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Publication Date: 27 April 2010 ID Number: G00175572
Magic Quadrant for Data Center Outsourcing and Utility Services, Europe
Claudio Da Rold, Gianluca Tramacere, Frank Ridder
This Magic Quadrant examines 12 providers' vision for data center outsourcing and infrastructure utility services, as well as their ability to execute that vision. Use the Magic Quadrant to help you look beyond price, location and technical skills when choosing a data center service provider.
© 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein are subject to change without notice.
WHAT YOU NEED TO KNOW
Organizations must diligently select an external service provider (ESP) for data center services and highly industrialized IT services, especially during turbulent economic times. It's not enough for organizations to base their decisions on price, current data center location and technical capability. They must also consider an ESP's overall vision and strategy for developing new services, if they want to engage in a long-term data center outsourcing (DCO) contract that supports critical functions. The evaluation criteria that Gartner has used in this Magic Quadrant provide a comprehensive framework to analyze 12 ESPs' capabilities to deliver these services across Europe (see Figure 1).
Figure 1. Magic Quadrant for Data Center Outsourcing and Utility Services, Europe
Source: Gartner (April 2010)
Gartner interviewed more than 50 client references for this Magic Quadrant. These interviews, combined with our normal interactions with Gartner clients in Europe, provide meaningful insight
Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Page 2 of 23
three out of the 12 providers are service arms of telecommunications companies. Worldwide. infrastructure utility and cloud computing — are blurring as new infrastructure utility and cloud-computing service offerings emerge. and sometimes even outsourced their data center management to other outsourcers. continuous optimization. automation and industrialization of new service offerings — especially in the area of infrastructure utility services (IUS) — continue to drive rapid change. Although no Indian providers qualified for this Magic Quadrant. such as Amazon or Google. hosting. they gain prominence in the market. We have also expanded the coverage of this Magic Quadrant to include Eastern Europe. DCO plus hosting. they are refreshing their data-center-based services at an accelerated pace.into the pulse of this market. This new Magic Quadrant reflects these market changes. the lines between different approaches — colocation. and in 2010. which is not necessarily located in a specific country. because clients are more willing to accept the concept of providing a consolidated European data center. satisfactory and mature sourcing option in Western Europe. In the infrastructure managed service market. All Rights Reserved. This raises the bar for the managed data center service market (see "Buy Industrialized Services to Quickly Reduce Outsourcing Costs and Risks" and "The Seven Golden Rules for Industrialized IU Services"). As a result. As these offerings (see Market Definition/Description section) compete for the same clients' business and wallet share. 2009-2013"). In fact. hosting represents 40% of the total managed data center service market in North America. Inc. the business service arm of Deutsche Telekom. overall DCO is a viable. while BT Global Services is bringing its new Virtual Data Center (VDC) offering to market. T-Systems. and we anticipate that at least one will qualify for inclusion in the 2011 Magic Quadrant. Page 3 of 23 . Although the DCO market is mature. Although a number of dissatisfied clients always exist. green requirements.g. hosting represents less than 20% of the managed data center service market (e. flexibility. Steria and Telefonica are two new entrants in the Magic Quadrant. automation and virtualization. European telecom incumbents have felt uncertain about their data center service strategies. Data center outsourcers (U. for many years. and reduced the revenue threshold to start taking additional players into account. The economic conditions in Europe during 2009 and 2010 have been driving the demand for lowcost services that also offer innovation. virtualization. Telefonica qualifies for inclusion in this Magic Quadrant because of its significant investments and focus on these new services. These telecom providers are now accelerating their coverage of data-center-based services. They have mostly offered colocation or simple hosting services. and/or its Affiliates. Although other telecom-related players did not qualify for inclusion in this Magic Quadrant. The European market (see "Stay Ahead of Data Center Outsourcing and Infrastructure Utility Market Trends in Europe") presents some key differences from the North American market. is leading the way with its dynamic infrastructure service approach. which started and continues to lead the evolution toward cloud computing and infrastructure as a service. consolidation. The various countries and languages across Europe have inhibited the growth of very large Internet providers.. More specifically. We moved from selection criteria based on a country-by-country presence to criteria based on six regions. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. they are close to meeting the target. DCO. see "Forecast: Infrastructure Utility Services. and implementing industrialized services and cloud computing because they can integrate these with their networking services. and European) have historically dominated the DCO market in Europe because of its specific geographic and cultural structure.S. Most of these clients are satisfied with the service they receive in this area and the relationship they have with their providers.
Turkey and Ukraine. Gartner's definition of Western Europe includes Austria. Italy. of which more than 20% are virtual servers. Denmark. Most data centers are provider sites. Central West: Belgium. Switzerland and the U. For the scope of this Magic Quadrant. the number of data centers they manage. Western Europe. the number of staff and clients they have. Bosnia and Herzegovina. Germany and Switzerland Western Europe. Each service provider varies significantly in size.000 servers. All Rights Reserved. Lithuania.000 servers. Poland. the underlying network infrastructure. These providers manage more than 1 million mainframe MIPS (million instructions per second) and more than 500. Market Definition/Description European Countries and Regions For the scope of this Magic Quadrant. Gartner defines Europe as the combination of Eastern and Western Europe. This generally includes the following items: System operations Tape operations Print operations Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. Greece. Inc. Slovakia. and unified communications and collaboration (telecom companies). Northwest: Ireland and the U. France. These providers are managing more than 500 data centers that span 22 European countries. others consider data centers as a necessary base capability to deliver end-toend services that extend to network services. We subdivide Western Europe into the following regions: Western Europe. Bulgaria. Gartner's definition of Eastern Europe includes Albania. Russia. Norway. Portugal. Macedonia. The average service provider represented in this Magic Quadrant records roughly $1. Finland.5 billion from this service line and manages more than 45. the Netherlands. France and the Netherlands Western Europe. Czech Republic. and their geographical coverage. Some of the providers view DCO as a strategic business. Ireland. Hungary. system integrators). Central East: Austria. with an average of more than 42 data centers in European countries. Slovenia. Croatia. Moldova. Page 4 of 23 . Others are client sites. Belgium. and the processes and organization that support this environment. Montenegro. For the scope of this Magic Quadrant. Germany. Their approaches to this service area also differ. or to application and business process services (outsourcers. Portugal and Spain Data Center Gartner defines "data center" as the centralized support of computer equipment in a secure facility. Romania. Northeast: Denmark. or are leased from third parties.K. and/or its Affiliates.K. South: Greece. Serbia. Finland. Spain. Italy. Latvia. Estonia.The 12 providers represented in this Magic Quadrant have a combined revenue of roughly $18 billion in DCO services. Sweden. Norway and Sweden Western Europe.
