g00223238 magic quadrant for managed hostingc14037907.r7.cf2.rackcdn.com/gartner magic quadrant for...

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Magic Quadrant for Managed HostingPublished: 5 March 2012

Analyst(s): Ted Chamberlin, Lydia Leong

Managed hosting solutions can be offered on both physical and virtualizedinfrastructures, including cloud infrastructure as a service. The market ismature, but cloud capabilities are disruptive, and vendors must be chosenwith care.

Market Definition/DescriptionManaged hosting bundles Internet data center facilities together with provider managed network,storage and computing services. The infrastructure components may be physical or virtual, and maybe dedicated or shared. At a minimum, the provider must manage the server OS, including theguest OS if virtualization is in use; the provider may optionally provide other managed andprofessional services related to the operations of the infrastructure, excluding management of theapplication itself. It is a productized, standardized service, with limited customization. It is sold as astand-alone, without the requirement to bundle it with application development, applicationmaintenance or other outsourcing.

This Magic Quadrant is focused on the enterprise-class, managed hosting market, regardless ofwhether the hosting is done on physical servers or a virtualized infrastructure. The following servicesare part of the covered market, and will collectively be referred to as "managed hosting" for thepurposes of this Magic Quadrant's definitions:

Managed dedicated hosting: This service includes physical servers dedicated to a singlecustomer, owned and hosted by a service provider. At a minimum, server OS managementmust be included.

Managed utility hosting: This service includes virtual machines (VMs) within a shared,multitenant environment that are owned and hosted by a service provider, and offered to thecustomer on a flexible capacity basis, generally by the month. At a minimum, server OSmanagement must be included.

Managed cloud hosting: This service includes a cloud infrastructure as a service (IaaS)platform — a standardized, highly automated environment, where computing resources,complemented by storage and networking capabilities, are owned and hosted by a serviceprovider, and are offered to the customer on demand, generally by the hour. This offering maybe public (multitenant) or a private (single-tenant) cloud IaaS. The customer must be able toself-service this infrastructure, but at a minimum, server OS management must be included.

Managed hybrid hosting: This service mingles managed, dedicated hosting with cloud IaaS.The customer uses a mixture of dedicated physical servers and VMs on a cloud IaaS. At aminimum, server OS management must be included for some of the infrastructure, although thecustomer may mix a managed and self-service infrastructure.

In addition to server OS management, optional managed and professional services related toinfrastructure operations may be offered, such as:

Management of infrastructure software at the middleware layer, such as Web server software,application servers and database servers

Management of storage, including backup and recovery

Management of security

Management of other network devices, such as application delivery controllers

Professional services associated with hosting, such as architecture, capacity planning,performance testing, security auditing and data center migration

Managed hosting services are productized and standardized, although some providers offercustomized services for specific customer needs that cannot be met with the standardized services.Some customers choose a fully managed service in which the service provider manages the systeminfrastructure (computing, storage and network) and application infrastructure (middleware), but notthe application. Others prefer to choose from a menu of a la carte management services. Forinstance, some need only database administration services, while others want junior-level systemadministration tasks such as patch management handled for them, but want to do all the complexwork themselves. Your choice depends on your needs and IT capabilities.

We separate the concept of a cloud IaaS platform from the concept of services that are delivered ontop of that platform. Managed hosting is simply one of many services that can be delivered on acloud IaaS platform, or more broadly, on an infrastructure that is created using a cloudmanagement platform.

What Use Cases Are Covered by This Evaluation?

This Magic Quadrant is focused on the following common use cases, independent of theinfrastructure type or combination of types that are used to serve these workloads:

E-business hosting: Managed hosting for e-marketing sites, e-commerce sites, software as aservice (SaaS) applications and similar modern websites and Web-based applications. Theseworkloads often are complex, and have a high rate of change in the systems and applicationinfrastructure. (Content changes that do not impact the underlying infrastructure do not counttoward the rate of change.)

Web-based business applications hosting: Managed hosting for corporate intranets andWeb-based applications delivered to users primarily within the enterprise. While most of theseare custom applications, some may be commercial, off-the-shelf applications; Microsoft

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SharePoint hosting is a common use. These workloads often are relatively small, and do nothave a high rate of change.

Enterprise applications hosting: Managed hosting for the infrastructure underlying largecommercial software applications, such as applications from Oracle, SAP and Lawson. Theseworkloads frequently are complex and require specialized knowledge to operate optimally, butdo not have a high rate of change. This is not SaaS — this is simply an infrastructure on whichcustomers place these kinds of applications.

Managed, on-demand infrastructure for multiple, general-purpose workloads: Managedhosting of flexible, self-provisioned infrastructure for multiple workloads that underlie a group ofclosely related applications. In the context of this Magic Quadrant, this use case focuses on IToperations management performed by humans; if you are primarily interested in automated IToperations management that is augmented by humans only where necessary, consult the"Magic Quadrant for Public Cloud Infrastructure as a Service."

Normally, these services are used for production environments, but many customers also obtainstaging environments and development environments. Many managed hosting workloads aremission-critical, including commerce transactions and high-performance computing.

The first three use cases are typically tactical sourcing decisions that involve one application, asingle group of closely related applications (such as everything associated with an enterprise'svideo portal) or a single division (such as the e-commerce business unit of a retailer). They aretypically best served by a best-of-breed provider that has strong operational expertise with similarsolutions.

The last, more general use case of managed infrastructure for multiple workloads may be a tacticaldecision to serve a particular business need (for instance, to service a marketing department thathas a greater need for timeliness and agility than internal IT operations can provide), or it may be astrategic decision to migrate some or all of a business infrastructure into a service providerenvironment. In the latter case, cloud IaaS often is used to drive a data center transformationstrategy. For this reason, customers with these needs may prefer to use providers that haveextensive professional service capabilities, application hosting capabilities or general data centeroutsourcing (DCO) capabilities.

No service provider in the managed hosting market does everything well. While all vendors in thisMagic Quadrant serve a global clientele, their data center footprints and locations vary significantly.As a result, it is important to match your use case with a vendor that excels in serving that particularneed. Smaller providers may do one thing extraordinarily well, but may not have a comprehensiveset of services that enables them to address a broad array of use cases. It is also crucial to notethat a Magic Quadrant shows the overall position of a vendor in the managed hosting market, andthus examines a broad array of business factors; the quality of service delivered comprises onlyabout one-third of the rating. A vendor's position in the Magic Quadrant should not be used todetermine the relative quality of different services for a given use case. It is crucial to look beyondMagic Quadrant Leaders when selecting a vendor, especially if you have an unusual need. Thevendor that is perfect for your needs may be a Niche Player.

