Transformative enterprises balance application development and modernization of legacy apps to drive agility, better customer experience
In an ideal world, enterprises that invest in application services capabilities would see a return in the form of application quality, operational efficiency and speed to value, but only 10% of enterprises are achieving this, according to Everest Group. The firm recently surveyed 194 C-level officers of global enterprises with revenues over US$1 billion and found that nearly 90% of global enterprises are unable to achieve the desired business outcomes of their application portfolios.
“Unfortunately, too many enterprises focus entirely on either investing in new technology stacks or blindly replacing their legacy applications, and this unbalanced approach is highly ineffective,” said Yugal Joshi, vice president, Information Technology Services, at Everest Group. “In contrast, 10% of enterprises are able to achieve significant improvement on their business metrics as a result of their applications strategy. What these leading organizations have in common is that they take a balanced view of their legacy and new application investments.”
Everest Group identified four more elements of effective applications strategies that leading organizations share:
- Alignment of business and IT objectives
- Outcome-oriented organizational structure
- Robust talent strategy for legacy and new applications
- Investment in strategic automation
These results and other findings are explored in a recently published Everest Group report: “Business Transformation: A Confluence of New and Legacy Applications – Annual Report 2019.” This report gives insight into the current applications services landscape, providing a fact-based analysis of buyer trends by geography, industry, and revenue size, and also offers an outlook for the application services market in the global ITS industry.
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Other Key Findings
- Application Services, which comprises application development, maintenance and testing services, accounts for approximately 32% of the US$539 billion global information technology services (ITS) outsourcing market, which is expected to continue growing at 2% per annum.
- Application services are the fulcrum of the ITS industry, with 79% of ITS deals having some form of application services in the scope. Stand-alone application services deals have been growing consistently and contribute the largest share (68%) to the IT services market.
- Enterprises are not shying away from making long-term investments. Deals with longer duration (longer than three years) have seen an increase at the expense of deals with shorter durations.
- Average deal sizes in most verticals have plummeted, except for healthcare and life sciences, which saw a marginal increase in deal sizes.
- Multi-region deal signings decreased sharply from 11% in 2017 to 2% in 2018.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.