or both to ensure the success of the service recipient's mission. Remote-Infrastructure-Management-Based Service Delivery Remote infrastructure management (RIM) is a delivery model that providers often embed in DCO.Second-level data center support Production control Backup and recovery processes Technical support (operating systems. In this case. Show that they have nonmarginal data center delivery capabilities in at least three regions in Europe (see "Market Definition/Description" section). the client signs a single service contract with one service provider for the whole set of DCO services. technical options and interfaces define IUS. industrialized. Generate less than 70% of their total European DCO and utility service revenue in any single country in Europe. ITO can include a portfolio of product support and professional services that ESPs bring together to provide IT infrastructure. Gartner included service providers that: Demonstrate that they provide DCO services as a sole-source direct provider (we excluded data center services delivered entirely by partners or subcontractors). which organizations pay for based on resource usage. allocation or the number of users served. Page 5 of 23 . Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. and when a single service provider delivers RIM. desktop. Service outcomes. network and enterprise application outsourcing. All Rights Reserved. As in previous years. this Magic Quadrant excludes simple. asset-based IT infrastructure managed services (below the functional business application layer). In this contract. enterprise application services. which always includes an IT management service and is segmented into data center. subsystems) Performance analysis/capacity planning Storage management System security/contingency planning Asset procurement and third-party management Data Center Outsourcing DCO is a segment of IT outsourcing (ITO). Inclusion and Exclusion Criteria This Magic Quadrant focuses on management services for mainframe and centralized server environments — including IUS — to evaluate each service provider's capability to deliver DCO services across Europe. Inc. This is an acceptable approach in DCO relationships that are based on a client or third-partyowned data center. including the management and control of the hosting subprovider. dedicated Web hosting and colocation services. and/or its Affiliates. the main provider is responsible for end-to-end service delivery. Infrastructure Utility Services Gartner defines IUS as the provision of outsourced.
Exclusively focus and deliver pure hosting services. simple/dedicated hosting or a pure rental approach to data center capabilities. two new providers met the selection criteria: Steria and Telefonica. retention and reputation. and their ability to meet client requirements. systems. Engage in DCO service relationships that are not bundled — for example. coverage. which enable each provider's performance to be competitive and effective while positively affecting revenue. methods and procedures. All Rights Reserved. we also asked providers to detail their: Service line financials. when the client owns one contract with the hosting provider and one contract with the RIM provider. seamless delivery within different countries. Generate at least $100 million in annual European DCO and utility service revenue in Europe. Page 6 of 23 . as well as on their Western European footholds in terms of resources. deal structure and sales performance Value proposition. Product/Service For this highly weighted category.Generate a minimum of 10% of their total European DCO and utility service revenue in at least three European countries (not all part of the same region). samples of service-level agreements (SLAs) and pricing Deal pipeline. We judged providers on their ability and success in capitalizing on their vision. In 2010. clients. such as colocation. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. servers. Inc. RIM and low-cost locations IUS offerings. and/or its Affiliates. We gave special consideration to practice area profile and service capabilities in Europe. key differentiators and win/loss elements Added In 2010. Evaluation Criteria Ability to Execute Gartner evaluated these providers on the quality and efficacy of their processes. investments and other main indexes New-generation data centers. Gartner excluded service providers that: Deliver data center services entirely by partners or subcontractors. Dropped We did not drop any vendors from the 2009 Magic Quadrant. We required each service provider included in this Magic Quadrant to brief the authors and present its vision of the market and ability to execute. green IT and physical consolidation plans Global delivery. we evaluated each provider's capabilities and the services it offers.
which we weighted as "high. Resource and transition management measures each service provider's ability to: Effectively provide relevant resources to the customer. In particular. Page 7 of 23 . Market Responsiveness and Track Record This category. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. The categories of services for our study are: Practice area profile and service capabilities focus on: Overall European DCO revenue. capacity/configuration planning and consulting on consolidation. customer on-site support. be flexible. Efficiently transition assets." assessed each provider's capabilities in all presales activities and the structure that supports them.service definitions. competitors act. which we weighted as "standard. client numbers and staff allocated Data and control center locations. remote management. effective "resourcing" and transition management. We asked each service provider about the future outlook for this outsourcing segment of its business. such as full facilities management. which includes the provision of core and ancillary data center services." includes an assessment of the financial health of the organization's data center operations. Integrate staff coming from the client organization. and size Management team and position in the corporate structure Amount of MIPS and servers managed Core services and SLAs focus on: The management of SLAs. customers' needs evolve and market dynamics change. we considered growth in the volume per unit (MIPS and servers) as well as revenue in the outsourcing data center segment during the past three years. and to ensure business continuity in day-to-day service delivery. We also interviewed clients to gather feedback about their experiences with the service provider in terms of negotiation and pricing. ownership (provider or client). We gave specific consideration to teams in charge of deal management. as well as whether it expects revenue and margins to grow." assessed each service provider's ability to respond. change direction. Overall Viability This category. Inc. and the likelihood that the individual data center business unit will continue investing to support state-of-the-art delivery within the organization's portfolio of services. which we weighted as "standard. pricing and clarity of scope. Sales Execution/Pricing This category. decline or remain stable. and achieve competitive success as opportunities develop. All Rights Reserved. workloads and facilities. and/or its Affiliates. Complete transition projects to implement a global delivery model.
