Magic Quadrant for Cloud-Enabled Managed Hosting, Asia/Pacific

Analyst(s):

To Chee Eng, Kenshi Tazaki, Vincent Fu, Arup Roy

Summary

Many providers offer cloud-enabled managed hosting services in Asia/Pacific, primarily for Mode 1 IT requirements, with early hybrid cloud capabilities. This Magic Quadrant helps infrastructure and operations leaders choose providers that can support their use cases and geographic requirements.

Market Definition/Description

The cloud-enabled managed hosting (CEMH) market deals in standardized, productized hosting offerings that combine a cloud-enabled system infrastructure (CESI) platform — comprising compute, network and storage hardware — with cloud management platform software to facilitate self-service and rapid provisioning with managed services. To be considered in this Magic Quadrant, the service requires standardized deployment across all customers and uses a single code base. A service provider must supply server OS management services, including guest OS instances when virtualization is used. The provider may provide managed and professional services relating to the infrastructure's deployment and operation.

CEMH allows only limited customization. It is sold on a stand-alone basis, with no requirement to buy it bundled with, for example, application development, application maintenance or data center outsourcing (DCO) services.

Customers must be able to access a self-service interface. A service provider can potentially intervene in the self-service workflow to manually approve, deny or alter a customer's requests, as long as the provisioning requested is fulfilled in a fully automated manner thereafter. Managed services (such as OS backups, patching and monitoring) must be available to customers on commitments of less than one year.

This Magic Quadrant focuses on the enterprise-class CEMH market. Multiple delivery models are used in this market:

• Multitenant, on the provider's premises: Compute, storage and networking hardware is shared by many customers, housed in the service provider's facilities and fully managed by that provider. This is the most common use case. It encompasses cloud infrastructure as a service (IaaS) offerings for which the provider offers management of guest OS instances.

• Single-tenant, on the provider's premises: Compute and storage hardware is dedicated to one customer and housed in the service provider's facilities.

• Single-tenant, on the customer's premises: Compute, storage and networking hardware is dedicated to one customer and housed in that customer's data center facilities, but it is owned and managed by the service provider in a nearly identical fashion to the multitenant and single-tenant provider premises approaches.

In addition to server OS management, managed and professional services related to infrastructure operations may be offered, 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 host-based and network-based security functions

• Management of network devices, such as application delivery controllers

• Professional services associated with hosting, such as architecture consultation, capacity planning, performance testing, security auditing and data center migration

CEMH services must be available to customers on contracts not exceeding one year. Customers may opt for longer contracts of one to three years to secure greater overall discounts, but this is at their discretion. CEMH should provide customers the flexibility to elastically change the amount of capacity and managed services in use, without requiring a contract alteration.

Use Cases Covered by This Magic Quadrant

This Magic Quadrant focuses on the following common use cases, independent of the type or types of infrastructure used for the associated workloads:

• E-business hosting — For digital marketing sites, e-commerce websites, SaaS, social websites, and similar modern online properties and applications. These workloads are often complex and are associated with a high rate of change in systems and application infrastructure.

• Web-based business application hosting — For corporate intranets and web-based applications delivered to users primarily within enterprises. The applications may be commercial software or developed in-house; workloads are often relatively static, and they do not have a high rate of change.

• Enterprise application hosting — Managed hosting for the infrastructure supporting large commercial software applications, such as those of Oracle, SAP and other enterprise software vendors. These workloads are often complex and require specialized knowledge to operate optimally, but they do not have a high rate of change.

All three use cases typically involve tactical sourcing decisions that center on one application or a single group of closely related applications. They are typically best served by a provider using best-of-breed technologies, with strong operational expertise in similar solutions. However, many customers expand their use of hosting over time, and the choice of provider may become a strategic decision.

A substantive amount of CEMH is bought for Mode 1 traditional IT, with an emphasis on cost reduction, safety and security. Service providers are beginning to support hybrid cloud — in particular, the hyperscale cloud providers — for Mode 2 IT, which places emphasis on developer productivity and business agility. This Magic Quadrant considers customer requirements and sourcing patterns, as well as service provider initiatives to support customer needs.

It is difficult to find a provider that excels in all use cases or geography — providers may be leaders in some areas but lag behind in others. As a result, it is important to match your use case with a vendor that excels at meeting your particular needs. Smaller providers may do one thing well, but they may not have a comprehensive set of services that enables them to address a broad array of use cases.

It is important to note that this Magic Quadrant shows the overall position of a vendor in the Asia/Pacific CEMH market; it does not consider a provider's strength in other adjacent areas in IT services. Therefore, it is important to look beyond the major players in the Magic Quadrant when selecting a service provider, especially if you have a specific need. The most appropriate vendor for your needs might, for example, be a Niche Player.

Gartner publishes a related Magic Quadrant report for Europe (see "Magic Quadrant for Managed Hybrid Cloud Hosting, Europe" ).

Types of Business Covered by This Magic Quadrant

This Magic Quadrant focuses on CEMH services for the following types of business:

• Western multinational companies (MNCs) operating in Asia/Pacific: These businesses typically host their IT infrastructure in one or two regional locations (hubs), typically Singapore and Hong Kong, and — to a lesser extent — Japan and Australia because fewer MNCs have regional headquarters there. In some instances, they may require local hosting in India for back-end IT operations and in China to support their large businesses there. Providers that address this segment must have presence in both Singapore and Hong Kong and, to a lesser extent, in the other markets.

