According to a new survey of North American cloud service providers (CSPs) from CA Technologies, more than half reported that their customers are opting for the private cloud services model, while 32 percent are choosing public cloud services. Moreover, these CSPs expect to grow their businesses by 30 percent in 2012.

CA Technologies surveyed CSPs and discovered respondents were upbeat about their performance and planned to continue investing in additional resources to increase business throughout the remainder of the year.

Although the cloud market is still considered to be fairly nascent, the average survey respondent has been delivering cloud services since 2009, with 22 percent reporting having offered cloud-based services before then.

Nearly 25 percent indicate they had been “extremely successful” in their cloud services activities—having met or exceeded their goals—while another 35 percent noted they had been “moderately successful” in their efforts.

Respondents also offer a diverse set of services cutting across Infrastructure as a Service, Platform as a Service, Software as a Service (SaaS), virtual private data centers and other services, with the highest percentage (two-thirds of respondents) indicating they sell SaaS solutions.

“Cloud service providers are critical players in the cloud computing ecosystem and important drivers in this new cloud economy,” said Adam Famularo, senior vice president, Cloud Solutions and Service Providers, CA Technologies. “Third party providers come from a range of backgrounds – managed services, software development, value-added resellers, even IT consulting and technology outsourcing – and they’re leveraging the cloud to transform their businesses and those of their end customers.”

The survey also explored challenges and areas of investment for CSPs. Not surprisingly, nearly fifty percent cited dealing with their customers’ security concerns as the top challenge. Issues around billing strategies (39 percent) and ensuring customer satisfaction (27 percent) were the next largest concerns, while issues like ensuring regulatory compliance (17 percent) and managing data center capital costs (12 percent) appeared much lower on the list.

In terms of their 2012 investments to grow cloud revenue, 55 percent of the respondents indicated they intend to increase their marketing activities, while 46 percent planned to create new cloud services to expand their existing offerings. Thirty-one percent will make investments to specialize in vertical markets. These areas of investment suggest that CSPs have recognized the need to differentiate their services in a highly competitive marketplace, and to increase awareness to drive new customer wins.

“The survey results mirror many of the conversations we’ve had with our service provider partners,” continued Famularo. “They are expanding from their earlier roots and finding competitive advantage through delivery of new cloud-based services, and they are looking to see significant growth this year through efforts like vertical specialization and ramped up marketing initiatives. It’s a fast-paced market with a lot of opportunity, and we’re eager to work with our partners to achieve our mutual goal: to help companies accelerate, transform and secure IT.”

The survey was conducted in March 2012 of registered users of SearchCloudComputing.com and generated 121 responses from a representative cross-section of cloud service providers in North America. Download the full Research Brief “Service Providers Put Their Heads in the Cloud” or the companion white paper “Rising Above the Competition as a Cloud Services Provider.”