we considered communication processes. In particular." evaluated the reference customers' overall satisfaction with the service and the relationship." assessed the clarity. quality. Organization) Sales Execution/Pricing Market Responsiveness and Track Record Marketing Execution Weighting High High Standard Standard Low Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. skills. Ability to Execute Evaluation Criteria Evaluation Criteria Product/Service Overall Viability (Business Unit. transitional. programs. systems. relationships. capabilities and resources. We obtained reference customers by asking each provider for five Western European references for DCO services. We also asked for samples of global reports on SLAs. Such elements include client satisfaction as part of the evaluation criteria and incentive plans for the account teams. creativity and efficacy of programs that are designed to deliver an organization's message to influence the market. Page 8 of 23 . We asked providers to supply information about the facilities/services they provide. which we weighted as "high. physical and IT security. contract and service delivery management. We spoke to the service providers about their main procedures (operational. customer satisfaction and other relevant measures during the past 12 months. All Rights Reserved. and continuous improvement processes in place centrally and within the account management team. we considered important elements of a successful DCO customer experience. Strategy. and establish a positive association between the service/brand and the service providers in the minds of buyers. Factors include the quality of the organizational structure. promote the brand and business. quality control and assurance processes. experiences. locations. disaster recovery plans. methodologies — especially related to Information Technology Infrastructure Library (ITIL) processes — and other certifications available for all sites or specific data centers or clients. We required that these references follow the geographic distribution needed to participate in the study and the different vertical industries addressed. increase awareness of the services. continuous improvement and innovation. Financial. while satisfying contractual obligations for service delivery to clients. Customer Experience This category. Operations This category. which we weighted as "standard. relationship management and change management) and asked reference customers for their feedback about these procedures.We also asked clients for feedback on their providers' flexibility. and other vehicles that enable the service provider to operate effectively and efficiently on an ongoing basis. program management. which we weighted as "low. continuous improvement plans. Table 1. taking into account other Gartner client interactions. Marketing Execution This category. and backup procedures." assessed each provider's ability to meet its goals and commitments. In particular. and/or its Affiliates. the principal system platform they manage. Inc.
In particular. we considered: Current and future value propositions for DCO in Western Europe The importance of DCO services within the broader IT service portfolio Channels for internal and external communications The differentiation of a provider's message from its competitors' messages Sales Strategy This category. Market Understanding This category. We evaluated how each provider is trying to address the main requirements of Western European clients. its reactive answer to RFPs vs. In particular. and its dedicated vs. and on how well these map to Gartner's position. offerings bundled within other services. shared sales force. direct vs. we considered each provider's: Vision for DCO services Plans to differentiate itself from major competitors System for segmenting and analyzing the target market to drive marketing and sales Plans to position these services within the broader offering Marketing Strategy This category. and/or its Affiliates. its stand-alone offering vs. which we weighted as "standard." required each provider to illustrate its overall sales strategy for DCO (for example. In particular. which we weighted as "standard. Inc. indirect selling partners. allies and channels)." looked at each provider's main marketing messages related to DCO services in Western Europe." assessed each provider's corporate view of the data center services and outsourcing market in Western Europe. All Rights Reserved. its proactive answer. Ultimately. which we weighted as "low. customer needs and competitive forces. innovations.Evaluation Criteria Customer Experience Operations Source: Gartner (April 2010) Weighting High Standard Completeness of Vision Gartner evaluates service providers on their ability to convincingly articulate logical statements about current and future market directions. We also looked at the main effect that new technologies. delivery models and services would most likely have on each provider's business and delivery models in the short term and medium term. we considered: A high-level sales organization chart to illustrate the provider's go-to-market strategy Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. we rate providers on their understanding of how they can exploit market forces to create opportunities for their organizations. Page 9 of 23 .
as well as the established or planned remote premises." required each provider to specify the most-important aspects of the service offering that differentiates it in the market and delivers value to its clients. In particular. and factored the answers into our evaluation. centrally. centralized teams Client retention rate (driven by the ease of doing business with the provider and its focus on relationship management) Offering (Product) Strategy This category. as well as offers in the pipeline Countries covered by direct. Vertical/Industry Strategy Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. we asked for information about: The structure of the management teams used to support and manage customers The average experience. we considered each provider's: Ability to integrate client assets. and how it fits within the provider's overall business model. We asked each provider's client references for their judgment of the provider's business model.The number of dedicated personnel in Western Europe The number of offers issued during the past 12 months. which we weighted as "high. centralized delivery of DCO services (driving low cost and margin). We also asked for information about the approach to the global delivery model for DCO services. including account management and service delivery. We focused on how much of the service the provider bases on virtualized and automated platforms. All Rights Reserved. In particular. local teams vs. we asked each provider to describe the strategy for centralized delivery of standardized data center services. which we weighted as "high. To evaluate how well the provider's business model addresses account management." asked each provider for a high-level description of its business model for DCO services. and/or its Affiliates. we considered the ability to address and satisfy two competing requirements: clientspecific requirements (driving client satisfaction) and the industrialized. Page 10 of 23 . knowledge and skill level of executive management and the key customer-facing managers Processes to address customer issues locally vs. including data centers in Western Europe Ability to transfer data center staff from client to provider in each Western European country Approach to combining standard service elements into customized service delivery to provide flexibility and low-cost services Business Model This category. Inc. including customer access to the appropriate level of management within the service provider and to the escalation procedures To evaluate how well the provider's business model addresses delivery.