• Asia/Pacific businesses, including government and midmarket companies: Their operations are typically domestic in nature. They require their IT infrastructure to be located within their markets for a variety of reasons, of which data security, data sovereignty and proximity hosting for application performance are the most important.

Magic Quadrant

Source: Gartner (October 2016)

Vendor Strengths and Cautions

CenturyLink

CenturyLink is a global communications service provider (CSP), with a track record in managed hosting in the U.S. and Europe. It targets enterprises, including MNCs. It offers multitenant and single-tenant services. Its cloud data centers in Australia, Singapore, Hong Kong, Japan, India and China are connected to its data centers in the U.S. and Europe to provide global coverage.

Strengths

• CenturyLink has a competitive cloud platform. CenturyLink Cloud offers cloud-native capabilities, an easy-to-use portal, and good governance and management features. It also offers a high level of automation for provisioning and management of managed services. It has a broad range of managed services, with support for databases, storage and disaster recovery, security, and select applications such as SAP and SAP Hana. It is also a provider for SAP Hana Enterprise Cloud (HEC).

• Its recent acquisition of ElasticBox, a multicloud application management service, will enable customers to orchestrate the deployment of applications to more than 12 cloud providers and create a self-service catalog of applications and infrastructure via a single pane of glass.

• It is reporting sustained strong revenue growth, with revenue contribution from both MNCs and Asian enterprises. Part of its growth is due to its focus on partnerships with strong local players in the past few years to address domestic opportunities in multiple markets, including China and India.

Cautions

• CenturyLink currently does not support third-party cloud providers, such as Amazon Web Services (AWS) or Microsoft Azure, which is an increasingly important requirement for enterprises in Asia. Its ElasticBox acquisition is new, and it has not been integrated into its cloud platform. It is still in the process of setting up direct Multiprotocol Label Switching (MPLS) connections to AWS and Microsoft Azure in the Asia region.

• Its strategy to evolve beyond infrastructure services into a more broad-based IT services provider will require a new level of investment in IT skills. It is in the early stages of implementing the strategy, with support for a limited range of applications. It will be increasingly competing against large IT services providers.

• CenturyLink has multiple public cloud IaaS offerings. It is focusing its development on its CenturyLink Cloud, with no development in its other platforms. Customers of the earlier platforms should plan to migrate to the new platform.

CtrlS Datacenters

CtrlS Datacenters is a major data center and managed hosting provider in India. It targets enterprises. CtrlS offers multitenant and single-tenant services. Its cloud data centers are located in India (Hyderabad, Mumbai and Delhi), Singapore, Thailand, and Malaysia. It also has data centers in the Middle East and the U.S.

Strengths

• CtrlS offers high-availability services through its high-grade data centers, multiavailability zones and four-way disaster recovery architecture, with a zero data loss guarantee backed by SLAs. Due to this implementation, it is particularly strong in the banking and finance sector. It reported strong revenue growth in the past three years.

• It provides a wide range of managed services, including security, middleware and databases. It supports a wide range of databases, including Oracle, MySQL, Microsoft SQL Server, MongoDB and NoSQL. It has enhanced its security capabilities significantly, offering complete life cycle management of security of data and a single SLA from detection to remediation.

• It has launched a community cloud for the banking and finance sector in India. It is highly secure and meets the requirements of the Reserve Bank of India. It is deploying services for eight payment banks. It has also built a community cloud for SAP customers, with good initial adoption. It plans to build similar clouds for the insurance and e-commerce sectors.

Cautions

• CtrlS is expanding its presence outside India to tap new growth opportunities. While it has established cloud infrastructure in Singapore, Malaysia and Thailand, its presence in each market is new and very small at this stage. It is still largely an India-only player.

• It needs to invest significantly in sales and marketing, professional services, and support capabilities in the new markets to compete with the large international providers.

• It has limited experience supporting third-party services, including AWS and Microsoft Azure, which are becoming increasingly important for customers. It is enhancing its cloud management platform to provide hybrid cloud capabilities, but this is in the early stage of development.

Datapipe

Datapipe is a U.S.-based managed cloud service provider. Its target market is MNCs. It offers multitenant and single-tenant services. It operates dual cloud data centers in Hong Kong, China and Singapore that are connected to its data centers in the U.S., Europe and South America to form a global cloud platform.

Strengths

• Datapipe has an early lead in hybrid cloud services. It is among the few providers that support both AWS and Microsoft Azure for infrastructure and managed services. Its cloud portal provides a single pane of glass for ordering, orchestration and management of AWS, Microsoft Azure and its own cloud services. It has also extended its support to Alibaba Cloud, a major public cloud service in China, in October 2016.

• It has strong managed AWS capabilities. It has been certified by AWS as a Migration Competency Partner, which means it has demonstrated expertise and proven experience handling large migration projects. It also provides automation services to speed up the deployment of cloud resources. It is building up its managed Microsoft capabilities. It has been certified as a managed service partner for Microsoft's Cloud Solution Provider program, Office 365 services and Azure.

• It provides a broad range of managed services, including storage, security, database and governance services, with experience in cloud migration for large customers. This is supported by high-touch customer service and support. It offers a simple pricing scheme, which includes infrastructure and managed services in one price, with a choice of hourly and monthly rates.

Cautions

• Datapipe has a relatively small presence in Asia, especially in terms of the number of staff supporting the business. Consequently, its customer base is small, although many customers are significant in terms of size and complexity.

• Its operations are concentrated in Hong Kong, with a small presence in China and Singapore. Its Australian data center has yet to go live, even though this has been planned for more than a year.