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Magic QuadrantFigure 1. Magic Quadrant for Managed Hosting

Source: Gartner (March 2012)

Vendor Strengths and Cautions

AT&T

AT&T is a global telecommunications carrier with a long track record of leadership in the hostingmarket. AT&T offers colocation, managed hosting on dedicated hardware and its VMware-basedSynaptic Hosting platform, cloud IaaS on its Synaptic Compute as a Service (CaaS) platform, cloudstorage and a content distribution network (CDN).

Strengths

AT&T is one of the few providers that can deliver enterprise application hosting andmanagement for core ERP systems (SAP, Oracle and SharePoint) in conjunction withcolocation, utility and cloud services.


AT&T has a solid road map around hosted and cloud environments, and extends its as-a-service vision into mobile platforms, collaboration and unified communications. This willeventually allow AT&T to provide cost-effective, scalable integrated communication services.

AT&T effectively tailors support, account management and strategic planning to the size andscope of its customers. It also has improved its ongoing customer support by adopting formalcustomer satisfaction programs (Net Promoter scores).

Use case(s): All use cases are addressed, including complex managed, cloud and ERPapplication hosting.

Cautions

With the expanding product portfolio AT&T delivers, Gartner clients report that the companyfrequently does not position the right solution for the client or prospect. This has led to AT&Tbeing disqualified from several shortlists later in the competitive process.

AT&T currently does not support any bridging between managed hosting and synapticcomputing as a service as a formal option in its portfolio.

As with other carriers in the hosting space, many enterprises also use AT&T for networkservices. Although it provides some limited discounts for cross-bundling services (e.g., MPLS,voice and hosting), AT&T needs to more aggressively standardize and market this option, andshow concrete savings to users that choose it as their one provider for network and hosting.

BT Global Services

BT is a global communications provider with a pedigree in both the managed services and networkoutsourcing markets, in addition to carrier services. BT provides core managed hosting and utilitycomputing on its production BT Compute platform, with new functionality tested and deployed onits "innovation" platform.

Strengths

The BT vision of the cloud, like that of many network providers, encompasses computing,storage, voice and application support, which is increasingly appealing to enterprises with moreand more converged IP networks.

BT's data center presence is among the most globally diverse, including capacity in North andSouth America, Western Europe and the Asia/Pacific region.

BT is developing a suite of modular cloud pods to support multiple vertical, geographic andavailability requirements. These solutions will include multiple hardware, device and softwareoptions to hit several different price points.

Use case(s): Larger global enterprises and government organizations needing business, Weband ERP hosting, as well as those that have managed, on-premises cloud services.


Cautions

BT sales capacity in the U.S. is limited, and is focused primarily on certain vertical markets(financial, pharmaceutical, consumer packaged goods [CPG] and healthcare) and Fortune 500enterprises. Organizations outside these specific vertical industries do not appear on Gartner'sclient shortlist for managed hosting and IaaS.

Although BT's initial foray into utility and IaaS offerings have public and private options, Gartnerwitness BT focusing sales and marketing efforts primarily on more customized, dedicatedprivate deployments.

Carpathia Hosting

Carpathia Hosting is a small, independent Web hoster with a focus on the midmarket and thegovernment vertical market, and an emphasis on complex and compliance solutions. It offerscolocation, managed hosting, Xen and VMware cloud IaaS, and cloud storage.

Strengths

Carpathia continues to develop its core strength in compliance-based hosting platforms. Fewproviders in the hosting and cloud market provide life cycle management services ingovernment, healthcare and retail compliance environments.

Carpathia has created cloud offerings that are dynamic and well-suited to enterprises that needboth highly and lightly managed requirement. Its ability to support both Citrix XenServer andVMware virtualization will appeal to enterprises that have diverse virtualization requirements.

Carpathia has one of the most knowledgeable and responsive sales teams, especially increating solutions for complex, hybrid hosting and cloud environments.

Use case(s): Private- and public-sector organizations that require compliance-centric platformsto support; and Web-based business applications and managed infrastructure for virtual datacenter capabilities for general-purpose workloads.

Cautions

Carpathia relies heavily on partners such as Equinix for sales and marketing reach in Europeanand Asian locations. This represents a low-risk strategy for market expansion, but does little tohelp Carpathia strengthen its market and brand awareness.

Carpathia has not yet built cloud services in any markets outside the U.S.; this, along with itslimited brand awareness outside public sector organizations, will keep Carpathia from growingas fast as its strongly branded competitors.

Carpathia does not currently provide application management or support ERP applications.


CSC

CSC is a large, traditional IT outsourcer with a broad range of DCO capabilities. CSC offers ERPand managed hosting, along with VMware-based cloud IaaS (public and private).

Strengths

CSC continues to push the boundaries of hosting and cloud offerings into the desktop, platformand software domains. CSC delivers SAP, Oracle and JD Edwards on its Infrastructure utilityplatform in both North America and Europe.

CSC, which relies on core delivery partners such VCE, VMware, Skytap and Cisco, hasproactively taken steps to improve cycle times, institute codevelopment practices and reduceredundant delivery costs. These continual steps have improved CSC's ability to rapidlyprovision the Vblock architecture across its hosting and cloud customer base, as well regaincontrol of its destiny around its configuration and architectures.

CSC has changed from a distributed, transaction-based support and service delivery model toan ITIL-certified, dedicated support team with service delivery managers who take ownership ofclient issues.

Use case(s): Larger enterprises and public-sector organizations for most use cases, includingenterprise application hosting, cloud IaaS and managed hosting.

Cautions

Despite its rapid innovation cycle, CSC has slowly acknowledged gaps in its service portfolioaround comprehensive billing/chargeback, integrated monitoring and asset/configurationmanagement. In North America, CSC has already implemented solutions by Nimsoft andBlazent to address those gaps; the rest of the world deployment time scale is being planned.

The pricing of CSC's cloud infrastructure and storage services is highly variable, and dependenton region, client size and associated services. Gartner has witnessed several instances whereparity of pricing failed to exist in similar contract reviews. CSC standardized its price list forcloud offerings in January 2012.

CSC does support hybrid cloud environments with dual-site replication, but this is not yet aproductized offering for current customers.

Datapipe

Datapipe is a smaller, rapidly growing and independently managed hoster and cloud IaaS providerwith a global footprint and presence. Datapipe offers colocation and managed hosting, along with aVMware-based private cloud IaaS called Stratosphere. Datapipe also offers managed services ontop of Amazon's infrastructure.


Strengths

Datapipe has competencies equivalent to much larger providers, and continues to mature insales and operations to support additional complexity in customer configurations.

Datapipe can effectively deliver high-quality, competitively priced managed hosting toenterprises of most sizes, and has greatly improved its ability to provide governance andcontract management with larger enterprises.