All Rights Reserved. even when using subcontractors or partners Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. provide full-service solutions or bring innovation closer to clients How each provider takes responsibility for managing the service delivered. global consolidation processes. Inc." evaluated each provider's position in the market as a thought leader and an innovator. In particular. we considered each service provider's: Penetration of different industries for DCO services Ability to demonstrate expertise in the vertical markets and business processes underpinned by DCO services Innovation This category. It also evaluated each provider on its leadership and investment to achieve its vision. processes and SLAs Virtualized and automated computing platforms Utility pricing units Reduced baselines and increased flexibility We asked client references for their judgment of their providers' ability to innovate." assessed each provider's strategy to direct resources. skills and offerings to meet specific client needs How infrastructure consolidation processes are affecting the practice area landscape Relationships with product and service providers to add value. including: Each provider's strategy to target markets in different Western European countries with the appropriate resources." looked at regional capabilities. Geographic Strategy This category. which we weighted as "standard.This category. which we weighted as "high. local alliances and partnerships. and/or its Affiliates. and to develop innovative strategies in the DCO market. and their "proactivity. In particular. including vertical industries." adaptability and service flexibility. skills and offerings to meet the specific needs of individual market segments. including the technical aspects of innovation. we considered the answers to these questions: What investments is your company making to sustain and enhance its vision for innovative DCO services? How do you offer innovation to your established and new customers? What innovative solutions have you provided to customers in the past 12 months? What global alliances do you have with other leading suppliers (and what investments support these alliances)? We also asked whether each service provider's utility-based offerings included: Highly standardized services. Page 11 of 23 . their ability to lower costs and improve the service. which we weighted as "low.
Table 2. Steria and Telefonica. Atos Origin. Visionaries Visionaries have a clear vision of the market's direction and are focused on providing services to meet future market needs. The Leaders quadrant includes. in alphabetical order. improved its margin. Page 12 of 23 . Challengers include. Challengers Challengers execute well today. They shape the market rather than follow it. Vendor Strengths and Cautions Atos Origin Strengths During a difficult year for most providers. Completeness of Vision Evaluation Criteria Evaluation Criteria Market Understanding Marketing Strategy Sales Strategy Offering (Product) Strategy Business Model Vertical/Industry Strategy Innovation Geographic Strategy Source: Gartner (April 2010) Weighting Standard Low Standard High High Low High Standard Leaders Leaders perform skillfully. a limited number of Western European markets or both. Logica. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. Atos Origin achieved growth in the DCO area. in alphabetical order. HP. and continued to invest in its data center estate and services. but they have a less-defined view of the market's direction. This has enabled it to strengthen its reputation in service resilience and high availability. They have a clear vision of the market's direction and develop competencies to maintain their leadership. They need to be more aggressive in outlining and communicating their strategy for the future. Fujitsu. Capgemini. while also reducing costs. and/or its Affiliates.We also asked reference clients for their feedback on local capabilities. and the current or potential effects of consolidation and global delivery processes. CSC. in alphabetical order. They need to improve their ability to deliver and penetrate the Western European market. Inc. Niche players include. IBM and T-Systems. and Siemens IT Solutions and Services. This narrow focus may affect their ability to outperform or innovate. All Rights Reserved. Niche Players Niche players focus successfully on a particular service. The only visionary in this Magic Quadrant is BT Global Services.
This may limit business flexibility. Atos Origin operates its data center ITO remote control centers in locations such as India. better manage the transition toward global delivery and fine-tune its change management function. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. and terms and conditions. VDC does not automatically manage physical servers or dedicated assets — BT can manage these only manually and offline. the speed of implementing homogeneous. stable and reliable data center services. its willingness to understand and respond to clients' IT and business needs. and on the offerings that it should pursue to leverage the potential sweet spot in midsize to large European organizations. Cautions Atos Origin's delivery structure still includes many people in high-cost locations. BT integrates management tools and consulting services (such as VDC Assess and Optimize) into VDC to bring it to market aggressively. and for its technical skills. baselines. BT's ability to migrate hybrid (physical/virtual) workloads into VDC to raise the level of virtualization in its installed base. This will limit the implementation of hybrid cloud services. Malaysia.Atos Origin has accelerated its delivery of industrialized services with the announcement of its Atos Sphere cloud offering. which provides flexibility and simple pricing mechanisms. for its focus on managing the relationship rather than the contract. especially in the mainframe area. the provider has grown its DCO revenue. BT has only launched it in the U. Inc. A positive level of investment in its key strategic offering. BT Global Services Strengths Despite a challenging market and BT Global Services' deep restructuring. VDC is pivotal to helping BT promote its managed infrastructure-as-a-service offering. Morocco and Poland. cloud providers and independent software vendors). It has also clarified the value of its partnership with HP. underlines BT's commitment to this market.. will force the provider to accelerate its strategic focus on specific vertical markets. and is just starting to introduce it in other countries. which it has mostly driven through renewal and smalland-midsize-business (SMB) deals. and/or its Affiliates. Clients reported that Atos Origin could offer innovation in its service approach more proactively. and its ability in transition and service-level management. and. Cautions While the VDC strategy is sound. Clients praised Atos Origin for its ability to deliver quality. Page 13 of 23 . coupled with Atos Origin's dependence on relatively few geographic markets. and France.K.K. and the overall flexibility of contract pricing. which now focuses on serving existing customers rather than developing new business. The desire to speed up the implementation of global delivery may create tension or delivery issues. in general. The increasing pressure from competitors (such as Indian vendors. The provider reports that about 20% of its business comes from utility-style services. namely the U. the VDC. All Rights Reserved. Clients praised BT for the attitude and technical skills of its staff. globally delivered services.
