This blog is based on the competitive analysis, Frost Radar™: Managed Cloud Services, 2025, by Frost & Sullivan’s growth expert, Anisha Vinny, from the Cloud Technologies team.
Today, IT stacks are growing increasingly intricate, with businesses striving to unify legacy infrastructure, multi-cloud environments, and edge architectures. Additionally, data generated by increasing adoption of AI, the Internet of Things (IoT), and 5G are adding to this complexity, introducing multifaceted challenges in cloud migration, integration, and security. To stay focused on their core business goals, enterprises are offloading the management of their cloud infrastructure, applications, and orchestration tasks to third-party providers that specialize in cloud management and optimization services that support broader digital transformation initiatives. This shift is fueling growth in cloud managed services.
Frost & Sullivan analyzed multi-cloud startegies, AIOps initiatives, and cloud infrastructure of 11 managed cloud service providers.
However, as the demand rises, so does competition. Large system integrators are rapidly broadening their cloud portfolios, combining their technical know-how with industry-specific business expertise. At the same time, mid-sized cloud providers are challenging them by delivering more agile and budget-friendly solutions—making the race to capture a great share of enterprise cloud spending an uphill task. To secure continuous growth amid these industry dynamics, providers must proactively adapt to the following eight imperatives:
- Disruptive Technologies
Generative AI (GenAI) and Financial Operations (FinOps): Investing in AI-driven automation and intelligent management platforms that empower agile, cost-efficient, resilient cloud operations. This includes using AI to optimize workload placement, strengthen predictive analytics, automate threat detection and response, monitor compliance, and dynamically allocate compute/storage/network resources based on demand.
- Industry Convergence
Hyperscaler Partnerships: Deepening partnerships with hyperscalers such as AWS, Microsoft Azure, and Google Cloud to strengthen multi-cloud and hybrid cloud delivery capabilities. These alliances will help managed service providers (MSPs) scale their offerings, drive co-innovation, and enhance customer experience, especially in complex IT environments.
- Competitive Intensity
Differentiation Through Verticalized Cloud Services: Developing a portfolio of outcome-based, customized cloud solutions tailored to the operational, security, and compliance needs of highly regulated industries such as financial services, healthcare, and the public sector. These verticalized offerings will help providers stand out in an increasingly crowded market.
- Internal Challenges
Cloud Cost Optimization: Support enterprise customers in eliminating data silos, avoiding over-provisioning, right-sizing infrastructure, and reducing cloud costs without compromising their ability to harness the benefits of emerging technologies like AI. This also means offering more flexible pricing plans and packages (pay-as-you grow) that better support cloud change management.
Considering these imperatives, how will you adapt your strategies for cloud migration, modernization, governance, and operations?
- Innovative Business Models
Integrated Data Services: Maximizing the value that enterprises derive from data by facilitating end-to-end data
management—from standardization and cleaning to creating unified datasets that unlock meaningful insights. These value-add services will not only improve data quality but also help organizations define holistic AI strategies, thereby creating additional revenue streams for providers.
- Transformative Megatrends
Data Sovereignty and Cybersecurity: Developing solutions to ensure that data stored in the cloud complies with data sovereignty laws of different countries and regions. Additionally, strengthening cloud infrastructure and security to resist AI-powered cyber-attacks, by leveraging advancements in quantum computing and zero trust frameworks.
Click here for an in-depth view of customer priorities, purchase decisions, and investment plans related to cloud, IT, and AI spends.
- Geopolitical Chaos
Adapting Growth Strategies: Personalizing cloud application services, delivering faster time-to-value, and supercharging risk management so that enterprises can accelerate cloud modernization initiatives amid macroeconomic challenges like inflation, pricing pressures, rising interest rates, and increasingly conservative IT spending.
- Disruptive Technologies
Supporting Edge-to-cloud Configurations: Developing innovative tools and platforms that help enterprises integrate edge devices with cloud infrastructure to better facilitate real-time processing and low-latency applications across distributed environments.
In conclusion, as IT environments grow more distributed and dynamic, managed cloud service providers have a critical opportunity to lead enterprises through digital transformation. Those who invest in automation, verticalized services, and robust AIOps/FinOps platforms will find themselves well positioned to address the challenges of cloud modernization, security optimization, and hybrid infrastructure management.
Which partnership strategies will help you unlock the full potential of a hybrid or multi-cloud approach?
Click Here to connect with our Cloud Technologies growth experts for customized opportunities, technology strategies, and best practices for your organization’s specific needs.