Datapipe is one of a limited set of providers that delivers end-to-end PCI compliance services,including device management through several partnerships.

Use case(s): E-business and Web-based application hosting, and complex managed andmanaged infrastructures for general-purpose workloads.

Cautions

Despite improvements to its cloud platform, Datapipe trails certain competitors in features,including portal usability, role-based access and self-service billing.

Datapipe's large portfolio of services, including Amazon and RightScale partnerships, can beconfusing for enterprises that do not have a blueprint for utilizing cloud services.

Despite increasing brand awareness, Datapipe must be more aggressive in marketing itscapabilities in an increasingly crowded cloud and hosting landscape.

Fujitsu

Fujitsu is a highly diversified, global hardware and service organization that targets government,midsize and large global multinationals that have diverse infrastructure requirements. Fujitsuprovides complex, managed and ERP hosting, as well as several variants of public, private and on-premises options.

Strengths

Fujitsu supports one of the most diverse service portfolios, including complex managed, cloudIaaS and enterprise application hosting. This includes an IaaS-based SAP offering, whichcurrently is a strong global offering.

Fujitsu has incorporated key partners (Cordys and Microsoft) into its cloud product portfolio tobring its capabilities up to the platform and application level, and to support integration.

Despite its vast array of hosting and cloud services, Fujitsu provides a single-sign-onmanagement portal, and allows clients with multiple geographic sites to be managed in thecountry of their choosing.

Use case(s): Larger global enterprises needing business, Web and ERP hosting, as well asthose that are managed on-premises cloud services.


Cautions

Compared with most current, established IaaS offerings in the market, Fujitsu's marketing andproduct strategy around cloud services is overly complex, and does not resonate as crisply asits competitors' more infrastructure-focused offerings.

Fujitsu does not have a strong hosting and cloud market presence in North America, whichkeeps it off most Gartner client cloud service radarscopes. The company must aggressivelyinvest in sales capacity, marketing and promotion to raise awareness, thus ensuring that itenters the competitive landscape.

GoGrid

GoGrid is a smaller, independent IaaS and hosting provider with a growing global footprint andpresence. Its primary focus is its Xen-based cloud IaaS service, which it offers as a public cloud, aprivate cloud and on-premises software. It also offers managed hosting and colocation.

Strengths

GoGrid has diversified its marketing and messaging to support more general-purposeenterprise workloads, in addition to being a viable alternative to Amazon Web Services. This,along with the ability to bridge colocation, dedicated and IaaS environments, should landGoGrid on substantially more enterprise shortlists in the future.

GoGrid's partnerships with Digital Realty Trust and Equinix are addressing a fast-growingsegment of turnkey hosted private clouds, which will allow GoGrid to market to largerorganizations that want to operate their own private cloud infrastructure at third-party datacenters.

GoGrid has expanded its data center and sales presence in the U.S. and the Netherlands,which will make its offering much more attractive to larger multinationals.

Use case(s): E-business and Web-based application hosting, complex configurations andmanaged infrastructures for general-purpose workloads.

Cautions

Despite having a reasonably robust service portfolio, GoGrid's marketing and messagingstruggles to consistently reach enterprise clients outside the media, technology and telecomvertical industries.

GoGrid's public cloud IaaS offering, which is developer-centric, continues to provide limitedrole-based account management, network access control and its own API.

GoGrid does not provide complex managed services, including database and applicationmanagement.


Hosting.com

Hosting.com is a smaller, independently managed hoster with a focus on small or midsizebusinesses (SMBs) and midsize enterprises. It offers colocation and managed hosting, along withVMware-based cloud IaaS.

Strengths

Hosting.com is extremely responsive in contract and pricing negotiations, and Gartner clientsreport a positive experience through user acceptance testing and onboarding.

Hosting.com provides cloud assessment professional services, including applicationdependency mapping, migration assistance and on-site capacity testing. Most of theseprofessional services are provided to larger enterprises and with considerable price tags.

Hosting.com has leveraged its vCloud data center certification extremely well to build advancedstorage area network (SAN) and hypervisor-based replication capabilities based on VMware'sSite Recovery Manager (SRM) 5 to replicate between internal data centers and customerpremises sites.


Cautions

As international expansion continues to be a major cloud adoption driver, Hosting.com still doesnot have data center capacity outside the U.S., or a communicated plan to support internationalpartnerships or expansion.

Despite increasing brand awareness around its cloud and recovery services, Hosting.com mustbe more aggressive in marketing its capabilities in an increasingly crowded cloud and hostinglandscape.

Hosting.com is growing via acquisitions (NeoSpire in 2011 being the most recent). As asuccessful provider with an attractive revenue profile, Hosting.com is likely to be an acquisitiontarget, although it wishes to remain an independent business.

IBM

IBM is a highly diversified technology company, and its cloud computing strategy unifiescomponents of its portfolio of global products and services. It offers colocation (on a limited basis),managed hosting, ERP hosting and cloud IaaS.

Strengths

IBM can bring a multitude of resources to bear, including business consulting and professionalservices, to design complex and custom solutions.


IBM's SmartCloud for SAP is one of the few offerings addressing a critical need for enterprisesthat need cost-effective scaling for SAP.

IBM has a strong deployment of SmartCloud Enterprise in six global data centers (two in theU.S., and one each in Canada, Singapore, Germany and Japan), with 18 expected by the end of2012.

Use case(s): Larger deployments for e-business and Web-based application hosting, as well ascomplex managed hosting for production and test/development.

Cautions

IBM's messaging and marketing around SmartCloud does not resonate with all levels and sizesof enterprises, including those looking for low-cost infrastructure management for general-purpose workloads.

Gartner clients continue to report that IBM sales is difficult to engage, and even unresponsivefor smaller configurations, proof of concepts and stand-alone traditionally managed hostingdeals.

IBM solutions, including managed hosting and application hosting, continue to be premium-priced in the market.

Layered Tech

Layered Tech is a smaller, independently managed Web hoster with a focus on compliance,midmarket and enterprises. It offers managed hosting, a VMware-based IaaS offering, an AppLogic-based cloud offering, and colocation and self-managed dedicated hosting.

Strengths

With the 2010 acquisition of GSI Hosting, Layered Tech is one of the only providers that candeliver comprehensive PCI Data Security Standards (DSS) and Health Insurance Portability andAccountability Act (HIPAA)-based hosting offerings, including a guarantee that a Layered Tech-hosted infrastructure will pass any compliance-based audit.

Layered Tech's service offerings are extremely price-competitive, and its sales and accountmanagement teams are responsive for presales and implementations.