CSC Strengths CSC has developed a strong portfolio of standardized services. Capgemini's industrialized offerings require continued focus and investments. Clients reported that BT needs to reduce its reliance on key personnel. and progressive consolidation of control center activities into a standardized. Clients reported that Capgemini could better fine-tune its transition to global delivery locations. or for deals with European multinational corporations that operate in the U. and manage service levels to proactively support continuous improvement initiatives. BT remains behind the ability of market leaders to deploy remote infrastructure services from low-cost locations. Capgemini's coverage remains limited in the U. as well as faster go-to-market models. to Europe. In addition. This may put Capgemini at a competitive disadvantage when competing to roll out services from the U. it will take time for this goal to deliver costbenefits. investment in new generation data centers. The execution of its aggressive consolidation plan. and integrate subcontractors or other internal parties. Despite its focus on enhancing global delivery capabilities in India (Mumbai). India-based Infrastructure Management Operations Center confirms Capgemini's continued focus on IT infrastructure services. and in Asia/Pacific. All Rights Reserved. and BT will need to manage this process carefully to keep customers (especially nonstrategic customers) satisfied. Clients also praised the provider. Inc. Capgemini Strengths Capgemini continues to evolve a balanced portfolio of end-to-end IT services. However." and establish infrastructure management as the foundational layer of Capgemini's other value-added services.S. Cautions Despite its size in Europe.S. and must further reinforce its ITIL orientation and ability to support clients in their journey toward adopting global delivery and industrialized services. underpin those locations with seamless processes and procedures.S. Clients praised Capgemini for its ability to deliver resilient services at a competitive price. the development of a new service catalog of standardized services is likely to progressively underpin all of Capgemini's new "solutioning. Although Capgemini focuses on customer relationships. innovation and service industrialization are the other key dimensions of its i3 programs. for its practical client management. and/or its Affiliates. The lack of a visible portfolio of industrialized offerings and growing economies of scale may limit Capgemini's ability to address clients' need for flexibility and cost containment during a challenging 2010. which operates its ITO remote control centers in locations such as India and Spain.BT is aiming to consolidate data center capabilities while rationalizing the portfolio of services that it delivers to clients. It may also limit Capgemini's growth potential in this service line. and quickly strengthened its image as a service provider for cloud assessment services and hybrid Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. and weak in Asia/Pacific. Page 14 of 23 .
After years of innovation focused on custom-made service provisioning. its flexibility in managing client relationships. Fujitsu has already engaged 10 third-party channels to execute this approach. which will help CSC retain control over existing clients that are looking for cloud solutions. Fujitsu Strengths Despite a complex year following the acquisition of Siemens' share of Fujitsu Technology Solutions. which include a significant number of large Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. This deal will also serve as a springboard for CSC's European DCO business. and perform changes in a more timely way. CSC has not yet clarified how it plans to approach smaller deals/opportunities from a broader set of companies. Although CSC has not indicated plans to invest in building new data centers. the quality and competence of its technical skills. and the related focus on restructuring and standardizing on a more integrated organization. while also leveraging an indirect go-to-market approach for services and cloud-based offerings for SMBs. During the next two years. Inc. and/or its Affiliates. Solid marketing initiatives will bring in sales opportunities and business in the short term. Aggressive plans to increase its offshore ratio and reduce staff for large clients could create significant turbulence during 2010 and 2011. Cautions CSC has intensified its focus on cloud-based and utility services. Russia and South Africa) that are too limited. Fujitsu is finally delivering the first industrialized offerings as market-facing assets. its IT skills in areas such as mainframe and security. Clients praised CSC for its ability to manage day-to-day data center operations. Fujitsu has continued its data center consolidation and investment plan. CSC's nearshore/offshore footprint is still behind others (its main remote control center is located in India). and achieved growth in line with the market. This reflects the requirements that its customers. with an initial pipeline of utility deals. and its transition management capabilities. manage service levels more effectively. which were traditionally focused on large enterprises and relatively large deals. Fujitsu is still relying on global delivery/low-cost capabilities (located in India. All Rights Reserved. This challenges CSC's strategy and go-to-market model. CSC will absorb significant assets and capabilities from the megadeal it recently closed with Zurich Financial Services Group. it has successfully consolidated its data centers. Cautions Despite recent improvements. Clients reported that CSC could become more proactive in supporting continuous improvement and innovation.solutions. Page 15 of 23 . and the outcomes it has achieved through its approach to transition management. and optimized available space and the average power usage effectiveness (PUE) of its data centers in Europe. Clients praised Fujitsu for its reliability in delivering data center operations. which will reduce the size of deals and clients that CSC aims to address.
