Shift in demand from traditional hosting to Infrastructure as a Service

Enterprise cloud adoption in Europe is increasing, according to a new report released by INTERXION HOLDING NV. The survey polled more than 400 business and IT decision-makers in the cloud and hosting market and uncovers five primary findings, including the trend towards IaaS and departure from traditional hosting services.
In a shift from last year's results, which showed demand for traditional hosting (including managed, dedicated and web hosting) exceeding demand for cloud services (IaaS and SaaS), this year’s survey reveals that demand for cloud services is eclipsing the demand for traditional hosting services. The report revealed that 43 percent of respondents now see a stronger demand for IaaS, up from 36 percent last year. Only 23 percent of respondents still see strongest demand for traditional hosting services, versus 56 percent last year.

This increase in demand for cloud services means service providers are in a prime position to capitalise on cloud to boost their revenue streams.

The survey also reveals intensifying competition between global cloud platforms and regional and local European service providers. In last year's survey, only 13 percent of respondents considered international cloud providers to be their main competition. This year, that number has risen sharply to 37 percent. As international providers continue to locate their platforms in Europe, local service providers are adopting various strategies to differentiate themselves from their competition. For the majority of respondents (86 percent) a focus on customer service was regarded as the most important competitive differentiator.

“In comparing this year’s survey findings to last year’s, it’s evident that the industry is in flux. As more enterprises are migrating workloads to the cloud, European service providers are shifting their offerings from traditional hosting to cloud services and expecting significant revenue gains from cloud as a result,” said JF van der Zwet, Director, Business Development & Marketing, Interxion. ”With competition heating up, both local providers and the multinational platforms have a role to play in the cloud market. To stay relevant, local providers are focusing on customer service and portfolio diversification, rather than competing head-on with multinational players. This will help them find ongoing success.”

The report also uncovers:
· Cloud impacts on revenues are expected to rise. While 12 percent of respondents indicate that IaaS represents 60 percent or more of last year's revenues, as many as 24 percent of respondents said IaaS will represent 60 percent or more of their revenue share in 2016
· Service providers prefer to own and operate their IT infrastructure. The majority of respondents (76%) still own and manage their own computing infrastructure (hardware such as servers, routers and switches), located in either their own or a third-party data centre
· More than a third of service providers (35%) have built their own data centre and use it as their primary site. Another 38% of service providers use a third-party data centre. The remaining 27% use a cloud infrastructure as their primary platform