Use case(s): Organizations that require compliance-centric platforms, specifically PCI DSS tosupport Web-based business applications, as well as a managed infrastructure for virtual datacenter capabilities for general-purpose workloads.

Cautions

Layered Tech's message in the cloud space does not reach most enterprises outside thoseconcerned with managing compliant workloads in the cloud.


Layered Tech does not have any stated plans to provide application management or monitoringfor ERP applications.

NaviSite

NaviSite, a Time Warner Cable company, is a managed Web hoster with a focus on the midmarket,and on application management and hosting. It also provides colocation (limited), managed hostingand a VMware-based cloud.

Strengths

NaviSite has greatly improved its financial viability and organizational stability with itsacquisition by Time Warner Cable. This helps answer longstanding viability concerns held byGartner and NaviSite prospects.

The NaviSite portfolio of managed hosting, ERP and e-business-centric application hosting,colocation and cloud IaaS support most use cases for midsize to large enterprise requirementsand workloads. NaviSite also offers its managed applications on NaviCloud to reduce cost andprovisioning time frames.

NaviSite, which has generally marketed to midsize enterprises, is winning larger, more complexmanaged hosting and cloud contracts based on the features, security and scalability of theNaviCloud platform.

Use case(s): All use cases, including enterprise application hosting, cloud IaaS and managedhosting.

Cautions

Despite having an extremely strong portfolio of services and capabilities, NaviSite continues tostruggle to consistently market and sell its offerings to a wide audience. NaviSite plans to usethe Time Warner Cable sales channel to increase exposure in certain markets, but Gartner hasyet to see any traction.

Unlike its competitors, NaviSite has been slower to build its capabilities beyond the U.K., andinto additional global markets including Germany, Singapore, Australia and India.

Although service and support have notably improved at NaviSite, most customers reportvariability when customer issues span multiple platforms, including cloud and managedapplications.

OpSource

OpSource, a Dimension Data company, is a cloud and managed hoster that has historically focusedon SaaS enablement, but has broadened its target market with cloud-based offerings. It offersmanaged hosting, public cloud IaaS and a variety of SaaS-enablement services.


Strengths

Acquisition by Dimension Data gives OpSource a strong global distribution arm, as well asadditional expertise in adjacent hosted offerings, including unified communications and SaaS.

OpSource's IaaS offering provides market-leading functionality for control (role-based access),security (virtual LAN [VLAN] segmentation and customizable firewalls) and usage reporting at acompetitive market price point.

OpSource's SLAs continue to be among the strongest in the industry.

Use case(s): E-business and Web-based application hosting, and general-purpose workloadsfor enterprises, carriers and SaaS providers.

Cautions

OpSource does provide application management and billing services for SaaS and Web-basedapplications, but these do not extend to application management for ERP and packagedapplications.

Since OpSource's historical client base has been technology companies, SaaS and serviceproviders, it has trailed its competitors in providing customized, multitier account management.

Once a private independent cloud hoster, OpSource is now one component of DimensionData's cloud strategy. Dimension Data, owned by the Japanese megacarrier NTTCommunications, has historically adopted a slower pace of integration, and lags behind themarket on product integration and messaging.

Rackspace

Rackspace is an independent cloud IaaS and managed hoster, and is a publicly traded company. Itoffers managed hosting, hybrid hosting, private cloud IaaS, cloud storage, cloud platforms as aservice (PaaSs), cloud monitoring, hosted virtual desktops and SaaS (email and SharePoint). It is theprimary sponsor of OpenStack, an open-source cloud stack, and its Cloud Builders businessprovides traditional, commercial open-source support and the professional services around it.

Strengths

Rackspace has taken demonstrable steps to develop an enterprise-centric service offering todispel the notion that it only supports SMBs and Web-centric organizations. This has involvedhiring senior-level sales and management, defining segment-specific sales and support, andglobal expansion, as well as providing dedicated resources for onboarding andimplementations. Rackspace also created a unit called Rackspace Advisory Services, whichprovides readiness assessments, custom design services and cloud strategies.

Rackspace provides a commercial service called RackConnect, which allows customers tobridge multiple environments (dedicated, public and private cloud) over the same virtual


network with security and access control. Rackspace is one of the few providers in this MagicQuadrant that has this capability in general release at publication time of this research.

With the formation of Rackspace Cloud Builders (formerly Anso Labs), Rackspace has vastlyimproved its ability to provide managed services for OpenStack-based private clouds insideand outside Rackspace data centers. Gartner believes that the OpenStack consortium will be astrong alternative to private cloud platform competitors, though it is far from an enterpriseturnkey solution, as it lacks advanced monitoring and compliance reporting.

Use case(s): E-business and Web-application-centric hosting, and cloud IaaS.

Cautions

Rackspace's focus on augmenting its hosting portfolio with public and private cloud offeringshas left a void for enterprises that are looking for considerable application managementcapabilities for custom and packaged ERP applications.

Gartner witnessed a slight dilution of focus and quality of support in Rackspace in 2011. Thismanifested in customer feedback in presales and ongoing customer engagements, and wasmost evident when customer requirements became increasingly tailored to existing customerbusiness processes.

Unlike its peers in the market, Rackspace has been slower to build its capabilities beyond theU.K. and into additional global markets, including Germany, Singapore, Australia and India.

Savvis

Savvis, a CenturyLink company, is a cloud and managed hoster with a substantial global footprint,as well as a long track record of leadership in the hosting market. It provides colocation, managedhosting, proximity services and a VMware-based IaaS offering.

Strengths

Despite being acquired by CenturyLink, Savvis has maintained a nearly autonomous businessunit, with most of its executives, products and data center geographies intact. This, however,could change as the broader CenturyLink market strategy is unveiled in 2012.

Savvis maintains one of the most aggressive expansion plans for foundation hosting and cloudservices, including additional nodes in Europe, Asia/Pacific, India and South America.

Savvis continues to lead the market with one of the broadest and most relevant productportfolios in the industry. Savvis also develops and refines its service portfolio on aggressivecycles, which allows it to launch services into the market sooner than its peers.



Cautions

The acquisition by CenturyLink could place the managed hosting and cloud business incompetition for capital funding, sales resources and marketing resources with CenturyLink'sother carrier services.

Despite having a deep product portfolio, Savvis currently does not provide applicationmanagement for ERP and packaged applications.

The focus of Savvis' parent company, CenturyLink, is primarily as an incumbent local-exchangecarrier in the Southern and Midwestern U.S., serving consumers and small businesses. Onlytwo business units focus on larger national and international business requirements —CenturyLink BMG (formerly Qwest BMG), which serves midsize and large businesses, andSavvis, whose solutions are premium-priced and target large (multinational) enterprises.

