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Microsoft Study Shows Digital Infrastructure Overtaking Physical

A new study from Microsoft has found that organizations now rely more on digital infrastructures than they do on physical infrastructures. The findings indicate that cloud deployment models have now overtaken any other type of deployment in the technology sector, according to the company, which asked tech research firm 451 Research to conduct the study.

“As organizations prepare for major business and technology changes, they will depend more on digital platforms to deliver products and services,” the company wrote in a statement Wednesday. “According to the findings from the study, 57 percent of organizational infrastructure will be digital, compared with physical in two years, up from 51 percent today.”

Cloud Providers Seeing High Renewal Rates

“The Digital Revolution, Powered by Cloud” study also found that 95 percent of customers intend to renew their contracts with their primary cloud and hosting providers, which Microsoft said indicated a high degree of customer loyalty despite the inherent flexibility of the cloud model.

“These findings underscore the opportunity for service providers to drive organic business growth by nurturing long-term customer relationships,” said Aziz Benmalek, vice president, Hosting and Cloud Service Provider Business, Microsoft, in the statement. “By adapting and servicing customers through their entire cloud life cycle and keeping turnover low, cloud service providers will avoid costs associated with churn and new customer acquisition, while benefiting from increased stability and more projectable revenue streams.”

In addition to high renewal rates, the study also found that more than 80 percent of customers have annual or longer-term contracts with their primary cloud and hosting providers, with 43 percent having contracts of two or more years, according to Microsoft. Thirty-eight percent of customers indicated they plan to increase spending with their primary cloud and hosting service providers when they renew their contracts.

Beyond Infrastructure

The opportunity for service providers extends beyond infrastructure hosting, with 71 percent of customers’ cloud and hosting budgets now allocated to managed services, application hosting, and security services, according to the report.

“Cloud adoption is a key driver in the digital transformation for organizations of all sizes, and service providers can benefit from adopting a more complete approach to the customer life cycle to help them throughout this process,” said Michelle Bailey, senior vice president, Digital Infrastructure and Data Strategy, 451 Research, in the statement. “Trustworthiness, product quality and technical expertise are key differentiators that can enable cloud providers to retain customers and grow their business.”

The study surveyed more than 1,700 IT decision-makers across small, midsize, and large organizations worldwide regarding their cloud and hosting buying intentions. The study gauged customer opinions and behaviors on issues such as budget allocation, cloud adoption, and business priorities. Countries covered in the study spanned mature and emerging markets, including Australia, Brazil, Germany, India, Japan, Netherlands, Singapore, Turkey, the U.K,. and the U.S.

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