HP's utility service offering is sound. its focus on governance and relationship management. Cautions Although the EDS integration process is well under way. which include existing ITO remote control data centers in locations such as Bulgaria. They also commended the potential of HP's global capabilities. HP also has broad and deep delivery capabilities. However. have made so far. which can cause service delivery challenges and lower customer satisfaction. a broad well-structured and organized portfolio. HP needs to increase its ability to manage a large number of smaller utility deals. HP has completed the legal integration and harmonized the portfolio. Inc. Clients reported that Fujitsu could improve its ability to manage new requests. Clients reported that HP could improve its ability to promptly react to new requests and changes. These third parties might then increase the need for HP to update and create a more automated service delivery and management model. and its expertise in ITIL. Page 16 of 23 . it has not yet fully integrated the delivery engine.government organizations. This is likely to require Fujitsu to further advance its design and ramp up its service delivery capabilities. that it must improve the transition process toward global delivery. it still requires additional time and effort to complete. proving the relative immaturity of its new utility and hybrid cloud offerings. Fujitsu must implement its consolidation plan more aggressively to reduce the cost of operations and protect its margin. as occurred during the second half of 2009. testing indirect channels as a route to market across Europe. and HP is. in fact. All Rights Reserved. and that it should focus on delivering innovation and continuous improvement. HP significantly reduced the number of client-owned data centers in Europe. The proportion of servers that Fujitsu has virtualized is lower than the average. HP Strengths HP grew its DCO business despite the economic crisis and its EDS integration activities. Clients praised HP for its robust data center operations. and a strong pipeline. and its ITIL competency. backed up by a clear vision. after having used its first indirect channel in Eastern Europe. The increasing share of and focus on utility services may affect revenue growth because utility service deals are smaller and the revenue from large clients shifts to lower-cost utility services. and it plans to further consolidate these while adding a couple of new data centers with a PUE below 1. and manages more virtual machines as part of its DCO business than the average provider in this market. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner.3. Slovakia. India and Malaysia. In the past two years. its focus on proactively delivering continuous improvement. HP increased its managed MIPS significantly in 2009 and is deploying a new single global toolset for service management across all its data centers. and/or its Affiliates. In addition. HP has a large client base for its utility services and six utility data centers in Europe.
All Rights Reserved. India and South Africa. its ITIL orientation and its performance in transition management. Offerings for utility services are sound and complement Logica's DCO portfolio. as well as one of the most powerful R&D engines. but its commitment to and focus on dynamic and utility infrastructures remain unclear. This gives IBM the potential to satisfy the demand for high-quality services and processes that smaller customers require. IBM also must continue to demonstrate to the market that it cares about smaller clients by showing how these clients can leverage IBM's most comprehensive global delivery model and industrialized offerings. Hungary. IBM's structured approach to innovation has the potential to develop into new and more efficient services for its customers. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. and/or its Affiliates. Page 17 of 23 . and a good protracted focus on infrastructure outsourcing that supports the growth of its DCO business. its focus on process quality and stability. its ability to handle change. its significant investments and its data center consolidation plan will improve its DCO position in those European markets. IBM's portfolio of industrialized offerings does not appear to be entirely integrated within its outsourcing approaches. brand recognition and technical capabilities. its global delivery potential. and lacks a clear path from "on demand" toward the cloud. IBM could also fine-tune the transition to global delivery and proactively offer industrialized services. and expanded that setup with the addition of Morocco in 2010. Logica improved its global delivery setup by enhancing its capabilities in India in 2009. Cautions IBM's cloud message to the market is sound. especially in light of a perceived high level of organizational complexity/bureaucracy. Logica also plans to invest further in RIM capabilities and in an additional global delivery toolset. IBM operates its ITO remote control centers in locations such as the Czech Republic. Logica Strengths Logica maintains a strong presence in Europe. Clients praised IBM for its robust data center services. To maintain DCO leadership in the long run. It made the most of its QMS framework. IBM listened to its customers when they requested a higher quality of service. and customers seeking an end-to-end solution can combine Logica's DCO portfolio with solid application services. Clients reported that IBM could improve its ability to react flexibly. and its ability to manage service levels while driving quality assurance and improvement. Logica's presence in key European markets. IBM must extend its message beyond green IT and smart services for data centers. IBM needs to carefully manage the push toward the cloud to avoid cannibalizing profits within its installed base. Inc. Clients praised Logica for its customer focus. which spans delivery and governance to focus on continuous improvement work and improve service quality. it is now competing more directly with traditional and increasingly nontraditional players.IBM Strengths While IBM still maintains the most comprehensive presence.
while volume flexibility is higher. SIS has been slow to execute its server virtualization program. while it's not leveraging innovative. and now it extends to cloud propositions such as brokerage. SIS has started an aggressive plan for utility and cloud-based DCO offerings to exploit the potential for virtualization. SIS will need to take decisive action to consolidate its data centers and standardize service delivery to restore growth. security (identity and asset management) and industrialization. Inc. Although this would be a positive and necessary step. and/or its Affiliates. as well as its ability to deliver continuous improvement and translate its client focus into true flexibility. Page 18 of 23 . underpins Siemens IT Solutions and Services' (SIS's) traditional leading position in Germany and Austria. industrialized approaches quickly enough. SIS's ability to take advantage of low-cost capabilities to realize their potential is still limited when compared with market leaders. SIS. Its strategy is centered on key themes such as energy optimization. Clients reported that Logica could refine its link between problem and change management for major issues. its flexible attitude in relationship management. but still limited to a few selected geographies. as well as an improved and comprehensive penetration strategy for the European DCO market. while balancing profitability. For example. Clients praised SIS for its customer focus. Logica treats IUS as business as usual. SIS is also using its consulting services and a solidly engineered model for industrialized data center services to support these offerings. Cautions SIS's revenue declined overall and in DCO in 2009. it should further accelerate its global delivery expansion because it is behind the competition in terms of the volume it delivers globally. All Rights Reserved. In line with the market's evolution. the quality of its IT skills and its proactive attitude in promoting industrialized offerings. After a period of acquisitions.Cautions Although Logica expanded its capabilities in India. Logica's utility story is solid. which has located its main ITO remote control center in Romania. but needs to accelerate. because SIS is currently restructuring the company after appointing a new CEO. clients would need to monitor service delivery quality and their relationship with established SIS executives during any consolidation and standardization program. but it is accelerating the execution of this program through a recent agreement for vCloud. which has been in place with VMware since 2006. Siemens IT Solutions and Services Strengths A renewed focus on outsourcing services and large deals. Logica should speed up its data center consolidation program and the implementation of a twin data center strategy to catch up with its main competitors. has recently started to enhance its RIM capabilities in India. The provider's average contract duration in this area is longer than its competitors' average deal terms. automation and integration across its client base. In general. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. SIS's focus on the industrialization of DCO services is sound.