SoftLayer

SoftLayer is an independent Web hoster with a growing global footprint and an SMB focus. It alsooffers cloud storage, a cloud CDN in partnership with Internap, private cloud IaaS, colocation,dedicated hosting and managed hosting.

Strengths

SoftLayer continues to invest and build market-leading automation and self-service capabilitiesinto its client provisioning portal.

Pricing for SoftLayer dedicated and cloud services are among the most aggressive in theindustry, and allow clients to deploy images on dedicated or virtualized hardware for relativelylittle incremental cost.

Although not a carrier, SoftLayer has built a large, high-capacity global private and Internet-centric peered network between its global data center locations. This allows enterprises tomultihome connections from multiple carriers, as well as providing capacity for bandwidth-intensive applications.

Use case(s): Self-managed e-business and Web-based application hosting, and complexmanaged and managed infrastructures for general-purpose workloads.

Cautions

Despite the acquisition of the Planet, which included managed services, Gartner clients reportthat SoftLayer's managed services are more automated, rigid and focused solely on run-stateenvironments, and less on business process.

Aside from database fine-tuning and management, SoftLayer does not provide othermanagement services above the OS, including content management, ERP or collaboration.


Although SoftLayer has made incremental progress, its brand and marketing message, whichfocuses on self- and lightly managed services, predominantly resonates with technologycompanies, SMBs and startups.

SunGard Availability Services

SunGard is a private, large business continuity solutions provider with global reach. It offerscolocation, managed hosting ERP hosting and VMware-based cloud IaaS.

Strengths

SunGard has a deep portfolio in consulting, managed infrastructure, network, application andsoftware services, in addition to colocation, hosting and cloud IaaS.

SunGard excels at providing incumbent customers with a simple on-ramp from colocation andbasic managed services to IaaS and private cloud services. It also is a strong provider of SAPapplication management and hosting.

SunGard has a consistent ITIL V3-centric operations methodology, and support for PCI-DSS inall data center locations.

Use case(s): E-business and Web-based application hosting, ERP and complex managedhosting.

Cautions

SunGard has improved its operational agility and responsiveness for critical issues, but Gartnerclients report that less critical issues and modifications continue to take longer than marketpeers to resolve.

Although SunGard has shown improvement, Gartner clients continue to report that itsengineering support is rigid, is conventional and does not think outside the box to solve clientissues, resulting in longer issue resolution times.

Terremark

Terremark, a Verizon company, is the result of Verizon's 2011 acquisition of Terremark, a cloud IaaSand managed hoster. Terremark also offers private cloud IaaS, managed hosting and colocation onglobal basis.

Strengths

Terremark 's comprehensive service portfolio provides solutions for most enterprise workloads(excluding application management) in most industrialized and emerging markets. Theacquisition cloud broker CloudSwitch will further allow clients to bridge multiple environments.


Terremark has made strong strides to improve customer support from presales responsivenessto minimizing ongoing operational issues. It also has improved SLAs to include device- andtransaction-based metrics.

Terremark continues to be a very strong provider for the managed and cloud services publicsectors, compliance and financial services, including PCI VM isolation.

Use case(s): E-business and Web-based application hosting, and managed infrastructures forgeneral-purpose workloads.

Cautions

Terremark does provide business application monitoring, but does not provide applicationmanagement, consulting or support services (Basis, etc.) for SAP, Oracle, JD Edwards orLawson.

Although the integration of Terremark into the larger Verizon portfolio has not produced anysignificant performance issue or customer churn, Gartner has witnessed noticeable senior-levelmanagement and sales and account management turnover. This has the potential to alter thevision and execution of the Terremark infrastructure division, which competes for funding andcapital with other core Verizon communication services.

As enterprises move toward consolidating services and contracts to save money and increaseleverage, Verizon has not effectively created incentives for them to purchase Terremark servicesin conjunction with network, wireless and unified communications services.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as marketschange. As a result of these adjustments, the mix of vendors in any Magic Quadrant orMarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope oneyear and not the next does not necessarily indicate that we have changed our opinion of thatvendor. This may be a reflection of a change in the market and, therefore, a changed evaluationcriteria, or a change of focus by a vendor.

Added

BT Global Services

Fujitsu

Dropped

Amazon Web Services

Joyent

MediaTemple


NTT Communications

Inclusion and Exclusion CriteriaThe inclusion criteria are used to determine which vendors will be covered in this research. Includedvendors must meet the following criteria:

They must sell managed hosting as a stand-alone service, without the requirement to bundle itwith application development, application maintenance or other outsourcing.

They must have the ability to scale an application on demand using a shared, multitenantinfrastructure; specifically, they must have a utility hosting platform, or a public cloud computeIaaS offering.

This service must be enterprise-class, offering 24/7 customer support (including phonesupport), SLAs and the ability to scale an application beyond the capacity of a single physicalserver.

They must have significant market presence, as indicated by a projected 2011 managed hostingrevenue of at least $50 million.

They must have demonstrable global presence. They must have data centers in at least twomajor geographies (North America, Western Europe or Asia); or they must have at least twodata centers in different cities, and derive at least 20% of their revenue from customers outsidethe region in which they have their headquarters.

Products and Services Excluded From This Evaluation

Please note that this Magic Quadrant exclusively covers managed hosting, and managed hostingonly. That means the following are explicitly excluded from this evaluation:

Colocation: Although many managed hosting providers also offer colocation, the quality ofcolocation offerings is not evaluated in this Magic Quadrant, and this Magic Quadrant shouldnot be used to selection colocation vendors.

Self-managed cloud IaaS: Many businesses want a self-provisioned, self-manageddynamically provisioned infrastructure; they want to take advantage of the cost-efficiencies of aprovider's scale and automation tools, but do not want to relinquish control. If your interest isprimarily in self-managed cloud infrastructure, consult "Magic Quadrant for Public CloudInfrastructure as a Service."

DCO, remote infrastructure management (RIM) and application management services:While many DCO providers may manage the infrastructure for Web applications as part of aDCO contract, this Magic Quadrant only evaluates managed hosting that is sold as a stand-alone service within provider-owned Internet data center facilities, and explicitly excludeshosting that may be done as part of a more general DCO or RIM contract. DCO providers arecovered in the "Magic Quadrant for Data Center Outsourcing and Infrastructure Utility Services,


North America" and "Magic Quadrant for Data Center Outsourcing and Infrastructure UtilityServices, Europe."

Cloud management platforms (CMPs): Cloud-building hardware and software — softwaresuch as Citrix CloudStack, OpenStack and BMC Cloud Lifecycle Manager, as well as turnkeysolutions such as HP CloudSystem Matrix — are not evaluated in this Magic Quadrant, which isrestricted solely to services.