• Its managed services for Microsoft is relatively new, and it has limited experience supporting Microsoft Azure and Office 365, compared with its AWS expertise.

Dimension Data

Dimension Data is a global information and communication technology (ICT) solution and service provider, with a strong presence in Asia/Pacific. It is owned by the NTT Group in Japan. Its target markets are enterprises, including MNCs. It offers multitenant and single-tenant services. Its cloud data centers in Australia, New Zealand, Japan, Hong Kong, Singapore, India and Indonesia are connected to its data centers in the Americas, Europe, and South Africa to form a global cloud platform.

Strengths

• Dimension Data's Managed Cloud Platform provides a single, unified architecture for its public and private cloud services, with a common management platform for both environments. It is extending its platform to include support for AWS and Microsoft Azure, as part of its hybrid cloud strategy. It has also introduced unified service management for hybrid IT in its portal.

• It has strengthened its ability to support enterprise workload hosting. It is SAP-certified for cloud, hosting and SAP Hana. It has expertise in Microsoft unified communications and collaboration apps, and it is building expertise in Oracle. In the past year, it has also enhanced its consulting and professional services capabilities significantly through its acquisitions of consulting companies Britehouse and Oakton.

• It also has strong regional coverage, with the ability to provide in-country support in many markets. Its service is reliable, backed by good service and support. It is fairly price-competitive, and it is becoming commercially more flexible. It is winning customers in multiple markets, and it is now better positioned to compete for large-enterprise projects.

Cautions

• Dimension Data is in the early stages of developing hybrid cloud capabilities. As it will introduce support for AWS and Microsoft Azure in its cloud management platform at the end of 2016, it's not possible to assess these capabilities today.

• It is increasingly competing for large or complex projects, as it is building up its professional services. It faces competition from large IT services providers with stronger enterprise application expertise. It needs to continue to expand its consulting and implementation service capabilities, as well as build up further experience supporting large enterprises.

• Its cloud platform has limited differentiation, even though it has enhanced its platform significantly during the past year. Its revenue is aggregated from a number of markets, and it is fairly small, despite its strong revenue growth.

Fujitsu

Fujitsu is a global IT services provider, with a track record for outsourcing and managed services. Its target market is enterprises. It offers multitenant and single-tenant services. Its cloud data centers in Japan, Australia, Singapore, China, Thailand and the Philippines are connected to its cloud data centers in the Americas and Europe to provide global cloud coverage.

Strengths

• Fujitsu has a good data center footprint, with a reasonable range of managed services, including security, middleware, databases and select applications. It is SAP-certified for cloud and SAP Hana. It has a track record in managing large-scale IT infrastructure in Asia, with good quality service and responsive service and support.

• It has launched a new OpenStack-based platform, Fujitsu Cloud Service K5, which will be its main cloud platform in the future. It can automate the migration of existing systems, including operating systems, middleware and applications, to cloud platforms using UForge, an integration platform as a service (PaaS) software it acquired a year ago. It has also introduced a PaaS platform based on Cloud Foundry.

• It has enhanced its hybrid cloud capabilities. Its orchestration software can integrate the management of its platforms, including its existing platforms based on VMware and open-source Xen, as well as third-party cloud platforms, such as Microsoft Azure and AWS. It also provides unified service management.

Cautions

• Fujitsu's OpenStack-based K5 platform is new, and it's too early to assess its capabilities. It is available only in Japan and Europe, but it will be rolled out in Singapore in the fourth quarter of 2016, with rollouts planned for Australia and the U.S. in 2017. Fujitsu is in the early stages of developing hybrid cloud capabilities, with limited experience supporting third-party clouds.

• It puts more emphasis on its VMware-based platform, which comes with the full range of managed services and is available in all locations. In contrast, its open-source Xen-based platform has limited managed services, and it is available only in Japan, Australia and Singapore.

• It is transforming from locally run operations to a global standardized delivery model, ranging from platform, products, service and support, and managed services. However, this approach is a work in progress, with continued inconsistency.

Hewlett Packard Enterprise

Hewlett Packard Enterprise (HPE) is a global IT services provider, with a track record for outsourcing and managed services. Its target market is enterprises. It offers multitenant and single-tenant services. Its cloud data centers are in Australia, New Zealand, Japan, Singapore, Hong Kong, India and China. It is undergoing a major reorganization, which will include the (1) spinoff and merger of software assets with Micro Focus; and (2) spinoff and merger of its Enterprise Services business with CSC. The Helion Managed Cloud Services assessed in this Magic Quadrant will be part of the new merged entity with CSC. (See Note 1 regarding HPE's reorganization.)

Strengths

• HPE has a good data center footprint, with presence in the regional hubs, China and India. It has enhanced its HPE Helion Managed Cloud Services significantly, providing a good choice of managed services for databases, middleware and security. It also offers disaster recovery, SAP Hana and Hadoop as a service.

• It has good advisory capabilities and migration expertise, putting it in a favorable position to support large enterprises with complex requirements. It continues to augment its professional services staffing, supported by its new cloud transformation and migration centers in India and Malaysia.

• It is gaining maturity as a managed cloud provider, with increasing ability to win large enterprises in multiple countries. It has been making it easy for customers to contract its cloud services, including simplified and modular contracts, commercial innovation for contracts, and more flexibility for customized SLAs.

