German enterprises are rapidly shifting from public cloud services to private and hybrid cloud solutions, driven by regulation, data security concerns and the desire for greater control over IT resources, according to a new research report published by Information Services Group (ISG), a global AI-centered technology research and advisory firm.
While new cloud models and AI tools offer benefits, they also introduce integration and compliance risks. Service providers enable German enterprises to implement standardized infrastructure that meets the requirements of AI and emerging technologies.
The 2025 ISG Provider Lens Private/Hybrid Cloud – Data Center Services report for Germany finds that organizations are implementing private and hybrid cloud environments to better address operational, compliance and data protection requirements. These environments offer the flexibility, scalability and agility enterprises need while controlling costs and ensuring data residency. As German organizations rationalize budgets and optimize IT costs amid persistent economic uncertainty, chief technology officers (CTOs) face increasing challenges in justifying expenditures and managing the complexities of hybrid models.
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“Organizations in Germany are re-examining their existing IT infrastructures,” said Dr. Matthias Paletta, director and technology modernization lead for ISG in Europe. “Many are concluding they can benefit from implementing hybrid cloud computing, along with automation and outsourcing.”
As German enterprises review their data center management strategies, many are reducing the physical space of their owned facilities and increasing reliance on colocation services, the report says. This move is intended to minimize costs, improve scalability and optimize operational efficiency with assistance from external expertise and infrastructure.
Organizations in Germany are also increasingly exploring the potential of generative AI to transform their business processes and drive innovation, ISG says. Many enterprises are carefully evaluating the costs and benefits of GenAI to distinguish between inflated expectations and practical business outcomes. As interest in GenAI grows, companies are making targeted investments in infrastructure and tools that can deliver predictive analytics, actionable insights and intelligent automation. These efforts are intended to unlock new revenue streams and enable companies to harness the transformative potential of AI.
At the same time, enterprises in Germany are responding to the proliferation of IoT devices and the need for low-latency applications by deploying data center solutions that support edge computing, the report says. They are engaging with colocation and data center providers that can position edge facilities close to end users, enabling faster data processing and real-time insights for critical sectors such as manufacturing, healthcare and smart cities.
“While new cloud models and AI-powered tools offer clear benefits, they also introduce complex integration and compliance risks,” said Wolfgang Heinhaus, senior analyst, ISG Provider Lens Research, and lead author of the report. “Leading service providers enable German enterprises to implement standardized infrastructure that meets the requirements of AI and emerging technologies.”
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The report also explores other trends in the private/hybrid cloud and data center services market in Germany, including the expansion of partnerships and alliances among data center outsourcing providers and the impact of evolving VMware licensing on enterprise cloud strategies.
The 2025 ISG Provider Lens Private/Hybrid Cloud – Data Center Services report for Germany evaluates the capabilities of 101 providers across seven quadrants: Managed Services — Large Accounts, Managed Services — Midmarket, Managed Hosting — Large Accounts, Managed Hosting — Midmarket, Colocation Services — Large Accounts, Colocation Services — Midmarket and AI-Ready Infrastructure Consulting.
The report names Arvato Systems, Deutsche Telekom (T Business), Kyndryl and q.beyond as Leaders in three quadrants each. It names Accenture, Atos, Axians, CANCOM, Capgemini, Claranet, DATAGROUP, HCLTech, Infosys, NTT DATA, plusserver, Rackspace Technology, Syntax and T-Systems as Leaders in two quadrants each. All for One Group, AtlasEdge, akquinet, Cognizant, CyrusOne, Digital Realty, Equinix, IONOS, ITENOS, KAMP, maincubes, Materna, noris network, PFALZKOM, STACKIT, TCS, Telehouse, TelemaxX, WIIT and Wipro as Leaders in one quadrant each.
In addition, CONVOTIS is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. Grass-Merkur, LTIMindtree and NorthC Datacenters are recognized as Rising Stars in one quadrant each.
In the area of customer experience, Persistent Systems is named the global ISG CX Star Performer for 2025 among private/hybrid cloud and data center service providers. Persistent Systems 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.
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Source – businesswire
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