Vendors Considered, but Not Included

This Magic Quadrant is global, but most participants are U.S.-based organizations. This primarilyreflects the fact that successful U.S.-based service providers tend to become global, while manysuccessful providers in other parts of the world choose to remain regional players. It also reflectsthat fewer providers outside the U.S. have launched cloud IaaS offerings. However, we see a strongdemand for these services on a global basis, driven by multinational corporations that need toexpand operations or increase market penetration outside their headquarters region, and by cloud-driven interest in countries that previously had not had a significant demand for managed hosting.

Many markets, including Australia, Brazil, China, Japan and India, are currently underserved.Furthermore, many European companies prefer in-country services; markets such as France,Germany and Switzerland also are underserved. These countries, along with Canada, the U.K., andthe Netherlands, are targets of provider expansion, especially in the form of additional data centersfor cloud IaaS.

Some providers did not qualify for this Magic Quadrant due to their inability to demonstratesufficient revenue to qualify for inclusion. The following are some smaller vendors we considered,but were not able to include. They are noted here because they are distinctive in the market in someway.

Bluelock: A U.S.-based, VMware-certified vCloud data center service provider focused oncloud IaaS. It is profiled in greater detail in the "Magic Quadrant for Public Cloud Infrastructureas a Service," where it is rated a Leader.

FireHost: A U.S.-based provider focused on providing cloud IaaS solutions to companies withcompliance needs, including PCI-compliant hosting.

Internap: A U.S.-based provider focused on an application-fluent network service strategy thatincludes infrastructure services.

Secure-24: A U.S.-based provider focused on enterprise application hosting, with deepcompetencies in SAP and Oracle applications.

Thousands of providers offer managed hosting services, and hundreds that focus on this market orderive a significant amount of revenue from it. Many small providers can provide excellent services.Do not let lack of inclusion in this Magic Quadrant deter you from evaluating such providers, sincewe do not consider service quality when determining inclusion, and insufficient revenue andgeographic presence often disqualify otherwise excellent providers.


Evaluation Criteria

Ability to Execute

The most heavily weighted criteria for a hoster's ability to execute are service offering and serviceexcellence, as reflected in the customer experience with sales, support and operations. Overallbusiness viability, as reflected in the ability to successfully service a customer over a three-yearperiod without significant disruption, and the service provider's track record also contribute to thisrating. Here, we emphasize immediate capabilities for the use cases that we see most often.

Table 1 shows weightings for our specific evaluation criteria.

Table 1. Ability to Execute Evaluation Criteria

Evaluation Criteria Weighting

Product/Service High

Overall Viability (Business Unit, Financial, Strategy, Organization) Standard

Sales Execution/Pricing Standard

Market Responsiveness and Track Record Standard

Marketing Execution Low

Customer Experience High

Operations Standard


Completeness of Vision

This market continues to experience rapid evolution. Consequently, it is vital that service providersunderstand the future needs of customers, have a realistic but aggressive road map for cloudservices and are able to exploit new technologies in innovative ways. The full context of thevendor's vision is important, as cloud concepts may pervade its entire business. We also evaluatethe vendor's approach to growing its business, including its strategy for marketing and sales,international expansion and vertical market solutions.

Table 2 shows weightings for our specific evaluation criteria.


Table 2. Completeness of Vision Evaluation Criteria

Evaluation Criteria Weighting

Market Understanding High

Marketing Strategy Standard

Sales Strategy Standard

Offering (Product) Strategy High

Business Model Low

Vertical/Industry Strategy Low

Innovation High

Geographic Strategy Standard


Quadrant Descriptions

Leaders

Leaders have proved they have staying power in this market, can frequently innovate on theirexisting products and can be relied on for enterprise-class needs. They have proved their technicalcompetence and ability to deliver services to a wide range of customers. They address multiple usecases with stand-alone or integrated solutions.

New, managed hosting customers should sign two-year contracts; enterprise application hostingcustomers should sign three- to five-year contracts with these companies. Satisfied customersrenewing a contract with one of these firms should sign a three-year deal. Cloud IaaS customersshould buy these services on demand, or in contracts of one year or less.

Challengers

Challengers have a track record of delivering good service capabilities, but they are trailing themarket's evolution. They are typically companies that have solid traditional managed hostingservices, but have not exploited technology and market demand to build cloud services.

New, managed hosting customers should sign two-year contracts; enterprise application hostingcustomers should sign three- to five-year contracts with these companies. Satisfied customersrenewing a contract with one of these firms should sign a three-year deal. Cloud IaaS customers


should buy these services on demand, or in contracts of one year or less, and should exercisecaution, as these vendors likely have not proved themselves in cloud services.

Visionaries

Visionaries have an innovative and disruptive approach to the market, but their services are newand unproved, and frequently have limited service portfolios. Visionaries have an early moveradvantage in providing cloud services, as well as road maps that may make them Leaders in thefuture.

Because the business of Visionaries can change radically in a short period, we recommend thatcustomers buy these services on demand, or in contracts of one year or less.

Niche Players

Niche Players are typically specialists with more limited product portfolios, or are emerging vendors.They may serve one use case particularly well, and may be better than a more generalized vendor intheir area of specialty.

New and renewing customers of stable, narrowly focused Niche Players should sign a two- orthree-year contract. New and renewing customers of emerging Niche Players whose businesses arestill rapidly evolving should buy services on demand, or in contracts of one year or less.

If you are using managed services, be wary of making short-term, tactical choices, as it can beinconvenient and expensive to change providers.

ContextDespite living in the media shadow of cloud computing, managed hosting continues to be the mostappropriate solution for many organizations that desire to outsource the infrastructure and IToperations management associated with an application or website. Most organizations prefer tosource the infrastructure on a flexible, pay-as-you-go basis, where capacity can be adjusted tomeet demand. Consequently, in addition to offering dedicated servers, managed hosting providersfrequently also offer shared and virtualized utility hosting platforms, or cloud compute IaaS. Indeed,some managed hosting providers are primarily or solely focused on cloud IaaS.

Most solutions for complex needs are hybrids, mixing different types of infrastructures to achievecost-effectiveness, and to meet the customer's range of availability, performance, security and IToperations requirements. For instance, customers may need test and staging servers hosted on anIaaS platform, their front-end Web and application servers on utility hosting, and dedicateddatabase servers. This has spurred providers to develop and productize hybrid hosting services thatinterconnect colocation, traditional hosting environments and cloud IaaS within unified networkingand security contexts.

Managed hosting is typically sold on a one- to three-year contract via a consultative sale, andbuyers should expect to interact at length with the solution architects of prospective providers to


achieve the solution that is right for their needs. Every provider's solution will be subtly different,and service and support quality vary tremendously across the industry. Managed hosting providersshould be chosen with care.