Cautions

• HPE's reorganization presents a level of uncertainty for customers. While the Helion Managed Cloud Services will continue to be operated by the new merged entity with CSC, the infrastructure and platform technologies will reside with HPE, while some of the key software components will reside with the new merged entity with Micro Focus. HPE says multiyear agreements will be put in place to ensure that the merged entity with CSC will continue to get access to the technology. In the long term, the merged entity may have less control and influence over technology direction.

• HPE and CSC have little overlap in terms of customers and geography in Asia/Pacific. However, the integration may impact HPE's high service quality and support quality — currently its biggest strengths. Both HPE and CSC are focused on developing cloud broker capabilities. However, each already has its own cloud broker platform, and it's not clear at this stage which platform or underlying software the merged entity will go with.

IBM

IBM is a global IT services provider with extensive presence in Asia. It has a track record in IT outsourcing. Its target markets are enterprises and government. It offers multitenant and single-tenant services. Its data centers in Australia, Japan, Singapore, Hong Kong, China and India are connected to its data centers in the U.S. and Europe to form a global cloud platform.

Strengths

• IBM has strong consulting capabilities, experience in enterprise applications, and a track record for managing large-scale IT infrastructure and operations, putting it in a favorable position to support large enterprises with complex cloud requirements. While it tends to lead with transformational projects, it is now more willing to take on stand-alone cloud projects. Combined with its increasing commercial flexibility, it's beginning to win more large customers in Asia.

• IBM is actively integrating its SoftLayer and Bluemix offerings into a single unified IaaS/PaaS infrastructure platform to provide an integrated end-user experience for both developers and nondevelopers. It is also now more focused on hybrid clouds, with support for third-party cloud services, delivered via a cloud broker solution enabled by its IBM Cloud Orchestrator software, which is being augmented with technology from its recent acquisition of Gravitant.

• It provides a broad range of managed services, including database, middleware, security and disaster recovery. It also provides a full range of managed services for Oracle and SAP applications, including application management and life cycle services.

Cautions

• IBM has two platforms — Cloud Managed Services and SoftLayer. They have different capabilities and are managed separately. Customers that want to use both platforms together need to deploy IBM Cloud Orchestrator to integrate the management.

• Its data center coverage is less extensive than it appears on the surface. IBM's Cloud Managed Services is available only in Australia, Japan and China, while SoftLayer is available in all locations. This limits the ability of customers to access both platforms in all locations.

• It has limited experience supporting AWS and Microsoft Azure. With its focus on its own Bluemix PaaS platform, which is gaining momentum in Asia, it's not clear if it will actively incorporate competing cloud services as part of its hybrid solution in the near term.

IIJ

IIJ is a major hosting and managed service provider in Japan. Its target markets are enterprises and midmarket companies. It offers multitenant and single-tenant services. Its cloud data centers in Japan, China, Singapore, Indonesia, Thailand, and Vietnam (first quarter of 2017) are connected to its data centers in the U.S. and the U.K. to provide international cloud coverage.

Strengths

• IIJ has good domestic coverage in Japan, with six cloud data centers supporting a wide range of customers. It is expanding its coverage overseas to support Japanese customers and target opportunities in other markets. It now has presence in three major developing markets in Southeast Asia through joint ventures with strong local players.

• IIJ is strong in product development. Its cloud platform, IIJ GIO Infrastructure P2, integrates its open-source-based public cloud and VMware-based platform, including bare-metal resources, under a single management system and portal. It uses a common Network File System (NFS) for data storage. It provides direct connectivity to Microsoft Azure and Office 365 and AWS.

• It offers a good range of managed services, including security management, database management, and disaster recovery (including putting it on public cloud). It is SAP-certified for cloud services and SAP Hana, and it has gained significant experience during the last two years implementing SAP on its platform.

Cautions

• While IIJ has expanded its coverage overseas, its initial expansion was driven by Japanese MNC requirements. It is now more focused on tapping local opportunities, including using local partners to go to market, but it is still in the early stages of market development.

• IIJ has not rolled out its broad portfolio of products to all international markets due to limited market maturity in these markets. It also does not provide hybrid cloud management, even though it is extending its connectivity support to third-party clouds.

• IIJ has significant experience supporting enterprise application requirements. However, it has yet to capitalize on its capability to offer transformation services with managed cloud, instead continuing to offer traditional IT integration and IT outsourcing.

NxtGen

NxtGen is a fast-rising managed hosting and cloud service provider in India. The four-year-old company, based in Bangalore, targets enterprises and midmarket companies. It offers multitenant and single-tenant services. It has nine data centers in six cities. Its cloud data centers are in Bangalore and Mumbai, India. It has also opened a data center in Singapore.

Strengths

• NxtGen is relatively young, but it is now among the major managed hosting and cloud providers in India. It operates high-grade data centers, with good geographic coverage. It has acquired a sizable base of customers, many of them large enterprises, including MNCs with operations in India.

• It has a good cloud platform, designed originally as a public cloud for online gaming, using flash-based solid-state drive (SSD) storage for high input/output (I/O) performance. It provides automatic scaling and failover, with integrated SAN and flexible storage options. It also supports bare-metal services.

• It provides a good range of managed services, including database, middleware, security and disaster recovery. It is SAP-certified for infrastructure operations services and has gained significant experience hosting SAP apps. It has introduced data protection as a service, in association with Hitachi and Commvault, for the banking and government sectors.

Cautions

• NxtGen is still largely an India-only provider, even though it has opened a data center in Singapore. It's not known outside its home market, and its international presence is new and very small.

• Six of its data centers came from an acquisition in the third quarter of 2016. They currently support hosted private cloud and colocation only, although they provide the option for NxtGen to expand its cloud footprint in the future.

