U.S. Companies Turn to Public Cloud Solutions for Enhanced AI Capabilities and Scalability

Published On: December 17, 2024 10:37 am

AI Growth Fuels Demand for Public Cloud Services, ISG Report Reveals

A recent report shows that U.S. enterprises are increasingly turning to public cloud services, driven primarily by the adoption of AI technologies. The 2024 ISG Provider Lens™ Multi Public Cloud Services report from Information Services Group (ISG) III, a major player in global technology research and advisory, outlines key trends in this rapidly evolving market.

The report indicates that businesses see the potential of AI and its applications, especially generative AI, but are also wary of the costs and complexities involved. Developing AI systems requires expensive hardware and software, like graphics processors and large language models (LLMs). Many companies are opting for cloud platforms that offer scalable computing resources, storage options, and AI-specific services instead of building their own infrastructure.

“AI and cloud computing have a close symbiotic relationship,” noted Anay Nawathe, ISG’s cloud delivery lead for the Americas. “As AI adoption rises in the coming years, we expect significant growth in the public cloud sector.”

According to ISG, while generative AI is making headway in U.S. businesses, companies are taking a cautious approach. Most implementations are still in the proof-of-concept stage. Enterprises are experimenting with GenAI in areas such as content creation and personalized marketing, though many customer-facing applications are not yet operational. Service providers are assisting these organizations through their initial transformation stages.

The report highlights that as enterprises adopt more AI workloads, they seek immediate financial benefits to manage their digital transformation while staying within budget constraints. Public cloud solutions provide greater flexibility, but can also introduce complex billing and unexpected expenses if not handled correctly.

To navigate this challenge, the implementation of FinOps practices has become vital for allocating cloud resources efficiently and minimizing wasted expenditures. Additionally, GreenOps models, which account for both cost and carbon emissions associated with cloud services, are becoming increasingly relevant.

Over the past year, there has been a steady rise in demand for consulting and transformation services as companies modernize their IT environments. This shift involves moving from traditional monolithic systems to more adaptable, cloud-native solutions. Larger organizations often look for industry-specific services to optimize existing workloads, while midsize companies tend to focus on cost-effective and swiftly deployable cloud transformations.

The report reveals that managed services for large enterprises have notably improved through the incorporation of AI automation and enhanced cloud optimization tools. Larger firms are searching for solutions that simplify the management of multi-cloud setups, while midsize entities prefer providers that offer cost-effective cloud infrastructure management with minimal disruptions.

“U.S. enterprises desire cloud infrastructure prepared for AI and intricate workloads,” shared Jan Erik Aase, partner and global leader of ISG Provider Lens Research. “Well-structured multi-cloud solutions enable them to launch applications across varied environments with minimal additional costs.”

Other trends discussed in the report include technological advancements made by hyperscale cloud operators and the increasing need for adaptable infrastructure, particularly for SAP HANA implementations.

For additional insights on the public cloud challenges encountered by U.S. businesses—such as the rising emphasis on built-in cloud sustainability and the escalating costs associated with VMware deployments—view the ISG Provider Lens™ Focal Points briefing here.

The report evaluates 59 service providers across seven segments: Consultation and Transformation Services — Large Accounts, Consultation and Transformation Services — Midmarket, Managed Services — Large Accounts, Managed Services — Midmarket, FinOps Services and Cloud Optimization, Hyperscale Infrastructure and Platform Services, and SAP HANA Infrastructure Services.

In the report, Accenture, Capgemini, HCLTech, and Rackspace Technology are recognized as Leaders in three quadrants each. Accenture (Navisite), AWS, Cognizant, Deloitte, Google, Hexaware, Hitachi Digital Services, Infosys, Kyndryl, Microsoft, Mphasis, TCS, Tech Mahindra, Unisys, and Wipro are acknowledged as Leaders in two quadrants. Additionally, DXC Technology, IBM, Microland, NTT DATA, Persistent Systems, and UST are named Leaders in one quadrant each.

Furthermore, Brillio, Cognizant, LTIMindtree, NTT DATA, and Persistent Systems are recognized as Rising Stars—companies with a promising portfolio and high potential for the future in one quadrant each.

In terms of customer experience, Persistent Systems has been honored as the global ISG CX Star Performer for 2024 among multi public cloud service providers, receiving the highest marks in ISG’s Voice of the Customer survey, part of the distinguished ISG Star of Excellence™ program.

Customized versions of this report can be obtained through Microland and Unisys.

The 2024 ISG Provider Lens™ Multi Public Cloud Services report for the U.S. can be accessed by subscribers or purchased as a one-time option on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is a unique evaluation of service providers that fuses data-driven research with real-world insights from ISG’s global advisory team. This comprehensive analysis benefits enterprises in selecting suitable partners while also validating ISG advisors’ market knowledge for making informed recommendations. Research currently includes providers operating worldwide, with aspirations to expand coverage to additional markets.

About ISG

ISG (Information Services Group) III is a top global technology research and advisory firm. Serving over 900 clients, including more than 75 of the world’s leading 100 enterprises, ISG focuses on helping organizations achieve operational excellence and sustainable growth. Established in 2006 and based in Stamford, Connecticut, ISG employs over 1,600 professionals in more than 20 countries, recognized for their innovative insight and extensive industry expertise. More information is available at www.isg-one.com.