Market OverviewThe market for managed hosting is mature, but the introduction of cloud IaaS has driven significantevolution in the market over the last three years, adding use cases related to managed cloud IaaSsolutions. This Magic Quadrant covers only solutions that include managed services, emphasizingcomplex implementations that require significant human labor on the part of the service provider,regardless of whether the underlying infrastructure platform comprises physical servers, virtualizedservers, cloud IaaS or some hybrid combination. For self-managed cloud IaaS, or cloud IaaS withan emphasis on highly automated management, rather than humans performing managed services,consult "Magic Quadrant for Public Cloud Infrastructure as a Service."

Buyers of managed hosting should be aware of the key aspects of the market that are detailedbelow.

The Infrastructure Platform Is a Means to an End

Increasingly, prospective managed hosting customers approach sourcing a solution with theattitude of, "I want to be in the cloud." However, for many customer needs, cloud IaaS is not theideal solution from a technical perspective or a cost perspective. Instead, you should consider thegoals you are trying to achieve. Each component of your application needs a particular level ofavailability, performance and security, which results in different demands of the underlyinginfrastructure.

You may also have scaling-related business needs, such as the ability to quickly scale up and downin response to unpredictable spikes in demand, the ability to handle seasonal needs withoutoverbuying capacity at other times, or the ability to rapidly add new batches of capacity (forinstance, for the launch of a new initiative or the turn-up of a new customer). Some scaling needsmust be addressed technically — for instance, if you need to add large amounts of capacity on fiveminutes' notice, VMs will be a must — but some needs, especially seasonal ones, often can beaddressed by flexible contracting.

Five types of infrastructure are provided by managed hosters, although not all providers offer all fivetypes:

Dedicated servers without virtualization

VMs on dedicated servers without customer self-provisioning

VMs on dedicated servers with optional customer self-provisioning, known as private cloudIaaS

VMs on shared servers, without customer self-provisioning, known as utility hosting


VMs on shared servers, with optional customer self-provisioning, known as public cloud IaaS

Managed hosting providers may offer a colocation option for equipment that they do not want tomanage, but ties into the overall solution.

The more complex your needs, the more likely it is that your best solution will be a hybrid blend ofdifferent infrastructure approaches.

Cloud IaaS Often Is Not a Well-Integrated Solution

Broadly, many managed hosting providers initially architected their cloud IaaS platforms primarilywith a self-service model in mind — environments the customer would self-provision and self-manage. Consequently, they did not pay sufficient attention to integration issues with their otherofferings, and were unsure how to offer managed services on the platform. As a result, manyproviders do not seamlessly integrate their cloud IaaS solutions with the rest of their environments.Specifically, the following is common:

The cloud IaaS solution tends to be on its own segregated technology infrastructure and LAN. Itmay not be located in the same data centers, or all the data centers, in which the provider offersother managed hosting services.

The provider might not have integrated customer support across all its offerings. A different andlower level of support might be provided for its cloud IaaS.

The provider might not offer the same managed services on cloud IaaS that it offers ondedicated servers or utility hosting; it might price and perform those services differently, orthose services might not be available.

The portal for cloud IaaS might be segregated from the provider's main customer service portal,and features that are included for dedicated servers or utility hosting, such as systemsmonitoring, may not be included or available with cloud IaaS.

Additional costs may be associated with a hybrid cloud solution, such as the requirement thatthe customer use a load balancer or firewall to bridge the cloud and noncloud environments.

If you use a hybrid solution that includes cloud IaaS, you must carefully investigate how theprovider's service will differ across the infrastructure platforms in use.

Cloud IaaS Is Evolving Rapidly

The cloud IaaS market as a whole is growing rapidly, and new providers are flooding the market,often with incomplete offerings and strategies that revolve around "not being Amazon WebServices." This approach characterizes many offerings that have been launched by managedhosting providers, data center outsourcers and others that have entered this space from a relatedbusiness model.

Furthermore, rapid market evolution, along with the rapid evolution of technology through the stackfrom hardware to applications, is driving a rate and level of change that provides significantmanagement challenges for service providers. This rapid evolution is making it difficult for


customers to decide which solutions they will adopt, because providers may release new featuresseveral times during a quarter, and the providers are evolving their service models.

In some cases, service providers have ended up building multiple cloud IaaS offerings, or multipleversions of the same core service, as technology has evolved and the providers have learned hardlessons about the technology and cloud IaaS business. Providers that have grown through mergersand acquisitions may have multiple cloud IaaS platforms.

The multiple infrastructure platforms used by managed hosting providers are an artifact of marketand technology immaturity. The cloud IaaS platforms are usually cutting-edge implementationsunburdened by the provider's legacy managed hosting systems; as a result, they may lack thefunctionality provided by those systems.

We expect that successful service providers will, within the next five years, fully converge theirinfrastructure platforms, and will provide the following capabilities:

The ability to provision both physical servers and VMs from a shared pool of capacity thatallows hardware components to be dedicated to a customer on an as-needed basis, or sharedamong customers

The ability to offer multiple infrastructure tiers, with differing levels of cost, availability,performance and security

The use of a unified management portal that can manage a physical and virtual infrastructure,with views for the provider, the customer and third parties such as resellers

A unified approach to support and manage service options across all infrastructure options

Few providers offer fully converged infrastructure platforms now. Even those that are well on thepath toward convergence frequently still support and sell a legacy managed hosting platform, alongwith whatever their infrastructure solution will be going forward.

All Infrastructure Requires Management

All infrastructure types require management. Prospective customers often assume that cloud IaaSrequires less management; they frequently assume that because they're in the cloud, IT operationsmanagement functions such as patch management, backups and disaster recovery areautomatically taken care of for them. Broadly, this is not true, although providers may bundlemanaged services with cloud IaaS, and are beginning to automate these aspects.

Provider approaches to managed services vary enormously across the market. However, they canbe broadly classified into "OS and below" and "everything excluding the application." We refer tothese as simple managed hosting and complex managed hosting, respectively:

Simple managed hosting customers typically want to handle most operations themselves, butwould like the provider to handle routine issues on a 24/7 basis, and to perform routine IToperations management tasks like patch management and backups.


Complex managed hosting customers typically want the provider to take ownership andresponsibility for the infrastructure so that they only need to deal with their application. Thecustomer may choose to retain certain responsibilities — for instance, doing databaseadministration themselves — but the provider essentially functions as the customer's IToperations team for this infrastructure.