• It is in the early stages of supporting third-party cloud services, which will become increasingly important as customers look for strong public cloud capabilities for Mode 2 IT, a case made more urgent as both Microsoft Azure and AWS have set up presence in India.

NTT Communications

NTT Communications is a global CSP, wholly owned by the NTT Group in Japan. Its target markets are enterprises, including MNCs. It offers multitenant and single-tenant services. Its cloud data centers are located in Japan, Australia, Singapore, Hong Kong, Malaysia, Thailand and India. The data centers are connected to its cloud data centers in the U.S. and Europe to provide a global cloud platform.

Strengths

• NTT Communications has very good geographic coverage, with presence in all regional hubs and several major developing markets. It has a strong foothold in India through its subsidiary, Netmagic, a major managed hosting and cloud provider in India. NTT Communications is well-advanced in its integration of Netmagic into its global operations.

• It provides a broad portfolio of managed services, with support for security, databases, middleware and select applications, such as SAP and SAP Hana. Its new Cloud Management Platform can integrate its existing enterprise and public cloud IaaS platforms, as well as third-party cloud services, such as AWS and Microsoft Azure, under a single cloud management portal. Other features include bare-metal services, an API gateway for hybrid cloud management and a PaaS platform based on Cloud Foundry.

• It has fairly large managed cloud revenue in Asia, with half coming from markets outside Japan. It is reporting strong revenue growth, with the ability to win customers in multiple markets in Asia, supported by its strong regional presence. It is also getting better at winning more complex projects, due to its improving managed service and application capabilities.

Cautions

• NTT Communications' OpenStack platform is new, and it's too early to assess its capabilities. It is available only in Japan, Singapore, Australia and Hong Kong. In other markets, customers need to use its existing cloud platforms, which lack differentiation.

• It is in the early stages of developing its hybrid cloud capabilities. It has limited experience supporting AWS and Microsoft Azure.

• It is gaining experience supporting some mission-critical applications or use cases. However, it has limited experience in supporting a broad range of enterprise applications, which puts it at a disadvantage when competing against the large IT services providers.

Orange Business Services

Orange Business Services is a global CSP with extensive presence in Asia/Pacific. Its target customers are MNCs and enterprises in Asia. It offers multitenant and single-tenant services. Its cloud data centers in Australia, Singapore and Hong Kong are connected to its data centers in Europe and the U.S. to form a global cloud platform.

Strengths

• Orange has experience with data center consolidation, virtualization and managed services in Asia. It has a consulting and professional services team, supported by well-defined methodologies and processes, to support customers with cloud migration. It has extended its services to include full life cycle management.

• It supports third-party cloud services, including AWS, Microsoft Azure, VMware vCloud Air and OpenStack-compatible public clouds, such as Alibaba Cloud service in China. Its cloud portal can provide single sign-on access, provisioning and monitoring of third-party services, as well as workload portability between cloud services. Its MPLS service provides direct cloud connections to AWS and Microsoft Azure.

• It has a good catalog of infrastructure and managed services, including a full range of disaster recovery options, which gives it the flexibility to customize individual solutions for customers. It provides end-to-end service management, with quality of service and SLAs for network, IaaS and OS, and applications.

Cautions

• Orange has limited experience and professional services for supporting complex enterprise applications. To augment its capabilities, it has to rely on partnerships with strong IT services providers to deliver a complete solution.

• Its customer base is relatively focused, although it has gained significant experience with data center consolidation, virtualization and managed services for a small number of large customers in Asia.

• For hybrid clouds, the contract management is done directly between the customer and third-party cloud provider, although Orange will consider taking over the contract if the volume is large enough.

Rackspace

Rackspace is a U.S.-based hosting provider with a strong track record in managed hosting in the U.S. and the U.K. It targets enterprises, including MNCs. Rackspace offers multitenant and single-tenant services. Its cloud data centers are located in Australia and Hong Kong. It also has data centers in the U.S. and Europe.

Strengths

• Rackspace is now focused on a multicloud strategy, leveraging its managed services — its big strength. It is offering managed services for third-party clouds, including AWS and Microsoft Azure and Office 365, in addition to its own platform. It has also started offering private clouds, including support for the VMware environment.

• It is strong in managed services, with good processes, support tools and automation capabilities, enabling it to deliver a consistent service quality over a broad customer base. This is backed by a very strong service and support culture. The result is high customer satisfaction and retention, with healthy revenue growth.

• It is price-competitive, including for managed services for third-party clouds. It allows customers to buy managed services on a consumption basis, breaking down the prices of its managed services transparently. It also provides effective advisory services as part of its managed services at no extra charge.

Cautions

• Rackspace's support for third-party cloud services is new, and it needs time to build up experience supporting AWS and Microsoft Azure. It also lacks a single pane of glass for hybrid cloud management or orchestration, preferring to use the management consoles and native toolsets of partner providers to provide managed services.

• It is building a professional services team in Hong Kong and Australia, but it is still small, which limits its ability to support large or complex requirements. It is building a network of specialist professional services partners to augment its capabilities.

• Its presence in Asia is limited to Hong Kong and Australia. While it can extend its infrastructure reach in Singapore and Japan via AWS or Microsoft Azure, it still needs to build sales, professional services and support capabilities in each market to address domestic opportunities.

Sify

Sify is a major ICT solution and service provider in India, with a track record in managed hosting and network services. It targets enterprises and midmarket companies. It offers multitenant and single-tenant services. Its cloud data centers are in Mumbai, Delhi, Bangalore and Chennai in India.