Steria Strengths Steria mostly focuses on France and the U. Inc. which addresses the needs of outsourcing clients in continental Europe. which has located its main ITO remote control centers in Poland and India. such as global delivery deployment. and an international proposition that is mostly based on its industrialized dynamic infrastructure services and cloud computing. As it pursues the need to drastically consolidate data centers in the next few years. is still developing its RIM capabilities in low-cost locations. and a vertical approach to meet the needs of industry leaders. Steria maintains a strict approach to qualifying deals while working to become a player that can support transformation through flexibility. its drive to proactively deliver innovation and continuous improvement. the creation of an industrialized platform for infrastructure services. and for its ITIL expertise. it could also fine-tune service-level management and better drive innovation and the allocation of key staff. and its level of consolidated. T-Systems Strengths T-Systems' revised and focused strategy on the top-400 corporate customers. and has demonstrated its ability to Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. Steria's limited visibility outside the U.. Steria must carefully manage service delivery quality and client satisfaction. underpin Steria's strategy to grow its DCO business. All Rights Reserved. onshore and remote capabilities to deliver DCO services. Steria must shift its focus from industrializing its internal delivery model to creating a portfolio of industrialized service offerings. Steria. Cautions Steria's data center penetration of the European market is patchy.Clients reported that SIS could improve its transition process when consolidating or moving to global delivery. assetbased delivery remains limited. Steria's combination of in-house. In addition to this ambition.K. a blended delivery model and local presence. with 74% of its DCO business in the U. is a sound strategy to support the provider's ambition of becoming a more recognized European DCO provider. Finally. and France could hinder its potential to expand through Pan-European deals. has closed a number of deals with major clients. are paying off. Clients praised Steria for responding well to customers and maintaining a positive level of client intimacy.K. but is looking to expand more in Germany and the Nordic countries. and its service-level management reporting.K. for its ability to guarantee resilient data center operations. T-Systems has increased its visibility as a successful telecom and IT provider. Clients reported that Steria could improve its ability to react to change requests. Gartner estimates that T-Systems' dynamic industrialized offering has already achieved 20% of its outsourcing business and is growing fast. and/or its Affiliates. Page 19 of 23 . Acquisitions and a late but sound focus on key themes. and France and another 10% in Norway. is serving more than 120 clients with its infrastructure utility for SAP offering.
Clients reported that T-Systems should respond to new requests faster. Clients praised T-Systems for its ability to provide stable and resilient services. Germany and Eastern Europe. and its operations in North and South America. Hungary. rapid deployment of low-cost global delivery capabilities and continued development of its dynamic service offerings will position T-Systems as a more credible global player. its customer focus. which has been overdue for a long time. T-Systems has revised its service catalog to include a significantly reduced and standardized set of offerings. Despite winning important contracts. such as the U. It can also derive future growth by continuing to focus on geographies. Page 20 of 23 . and/or its Affiliates. offer improvements to services more proactively. Clients praised Telefonica for the quality and reliability of its infrastructure and data center services. and its broad set of technical skills and services. as well as in the number of smaller contracts and clients. and improve its ITIL focus to further increase the performance of its processes. Its revised service catalog and faster implementation of global delivery are likely to lower service costs and deliver higher returns on investment. Telefonica Strengths Telefonica can rely on its strong presence in the Iberian market. and its flexible approach to account management. to support clients with operations (or growth ambitions) in these regions. T-Systems must further penetrate the European market and reinforce its brand awareness — particularly in the Nordic countries. which it has supported by the investment necessary to develop industrialized managed data center services. which will place the provider's global capabilities and delivery network under pressure. Its 3P approach to connect the network/data center platform to people and processes to deliver integrated client services is also sound. utility offerings are driving an increase in the number of T-Systems' new large deals. and has accelerated its implementation of global delivery. Mexico and Malaysia. Although it has substantial potential to penetrate the European market. However. All Rights Reserved. which has located its main ITO remote control centers in Slovakia. Cautions The global capabilities and delivery network of T-Systems. T-Systems will need to develop or tailor specific offerings to achieve future growth in vertical sectors (such as automotive and financial services) that are facing particular challenges or are restructuring. and by exploiting converging IT and telecom services. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner.. Inc. its ability to manage service levels over time. the macroeconomic climate has placed its business under pressure in Germany. Telefonica has demonstrated a positive vision and commitment. Only continued sales growth. are evolving rapidly.K.offset — at least for data center services — the declining revenue from its internal services to Deutsche Telekom. address its reliance on a complex and bureaucratic structure. the technical skills and technological depth of its engineers.