Standardization Brings Benefits

Many managed hosting providers will do extensive customization of a customer's environment.However, the more your environment deviates from the provider's norm and blueprints, the moreyou pay, and the less consistent your service is likely to be. If you deviate from the standard, youdon't gain the benefit of as much of the provider's automation and tools; therefore, it is more costlyfor the provider to serve you, and the more things will be done manually, which is more prone toerror.

Standardization becomes particularly important when you consider using a provider's utility hostingor public cloud IaaS platforms. These environments are highly standardized so you can only usethem if you can accept the standard way they are architected.

If you need a lot of customization in your managed hosting environment, ask the provider what thedifference is in cost between its standard approach and the custom approach you desire. Askyourself if the customizations you need generates business value, or are just a matter of the tastesof your IT personnel. For instance, a custom file system layout that places packages in a differentplace than the provider's standard generates no business value, and may mean that you cannot usethe provider's standard patch management approach. Even some customizations done for costreasons may turn out to be a bad idea; for instance, a particular set of parameters for performance-tuning a server may result in more of a cost penalty for deviating from the standard configurationthan you save by getting more efficiency from the server.

Customer Service Is the Key Differentiator

Most established managed hosters have very high levels of operational reliability and excellentreactive support when customers have issues. However, providers vary significantly in their ability torespond promptly to customer requests that aren't directly related to an outage or other immediateoperational emergency. Many providers are weak in responding when the customer's request iscomplex, or when it crosses multiple groups within the company — for instance, a customer thathas a persistent problem with network performance, where engineers that support the networkelements, and the systems finger-point with no one taking ownership for getting the problemsresolved.

Proactive support is even more of a differentiator. Some providers excel in anticipating a customer'sneeds, and in partnering with customers to achieve their operational goals. Providers also differwidely in their ability to manage complex projects.

When evaluating your needs, consider the complexity of your environment, frequency of changes inyour environment and scope of those changes. If you have frequent application or infrastructurechanges (not content changes), you will need to work closely with your provider on a daily basis. If


you have large-scale project work, such as new deployments, you will want to be sure your providerhas the appropriate project management resources available.

More than anything else, the provider's service organization is likely to determine your level ofsatisfaction with your managed hosting experience over the long term. Evaluate your prospectiveaccount team carefully.

The Vendor Landscape Is Dynamic

This is a time of great opportunity and great risk for service providers in this market. New entrantsare altering the landscape, and established hosters that previously had lagged behind in the markethave made bold investments in an attempt to catch or overtake more established competitors. Mostproviders are aggressively investing in innovative new solutions that exploit the proliferation oftechnology capabilities coming into the market.

Mergers and acquisitions have become commonplace, as vendors seek to decrease their time tomarket, obtain engineering expertise with new technologies and build market share. We expect thatmergers and acquisition activity will continue on a global basis.

Because the vendor landscape is highly dynamic, buyers of managed hosting are subject to greatersourcing risk. It is difficult to predict which vendors will be good long-term bets; neither smallvendors nor large ones can be considered safe. In general, shorter-term contracts are preferable inthis market; a one-year or two-year contract is best.

Recommended ReadingSome documents may not be available as part of your current Gartner subscription.

"Magic Quadrants and MarketScopes: How Gartner Evaluates Vendors Within a Market"

"How to Write a Managed Hosting Service RFP"

"Getting the Best Service From Your Managed Hosting SLA"

"Evaluating Cloud Infrastructure as a Service"

"Data Center Managed Services: Regional Differences in the Move Toward the Cloud"

"What's the Best Hosting or IaaS Solution for You in Europe?"

"European Enterprises Should Exercise Caution When Adopting IaaS"

"Key Considerations When Sourcing Cloud Services In Asia/Pacific"

"Data Center Outsourcing, Hosting or Cloud? Use Gartner's Market Map and Compass to Decide"

"Migrating Applications to the Cloud: Rehost, Refactor, Revise, Rebuild, or Replace?"


"Applying an Enterprise Framework to the Implementation of Hybrid Cloud Hosting"

Evaluation Criteria Definitions

Ability to Execute

Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality,feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.

Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includesan assessment of the overall organization's financial health, the financial and practicalsuccess of the business unit, and the likelihood that the individual business unit willcontinue investing in the product, will continue offering the product and will advancethe state of the art within the organization's portfolio of products.

Sales Execution/Pricing: The vendor's capabilities in all presales activities and thestructure that supports them. This includes deal management, pricing and negotiation,presales support, and the overall effectiveness of the sales channel.

Market Responsiveness and Track Record: Ability to respond, change direction, beflexible and achieve competitive success as opportunities develop, competitors act,customer needs evolve and market dynamics change. This criterion also considers thevendor's history of responsiveness.

Marketing Execution: The clarity, quality, creativity and efficacy of programs designedto deliver the organization's message to influence the market, promote the brand andbusiness, increase awareness of the products, and establish a positive identificationwith the product/brand and organization in the minds of buyers. This "mind share" canbe driven by a combination of publicity, promotional initiatives, thought leadership,word-of-mouth and sales activities.

Customer Experience: Relationships, products and services/programs that enableclients to be successful with the products evaluated. Specifically, this includes the wayscustomers receive technical support or account support. This can also include ancillarytools, customer support programs (and the quality thereof), availability of user groups,service-level agreements and so on.

Operations: The ability of the organization to meet its goals and commitments. Factorsinclude the quality of the organizational structure, including skills, experiences,


programs, systems and other vehicles that enable the organization to operateeffectively and efficiently on an ongoing basis.

Completeness of Vision

Market Understanding: Ability of the vendor to understand buyers' wants and needsand to translate those into products and services. Vendors that show the highestdegree of vision listen and understand buyers' wants and needs, and can shape orenhance those with their added vision.

Marketing Strategy: A clear, differentiated set of messages consistentlycommunicated throughout the organization and externalized through the website,advertising, customer programs and positioning statements.

Sales Strategy: The strategy for selling products that uses the appropriate network ofdirect and indirect sales, marketing, service, and communication affiliates that extendthe scope and depth of market reach, skills, expertise, technologies, services and thecustomer base.

Offering (Product) Strategy: The vendor's approach to product development anddelivery that emphasizes differentiation, functionality, methodology and feature sets asthey map to current and future requirements.

Business Model: The soundness and logic of the vendor's underlying businessproposition.

Vertical/Industry Strategy: The vendor's strategy to direct resources, skills andofferings to meet the specific needs of individual market segments, including verticalmarkets.

Innovation: Direct, related, complementary and synergistic layouts of resources,expertise or capital for investment, consolidation, defensive or pre-emptive purposes.

Geographic Strategy: The vendor's strategy to direct resources, skills and offerings tomeet the specific needs of geographies outside the "home" or native geography, eitherdirectly or through partners, channels and subsidiaries as appropriate for thatgeography and market.


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