Strengths

• Sify offers a high-reliability service in India. It operates high-grade data centers in four major cities, with a disaster recovery service. Its cloud platform can support bare-metal services, as well as multiple hypervisors, including VMware, Microsoft Hyper-V and KVM. Its cloud portal is also well-designed, providing ease of use and a useful choice of features.

• It offers a wide range of managed services, including managed security, database management and middleware management. Sify has built up its skill set supporting the Microsoft environment, in addition to its experience in VMware. It is also SAP-certified for hosting, cloud, Hana and application services, with early experience supporting SAP migration.

• It is getting more successful handling large or complex projects, including building community clouds for five state governments. It is also commercially agile, and it has completed private cloud projects with usage- or transaction-based pricing. It is extending its support to AWS and Microsoft Azure, including offering managed services on top of the third-party cloud providers.

Cautions

• Sify lacks infrastructure and presence outside its home market, which limits its ability to address opportunities that are emerging in other markets in Asia. It is an India-only player today.

• Sify is more focused on traditional workloads, and it has limited experience supporting applications with cloud-native requirements.

• Its support for third-party cloud services is new, and it needs to demonstrate these capabilities, including the ability to provide hybrid cloud management. It plans to ride on the infrastructure of the third-party cloud services, focusing on managed services, for international expansion next year.

Singtel

Singtel is the leading CSP, as well as major IT services provider, in Singapore. It also has strong presence in Australia through Optus. Its target customers are enterprises, including MNCs. It offers multitenant and single-tenant services. It has cloud data centers in Singapore, Australia and Hong Kong.

Strengths

• Singtel has changed its strategy significantly, focusing on hybrid cloud services. It has launched a cloud management platform for orchestrating the setup and operations of hybrid cloud environments. It also has a well-developed framework for migrating customers to cloud, supported by professional and managed services, with full life cycle management.

• It operates two platforms — one based on VMware and the other on Microsoft. It supports third-party cloud services, such as Microsoft Azure, AWS and Alibaba Cloud in China. It has also developed a good cloud spend management tool. It also provides direct cloud connections to Microsoft Azure and AWS via its MPLS and Ethernet networks.

• Singtel has a good portfolio of managed services, including management of databases, middleware, web servers and application servers. It has a large IT services arm, which enables Singtel to handle large and complex environments. It has strong security capabilities, enhanced by its acquisition of Trustwave, a U.S. managed security provider.

Cautions

• Singtel's hybrid cloud service is new, and it's too early to assess its capabilities. It has a clear view of how it wants to further develop its cloud management platform, but it will need time to enhance its capabilities.

• It also has limited experience supporting third-party cloud services or hybrid cloud environments.

• It has strong experience in the government sector, but it has less experience in enterprise applications or vertical industries, which puts it at a slight disadvantage when competing with established IT services providers for large or complex migrations involving traditional workloads — an important target segment.

Telstra

Telstra is the leading CSP in Australia. It is expanding its international presence, targeting MNCs. It offers multitenant and single-tenant services. Telstra operates cloud data centers in Australia, Singapore and Hong Kong that are connected to its data centers in the U.K. and the U.S. to form an international cloud platform.

Strengths

• Telstra has broadened its strategy to focus on multicloud services. It now offers third-party cloud services, including AWS, Microsoft Azure and SoftLayer, in addition to its own platform. It provides managed services on top of these platforms, with single bill and first point of contact for support.

• Its cloud management platform, based on RightScale, provides online ordering, provisioning, operation management, and usage and cost analytics of third-party services. It provides direct cloud connections to third-party services via its MPLS and Ethernet networks, with bandwidth-on-demand features.

• It has a strong presence in Australia, and it can also support MNCs with regional requirements. It provides end-to-end service management, with SLAs for cloud platform, network infrastructure and applications. It puts more effort than its peers into providing a great customer experience, with a high-touch service, a user-friendly cloud portal and a globally consistent product.

Cautions

• Telstra's multicloud services is new, with limited experience supporting third-party cloud services. It is building up its professional services to support hybrid clouds, but this will take time. Its recent acquisitions of Australian cloud consulting companies — Kloud and Readify — will augment its capabilities.

• Its portfolio of managed services is relatively small, covering key services such as security, backup and disaster recovery, and OS management. It has improved its support for web servers, but for databases, its options are limited.

• It has limited professional services and expertise in enterprise applications, which limit its ability to compete for large or complex migrations involving traditional workloads — an important segment of the market.

Verizon

Verizon is a global CSP with an established managed hosting business in the U.S. Its target markets are MNCs and government. It offers multitenant and single-tenant services. Its cloud data centers in Hong Kong, Australia and Singapore are connected to its data centers in the U.S. and Europe to provide global cloud coverage.

Strengths

• Verizon has revamped its cloud strategy, exiting the public cloud market to focus on managed cloud services. It is planning to announce a new multicloud strategy in the first quarter of 2017, supporting both its own and third-party cloud platforms, and placing stronger emphasis on managed services.

• Its cloud service is combined with its core competencies — global network and security — to provide a stronger value proposition. Its strength in security is a key differentiator for large enterprises, including government. It also provides direct cloud connections to the most number of major cloud services in the region, including AWS and Microsoft Azure and Office 365.

• Its managed services are organized into different tiers of service to make it simpler for enterprises to select its services. Its range of managed services is also consistent across its different cloud platforms. It is enhancing the user interface of its existing Verizon Cloud platform to improve user experience, although this is a work in progress.

