Drive for Nordic datacentre transformation

Nordic enterprises looking to spread abroad are outsourcing datacentre IT in cutting-edge ways to gain international advantage

Nordic enterprises are seeking advanced outsourced IT services and skills to help transform the way their datacentress serve their businesses. 

ISG’s report Nordics region – private/hybrid cloud – data center services & solutions Nordics 2019, found that cloud infrastructure, artificial intelligence for operations, hyper-converged infrastructure and containerisation are in high demand by organisations in the region, along with software as a service (SaaS) for security.

These trends indicate that Nordic firms are seeking datacentre transformation to improve their efficiency and competitiveness. 

The reasons for these developments are likely to include pragmatism and ambition: many Nordic organisations have realised they have no alternative but to aim for global success.

The Nordic market is small in population terms, yet too large for international competitors to ignore. The result is that companies in Norway, Sweden, Denmark and Finland have to adapt and expand in order to survive, and many of them have tough international competition.

“As Nordic enterprises transform their businesses to raise their profiles in the global market, digital transformation and cloud datacentre outsourcing have become their key priorities,” said Barry Matthews, partner and head of technology research and advisory firm ISG Northern Europe. 

But it’s not enough to simply declare “We are heading into the cloud” and expect instant cost savings and efficiency improvements, as plenty of international organisations have already discovered to their cost. 

According to Manoj Chandra Jha, lead analyst at ISG, some Nordic businesses struggle to see rapid returns on their investment in cloud computing, which is to be expected. A move to cloud infrastructure can reduce an organisation’s hardware and software requirements, but only if it is carefully planned and implemented.

That can be hard to do from a standing start with no prior experience. It often makes more sense to source the required skills and services from outside rather than try to build them up in-house.

Read more about IT services in the Nordic countries

  • Norway’s biggest bank has outsourced IT operations to Indian service provider HCL in a seven-year deal worth $400m.
  • Wipro, one of India’s big four IT services providers, is to expand its workforce in Scandinavia and has appointed a local executive to lead its operations in the region.
  • HCL has established a team in the Nordic region, one to cover Germany, Austria and Germany, another for France, a team to look after the Benelux, as well as an Italian outfit.

Jha said: “Enterprises in the region have some key concerns, such as lack of skilled talent, siloed operating models, inadequate governance capabilities, cyber security challenges, an inability to innovate and inadequate technology suppliers in emerging areas.”

This explains the breadth of the IT trends in the region, which include not just increased spending on cloud (including hybrid cloud) computing, but also hyper-converged infrastructure (HCI), artificial intelligence for operations (AIOps), SaaS security and containerisation.

Some of the organisations surveyed for the report see HCI as being “cloud coming to them rather than the other way around”. Software-defined anything (from computation and storage to networking) has produced good results for Nordic organisations, “causing the implementation of HCIs to grow by more than 100% over the year”, said Jha.

Complementing HCI is AIOps, which can automate some aspects of IT hardware and software maintenance, replacing mundane, labour-intensive tasks. But it is beginning to be used for more than that, said Jha. “We also see a shift in organisations adopting the AIOps model to enable them beyond automation. Data is fed into an AI platform that would analyse the pattern behaviour and trigger a workflow for a resolution.”

Associated with these trends is the increasing use of containerisation and SaaS-based security. Containerisation skills are, again, mainly being sourced from outside providers, many of whom have strategic partnerships with Kubernetes for the supply of containers as a service (CaaS) and are focusing on training their staff accordingly.

Win-win situation

As far as security is concerned, because organisations’ data is increasingly distributed, the same must also apply to security, said Jha. “This is a win-win situation for both clients and SMEs [small and medium-sized enterprises] as they get to deploy the model wherever necessary.”

All these methods and systems require considerable expertise to get right, which is a major reason why Nordic organisations are outsourcing IT – they need to have access to the necessary skills. Suppliers leading the race to supply such datacentre transformation services include Capgemini, TCS, Atos, Accenture and Wipro.

None of those firms has headquarters in the Nordic countries, an indication that international firms may be beating local ones even in their own backyard.

That said, Nordic IT providers are still active in their own region. According to Jha, there has been development in the Nordics IT provider space in last couple of quarters. For example, the TietoEvry merger now targets large enterprises clients to drive their digital transformation journey, Orange’s acquisition of Basefarm has increased its overall portfolio and position, and Nordcloud is emerging as one of the niche IT service providers across hyperscalers.

Jha said this datacentre transformation trend will continue for the next three to five years.

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