Clients reported that Telefonica could improve its incident management and ability to manage end-to-end processes. Telefonica has created and deployed a global remote infrastructure service model that is very limited. and to leverage opportunities across its DCOs in the U.S. the mix of vendors in any Magic Quadrant or MarketScope may change over time. Page 21 of 23 . All Rights Reserved. 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 Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. coupled with its scattered and limited European presence for this service. Inc. They also said that Telefonica could benefit from increasing its focus on ITIL competencies and the proactive delivery of innovation. Western Europe" "Stay Ahead of Data Center Outsourcing and Infrastructure Utility Market Trends in Europe" "BT's Restructuring and Finances Are a Manageable Risk" "2010 Outlook for HP in Europe After the EDS Integration" "T-Systems Accelerates Move Into Infrastructure Utilities and Cloud Computing" "Infrastructure Utility for SAP: Comparing Five Leading Offerings" "Infrastructure Utility for SAP: Comparing Contract Terms and Service Levels" "Infrastructure Utility for SAP: Comparing Architectural Offerings" "Case Study: Areva Gains IT Flexibility Through an Infrastructure Utility" "Keiper: Adopting an Infrastructure Utility for Flexibility and Efficiency" "Oxea Shows How Infrastructure Utility Can Deliver Speed and Efficiency" "Case Study: Nampac Adopts the IBM Infrastructure Utility for SAP Applications" Vendors Added or Dropped We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. and/or its Affiliates. this is likely to leave Telefonica at a disadvantage when competing against providers that are taking a much more aggressive approach to developing these capabilities. Telefonica plans to invest to enhance its low labor cost control center capabilities in Brazil and the Czech Republic through 2012. RECOMMENDED READING "Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market" "Magic Quadrant for Data Center Outsourcing Services.Cautions Telefonica is not a widely recognized brand in the delivery of DCO services. Despite some early success in moving client workloads in its data centers in Eastern Europe. As a result of these adjustments. with risks of escalating costs per sale and challenges of service standardization and service delivery processes for larger deals. and this. In the short term. and Latin America. Its focus on small deals is likely to support slow growth. will challenge its European DCO expansion. compared with those of leading competitors in Europe.
Financial. advertising. This "mind share" can be driven by a combination of publicity. and/or its Affiliates. Organization): Viability includes an assessment of the overall organization's financial health. and establish a positive identification with the product/brand and organization in the minds of buyers. etc. and the likelihood of the individual business unit to continue investing in the product. competitors act. Specifically. etc. to continue offering the product and to advance the state of the art within the organization's portfolio of products. experiences. Strategy. Vendors that show the highest degree of vision listen and understand buyers' wants and needs. programs. pricing and negotiation. Inc. Factors include the quality of the organizational structure including skills. customer programs and positioning statements. or a change of focus by a vendor. changed evaluation criteria. systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis. customer needs evolve and market dynamics change. Market Responsiveness and Track Record: Ability to respond. promotional. Page 22 of 23 . Marketing Execution: The clarity. Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner. the financial and practical success of the business unit. and can shape or enhance those with their added vision. customer support programs (and the quality thereof). Completeness of Vision Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. availability of user groups. pre-sales support and the overall effectiveness of the sales channel. whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria. This criterion also considers the vendor's history of responsiveness. This can also include ancillary tools. quality. Evaluation Criteria Definitions Ability to Execute Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. products and services/programs that enable clients to be successful with the products evaluated. Overall Viability (Business Unit. quality. feature sets. differentiated set of messages consistently communicated throughout the organization and externalized through the website. creativity and efficacy of programs designed to deliver the organization's message in order to influence the market. increase awareness of the products. Customer Experience: Relationships. skills. All Rights Reserved. Operations: The ability of the organization to meet its goals and commitments. service-level agreements. Marketing Strategy: A clear. thought leadership. change direction. therefore.vendor. This may be a reflection of a change in the market and. word-of-mouth and sales activities. promote the brand and business. this includes the ways customers receive technical support or account support. be flexible and achieve competitive success as opportunities develop. This includes current product/service capabilities. This includes deal management.. Sales Execution/Pricing: The vendor's capabilities in all pre-sales activities and the structure that supports them.
CT 06902-7700 U. Geographic Strategy: The vendor's strategy to direct resources. including verticals. 141 Walker Street North Sydney New South Wales 2060 AUSTRALIA +61 2 9459 4600 Japan Headquarters Gartner Japan Ltd. related. +1 203 964 0096 European Headquarters Tamesis The Glanty Egham Surrey. 12551 9° andar—World Trade Center 04578-903—São Paulo SP BRAZIL +55 11 3443 1509 Publication Date: 27 April 2010/ID Number: G00175572 © 2010 Gartner.A. Innovation: Direct. skills and offerings to meet the specific needs of geographies outside the "home" or native geography. Tokyo 153-0042 JAPAN +81 3 3481 3670 Latin America Headquarters Gartner do Brazil Av. consolidation. defensive or pre-emptive purposes. skills. and/or its Affiliates. services and the customer base. Business Model: The soundness and logic of the vendor's underlying business proposition. technologies. channels and subsidiaries as appropriate for that geography and market. Aobadai. TW20 9AW UNITED KINGDOM +44 1784 431611 Asia/Pacific Headquarters Gartner Australasia Pty. marketing.Sales Strategy: The strategy for selling product that uses the appropriate network of direct and indirect sales. 4-chome Meguro-ku. Level 9. das Nações Unidas. Ltd. complementary and synergistic layouts of resources. functionality. expertise or capital for investment. Page 23 of 23 . 6F 7-7. Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation. methodology and feature set as they map to current and future requirements. service and communication affiliates that extend the scope and depth of market reach. expertise. either directly or through partners. Aobadai Hills. All Rights Reserved. skills and offerings to meet the specific needs of individual market segments. Inc.S. REGIONAL HEADQUARTERS Corporate Headquarters 56 Top Gallant Road Stamford. Vertical/Industry Strategy: The vendor's strategy to direct resources.