Cautions

• Verizon spent years developing its Verizon Cloud platform, which was meant to be its main platform for the future. It was finally launched last year, but it will soon be superseded by the new multicloud strategy. Verizon is developing a cloud management platform to integrate and manage multiple cloud platforms, but it is too early to assess its capabilities as the service is not commercially available.

• It has limited professional services and expertise in the region for enterprise applications, limiting its ability to compete for large or complex migrations involving traditional workloads, an important segment of the market. It will use global resources and partner with IT services providers to augment its capabilities. Its hybrid cloud capabilities are currently limited to direct cloud connections.

• It has limited geographic presence. Its geographic coverage is not broad enough to support MNCs with regional hosting requirements. While its cloud platform is available in Hong Kong and Australia, it is not available in Singapore, an important regional hub. It lacks deep presence in key markets to compete with established players that compete at the country level.

Vendors Added and Dropped

We review and adjust our inclusion criteria for Magic Quadrants as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant may change over time. A vendor's appearance in a Magic Quadrant one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. It may be a reflection of a change in the market and, therefore, changed evaluation criteria, or of a change of focus by that vendor.

Added

The following vendor was added:

• NxtGen, based in Bangalore, India

Dropped

No vendors were dropped.

Inclusion and Exclusion Criteria

To be included in this Magic Quadrant, providers had to meet the following criteria:

• Products and services: The provider must offer a CEMH service that meets Gartner's market definition. It must offer this service as a multitenant offering in its own data center, and it may offer a single-tenant option.

• Technical and business capabilities in Asia/Pacific: The provider must operate a CESI platform in at least one major market in Asia/Pacific, with associated technical support, managed and professional services, and sales capabilities in the country.

• Market traction and momentum: Because the market is evolving rapidly and has many players, we include only a select number of early market movers, innovative providers and potential market makers for this Magic Quadrant. To be included, a provider needs to be a key player in a major market, supported by CESI and associated capabilities in the region.

The provider must sell CEMH as a stand-alone service, with no requirements to bundle it with application development, application maintenance or other IT outsourcing and/or DCO services.

The provider's qualifying offerings must offer customers direct or mediated self-service for OS instance provisioning on a CESI platform, with usage-based billing and resource-metering increments of no greater than one month, as well as OS management services that are coterminous with the underlying compute resources.

The services evaluated must be enterprise-class, offer 24/7 customer support (including phone support) and have infrastructure availability SLAs.

Products and Services Excluded From This Evaluation

This Magic Quadrant is for CEMH only. Therefore, the following adjacent services are excluded from evaluation:

• Colocation: Although many CEMH providers also offer colocation, the quality of colocation offerings is not evaluated in this Magic Quadrant. This Magic Quadrant should not be used to select 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 they do not want to relinquish control. If your interest is primarily in self-managed cloud infrastructure, consult "Magic Quadrant for Cloud Infrastructure as a Service, Worldwide."

• Traditional managed hosting: Although the managed hosting market is established, this Magic Quadrant focuses on providers that have evolved to offer customers more cloudlike consumption options, including on the managed service tier. Many providers in this Magic Quadrant may still offer traditional managed hosting services, but this analysis does not consider those legacy offerings in this analysis.

• DCO and remote infrastructure management (RIM): Although many DCO providers may manage the infrastructure for web applications as part of a DCO contract, this Magic Quadrant evaluates only CEMH that is sold as a stand-alone service within provider-owned data center facilities. It explicitly excludes hosting that may be part of a more general DCO or RIM contract.

• 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 that CEMH services stop below the application layer. Application layer services are part of the application management market.

• Cloud management platforms: Cloud-building hardware and software — software such as BMC's Cloud Lifecycle Management, RightScale's Universal Cloud Management Platform, and turnkey solutions such as HPE's Cloud Service Automation — are not evaluated in this Magic Quadrant, which is restricted solely to services.

Evaluation Criteria

Ability to Execute

This Magic Quadrant is aimed at businesses operating in Asia/Pacific, including MNCs with regional hosting requirements and Asia/Pacific businesses with domestic hosting requirements. Because Asia/Pacific is a large region with 13 major markets, providers that aim for market leadership need to demonstrate that they can address multiple markets within the region with the support of a competitive cloud platform, as well as associated managed and professional capabilities.

We gave high weightings to two criteria: Market Responsiveness/Record, which includes a provider's history and ability to respond to market needs and opportunities in the region; and Product or Service, which includes a provider's cloud platform, range of services, managed and professional services, and service availability in all key markets.

Source: Gartner (October 2016)

Completeness of Vision

This Magic Quadrant is aimed at businesses operating in Asia/Pacific, including MNCs with regional hosting requirements and Asia/Pacific businesses with domestic hosting requirements. Due to the region's large size and fragmented geography, providers need a strong Market Understanding of their target segments, as this will determine their Geographic Strategy, supported by a competitive Offering (Product) Strategy. We gave high weightings to these three criteria.

Ideally, a leading provider should provide services in all 13 major markets within Asia/Pacific. However, we recognized that this is not yet feasible due to the tremendous amount of resources required to address all these markets at a local level. As a result, we looked for providers that can support multiple markets today, and have the potential to become fuller regional providers in the future.

Source: Gartner (October 2016)

Quadrant Descriptions

Leaders

Providers require a strong strategy to become a Leader in Asia/Pacific. They need to invest in their products, geographic coverage and delivery capabilities to the extent that they can become strong regional players. To build their market positions, they must have the ability and willingness to invest for the future.

