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U.S. Public Sector’s Cloud Push Boosts Azure’s Importance

More state, local and educational organizations use the cloud to rein in costs and gain flexibility, choosing Azure in many cases, ISG Provider Lens™ report says

More U.S. public-sector organizations are turning to the cloud for their core IT infrastructure, boosting demand for Microsoft Azure and related services from ecosystem partners, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2024 ISG Provider Lens™ Microsoft Cloud Ecosystem report for the U.S. Public Sector finds that Azure is the de facto cloud platform for a majority of state, local and educational (SLED) entities. As these organizations strive to better serve constituents despite shrinking IT resources, Azure is becoming essential to productivity, communications, server and storage functions at many agencies.

“Effective use of Azure allows public agencies to efficiently provide services that have a positive impact,” said Nathan Frey, partner and lead, ISG Public Sector, for the U.S. “Experienced IT service providers play a key role in getting the most out of Azure’s capabilities.”

SLED organizations are migrating to the cloud for several benefits that are beyond the reach of their limited internal resources, the report says. In the cloud, they can scale computing power, networking and storage up and down as demand changes. They also gain access to enhanced security, the agility to adopt new technologies and the ability to more closely align their IT and business strategies.

Rising cloud adoption partly reflects the U.S. public sector’s growing focus on cybersecurity and compliance, ISG says. With Azure, Microsoft is responding by moving toward a zero-trust architecture, which continuously verifies access to enterprise systems, and increasing investments to ensure Azure solutions adhere to a growing array of data privacy and security regulations.

Many state and local governments are also under pressure to increase engagement with the public by offering constituents better ways to communicate and access information, the report says. Azure provides AI-powered chatbots, virtual assistants and sentiment analysis tools to support these initiatives. Governments are also using analytics and ML tools in Azure to identify issues, predict demand and allocate resources.

SLED organizations also are migrating their SAP environments to the cloud at an accelerating pace for better scalability and security, lower costs and simplified maintenance, ISG says. This has increased demand for SAP on Azure services from a large ecosystem of providers. Agencies are also embracing Microsoft Power Platform services, which enable more employees to quickly create new applications through low-code/no-code methods.

“As Azure and its ecosystem evolve, the possibilities keep expanding, even as many state and local agencies are still catching up with private-sector cloud initiatives,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Service providers with public-sector experience make it easier to chart the best course.”

The report also explores other Azure ecosystem trends affecting the U.S. public sector, including the growing use of Azure managed services to solve cloud management challenges and the rising importance of using provider services delivered from within the U.S.

For more insights into the challenges faced by U.S. SLED organizations, including skills shortages and the complexity of moving data from legacy platforms to the cloud, see the ISG Provider Lens™ Focal Points briefing here.

The 2024 ISG Provider Lens™ Microsoft Cloud Ecosystem report for the U.S. Public Sector evaluates the capabilities of 31 providers across four quadrants: Managed Services for Azure, Microsoft 365 Services, SAP on Azure Services and Power Platform Services.

The report names Accenture & Avanade, Cognizant, DXC Technology, IBM, Infosys, Kyndryl, TCS and Wipro as Leaders in all four quadrants. It names NTT DATA and Unisys as Leaders in three quadrants each. Capgemini and Rackspace Technology are named as Leaders in two quadrants each. Hexaware is named as a Leader in one quadrant.

In addition, HCLTech is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in all four quadrants. Hexaware is named as a Rising Star in one quadrant.

In the area of customer experience, Bechtle is named the global ISG CX Star Performer for 2024 among Microsoft cloud ecosystem providers. Bechtle earned the highest customer satisfaction scores in ISG's Voice of the Customer survey, part of the ISG Star of Excellence™ program, the premier quality recognition for the technology and business services industry.

A customized version of the report is available from Unisys.

The 2024 ISG Provider Lens™ Microsoft Cloud Ecosystem report for the U.S. Public Sector is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including AI and automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.

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