77 percent of service providers will require some level of IT transformation over the next three years to meet the needs of their customers, according to 451 Research.

Service providers will be challenged by automation, scalability and reliability going forward. The hardware and software vendors will also have to compete with the public cloud providers as service providers consider hyperscalers for their next compute and storage purchases, since many enterprises are moving workloads off-premises.

60 percent of enterprises will run most of their IT in off-premises environments over the next two years.

“The vendor community must adapt their product roadmaps, marketing programs and sales strategies to address the growing role service providers will play,” Al Sadowski, research vice president for Voice of the Service Provider at 451 Research, said.

39 percent of service providers identified reliability as the most important vendor selection criterion. Service providers are ready to dump traditional hardware solutions in favor of simpler solutions to provision.

57 percent will deploy hyper-converged platforms in the next 12 months against 38 percent deployed today.

Backup and disaster recovery are the most represented services. 39 percent prefer to work with a small group of strategic partners.

Intel and AMD are no longer expected to be the dominant players for servers over the next 12 months. SoftBank-owned Arm’s cost and flexibility show promise.

There is strong interest in open networking projects, but limited adoption.

21 percent of service providers do not have a formal strategy for handling the Internet of Things (IoT).

The General Data Protection Regulation (GDPR) and Brexit are likely accelerants for service expansion within the EU over the next 12 months.