Challengers

Challengers typically have a strong Ability to Execute, but they trail the market in terms of geographic coverage or product evolution. They have experience in traditional managed hosting services, but they have not exploited technology and market demand to build highly competitive CEMH services. They could become Leaders if they extend their vision and strategy, but they could also fall quickly behind in this fast-moving market if they focus only on the short term.

Visionaries

Visionaries are typically early movers with an innovative or disruptive approach to the market; however, they have limited geographic coverage or services that are new and unproven. They may become Challengers or Leaders if they can execute strongly on their vision and the market accepts their services.

Niche Players

Niche Players typically perform well in a particular segment of the market, but they have limited ability to outperform other providers in the region as a whole. Their focus on a particular segment or geography limits their ability to address the broader market. They tend to be relatively unknown outside their target market.

Context

This Magic Quadrant focuses on CEMH services for businesses in Asia/Pacific. These are standardized products that combine a CESI with managed services. This Magic Quadrant focuses on services for Asian enterprises and Western MNCs operating in Asia.

The aim of this Magic Quadrant is to help infrastructure and operations leaders sourcing for CEMH services by establishing which providers are best placed to serve the needs of Asia/Pacific's broad market. Ideally, a provider should offer services in all the major markets, but we recognized that this is not yet feasible due to the tremendous amount of resources required to address all these markets at a local level. As a result, we looked for providers that can support multiple markets today and that have the potential to become fuller regional providers in the future.

We evaluated a select number of providers that focus on the region's developed markets, particularly the key regional hubs, such as Singapore, Hong Kong, Australia and Japan.

We also included providers from India, as this country serves as the IT back end for many MNCs. We also looked at providers in China, because there is a growing need for MNCs to host in this country as business expands there. However, China's service provider market is immature. As a result, we did not include any provider from China in this Magic Quadrant.

We give higher weightings to providers that:

• Serve multiple country markets in Asia/Pacific, including regional hubs such as Singapore, Hong Kong, Australia and Japan, to meet the requirements of MNCs.

• Offer a CEMH service that is competitive in terms of range of services, cloud platform, service features, managed and professional services, and local service and support.

• Experience and track record supporting enterprises in Asia/Pacific, with the ability to win MNCs with regional requirements and Asian enterprises with domestic hosting needs only.

Market Overview

Enterprises in Asia/Pacific are adopting CEMH in greater numbers. They now have a better understanding of cloud or have gained some experience using public cloud. The service is now available in more markets, with better choice of providers — and more mature providers. All these factors make it possible for more enterprises to adopt the service.

Adoption is led by developed markets such as Australia, Japan, Singapore and Hong Kong, but it is also growing in developing markets, particularly in India, where there is a choice of strong local providers. Initial adoption was led by midmarket, but CEMH is gaining momentum in enterprises and government organizations.

There is a wide range of players, including cloud and managed hosting providers (mostly from the U.S.), large IT services providers, and global and regional CSPs. Their backgrounds differ significantly:

• Cloud and managed hosting providers have better automation and managed service capabilities, but they lack strong regional presence.

• IT services providers have more managed hosting experience (typically as part of larger IT services or data center outsourcing deals), as well as deep presence in some country markets.

• CSPs lead in network and hosting services (typically offering end-to-end service management, including network, cloud infrastructure and application performance).

The providers are highly focused on supporting traditional enterprise applications for Mode 1 IT requirements, which place priority on availability, security and assurance. Most have gained some level of maturity in terms of cloud platform development, managed service capabilities, and experience supporting enterprises with traditional workloads. Nevertheless, most continue to invest in the service and are making good progress, albeit at different speeds. In the past year, they have been:

• Building up cloud advisory services, especially for cloud migration and transformation

• Developing expertise in key enterprise applications — in particular, SAP, Oracle and Microsoft

• Introducing SaaS, including disaster recovery, database and, in some instances, Office 365

An increasing number of providers are now focused on hybrid clouds as their new strategy. They are beginning to extend support to hyperscale cloud services, such as AWS and Microsoft Azure. However, their hybrid cloud management capabilities differ significantly, and they are generally basic and unproven.

We believe the market will continue to evolve greatly over the next few years. Enterprises should select the provider that matches their needs in the near term and keep to shorter contracts. This will give enterprises the opportunity to select another provider as the market matures.

Note 1
HPE's Reorganization

HPE has announced plans for a spinoff and merger of its software assets with Micro Focus, in a transaction valued at approximately $8.8 billion, including 50.1% ownership of the new company by HPE shareholders and a $2.5 billion cash payment to HPE. The software assets include its application delivery management, big data, enterprise security, information management and governance, and IT operations management (ITOM) software. The ITOM portfolio includes its Service Anywhere, Cloud Orchestration Suite, and Data Center Automation software, which are used in its Managed Cloud Services and cloud broker platform.

HPE will retain its portfolio of software-defined servers, storage, networking and converged infrastructure. HPE's newly created Software-Defined and Cloud Business will build on software assets, such as HPE OneView and Helion Cloud platform, to deliver software-defined infrastructure.

In a separate announcement, HPE plans for a spinoff and merger of its Enterprise Services business with CSC to form a pure-play global IT services company. HPE shareholders will own approximately 50% of the combined company. The Helion Managed Cloud Services, including private cloud, virtual private cloud and cloud broker, will be part of the merged entity with CSC.

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor for 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: 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/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 to 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.