity on five minutes' notice, VMs will be a must — but some needs, especially seasonal ones, often can be addressed by flexible contracting.
Five types of infrastructure are provided by managed hosters, although not all providers offer all five types:
- Dedicated servers without virtualization
- VMs on dedicated servers without customer self-provisioning
- VMs on dedicated servers with optional customer self-provisioning, known as private cloud IaaS
- VMs on shared servers, without customer self-provisioning, known as utility hosting
- VMs on shared servers, with optional customer self-provisioning, known as public cloud IaaS
Managed hosting providers may offer a colocation option for equipment that they do not want to manage, but ties into the overall solution.
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
Broadly, many managed hosting providers initially architected their cloud IaaS platforms primarily with a self-service model in mind — 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 following is common:
- 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; 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 systems 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.
Furthermore, rapid market evolution, along with the rapid 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 rapid 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 hard 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.
We expect that successful service providers will, within the next five years, fully converge their infrastructure platforms, and will provide the following 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 still support and sell a legacy managed hosting platform, along with whatever their infrastructure solution will be going forward.
All Infrastructure Requires Management
All infrastructure types require management. Prospective customers often assume that cloud IaaS requires less management; they frequently assume that because they're in the cloud, IT operations management functions such as patch management, backups and disaster recovery are automatically taken care of for them. Broadly, this is not true, although providers may bundle managed services with cloud IaaS, and 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:
- 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 their 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.
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 the more things will be done manually, which is more prone to error.
Standardization becomes particularly important when you consider using a provider's utility hosting or public cloud IaaS platforms. These environments are highly standardized so you can only use them if you can accept the standard way they are architected.
If you need a lot of customization in your managed hosting environment, ask the provider what the difference is in cost between its standard approach and the custom approach you desire. Ask yourself if the customizations you need generates business value, or are just a matter of 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 complex, or when it crosses multiple groups within the company — for instance, a customer that has a persistent problem with network performance, where engineers that support the network elements, and the systems finger-point with no one taking ownership for getting the problems resolved.
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, you will want to be sure your provider has the appropriate project management resources available.
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 catch or overtake more 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, obtain engineering expertise with new technologies and 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; 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.
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, service-level agreements 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.
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.