1 Management Summary

The KuppingerCole Market Compass provides an overview of a market segment and the vendors in that segment. It covers the trends that are influencing that market segment, how it is further divided, and the essential capabilities required of solutions. It also provides ratings of how well these solutions meet our expectations.

This Market Compass covers hosted hybrid cloud services provided from within Europe. It provides an assessment of the capabilities provided by these services, including those for the tenant to ensure their secure and compliant use of the service.

The market for cloud services is forecast to grow significantly as organizations complete their digital transformation and move, migrate, or modernize their IT systems. However, according to some estimates only around 4% of enterprise workloads have currently been moved to the public cloud. The factors limiting this growth are the challenges faced by organizations of managing the security and compliance of this new complex hybrid IT environment. This leads to growth in IaaS cloud like hosted infrastructure services that enable compliance with local data residency obligations while providing standardized integration with the hyperscale cloud services where appropriate.

Hybrid cloud hosting provides a cloud enabled infrastructure platform which consists of a pool of compute, storage, and network capabilities that tenants can manage through a self-service portal. It provides a form of Infrastructure as a Service with guaranteed geographic location of data and processing often with tenant dedicated resources. The infrastructure platform is located in the provider's data centre in a European country.

Increasingly cloud services are used in conjunction with on premises IT in a Hybrid IT service delivery model. This platform should also include the capabilities for the tenant to integrate their hosted services with those outside of the provider's data centre. This should also include documented and standardized management capabilities that allow the tenant to integrate their services with one or more of the public hyperscale clouds.

Highlights:

• This Market Compass report covers hosted hybrid cloud services (IaaS) provided from within Europe. It provides an assessment of the capabilities provided by these services including those for the tenant to ensure their secure and compliant use of the services.
• The market for IaaS services is forecast to grow significantly. Most of the previous growth has come from use of a few hyperscale service providers based in the US.
• Future growth is being limited by the need for compliance with local regulations and laws. In Europe GDPR and the recent Schrems II judgment are examples of these limiting factors. In addition, there are complexities and costs in adapting existing applications to run in cloud environments.
• In response to these challenges, organizations are adopting a hybrid approach to cloud - combining the use of hyperscale clouds with those from local vendors that can guarantee the jurisdiction and legal framework of processing and administration as well as providing a more compatible technical envelope.
• The main enablers for this hybrid model are common environments such as VMware and to a more limited extent OpenStack plus professional management services to accommodate the differences between the services.
• Within Europe there are few European owned, hosted, and operated IaaS services. These are included in this report.
• The EU has launched the GAIA-X project to build a competitive, secure, and trustworthy data infrastructure for Europe in the cloud as a response to this.
• The large European vendors such as Telcos and Systems Integrators now focus on offering managed services around the hyperscale clouds. Most include some form of tailored local hosting for large customers and public services.
• Another approach to infrastructure as a service is emerging through hardware vendors offering their equipment on as a service with a level of management in a location specified by the customer.