Tag: Applications Services

Output-Based Pricing in Application Services: Adoption in the As-a-Service Economy | Webinar

60-minute webinar to be held on Thursday, October 17, 2019 | 9 a.m. CDT, 10 a.m. EDT, 3 p.m. BST, 7:30 p.m. IST

Download the Presentation

Despite decades of outsourcing experience, pricing models continue to be input-based, leaving little to no incentive for the sourcing teams to change or for service providers to propose new options. As the inexorable march toward the as-a-service economy continues, the input-based model is increasingly less effective in some areas. An output-based services consumption model is better suited to the overall cloudification of the IT estate.

In this session, Everest Group’s Pricing Assurance team leaders will explore adoption of output-based models and offer insights on pitfalls to avoid if you’re considering this an approach. We’ll also introduce the different output-based benchmarks we see being contracted in IT application services.

Specifically, we’ll answer these questions:

  • What are the distinct advantages of output-based pricing?
  • What key metrics are being tracked across application services engagements?
  • Where do we see early adoption of output-based pricing, and how should we drive behavior toward more widespread adoption?
  • What are the typical guardrails enterprises should have in place?

Who should attend, and why?
Sourcing, procurement, and vendor management executives, pricing/commercial leads, sales leads, and solution/delivery heads who want to understand when and where adoption of output-based pricing is taking place as well as pitfalls avoid.

Can’t join us live? Register anyway!
All registrants will receive an email (typically within 1-2 business days of the live delivery) with the link to session slides and on-demand playback.

Presenters
Abhishek Sharma
Partner, Pricing Assurance
Everest Group

Achint Arora
Practice Director, Pricing Assurance
Everest Group

Moderator
Michel Janssen
Chief Research Guru
Everest Group

Legacy IT Systems Weigh Down ‘Digital First’ Efforts of More Than Half of Enterprises—Everest Group | Press Release

80% of enterprises’ application modernization efforts are limited to ‘lift-and-shift’ rather than meaningful changes to the underlying architecture; enterprises need to invest in intelligent sentient architecture if they are serious about digital transformation

More than 54 percent of enterprises aspiring to digitally transform blame their slow-moving efforts on the constraints of legacy systems. A key, but too often disregarded, component of those legacy systems is the architecture of enterprise software, according to Everest Group, which reports that 80 percent of enterprise efforts to modernize their applications is limited to a “lift-and-shift” approach as opposed to the adoption of modern software architecture practices which would considerably accelerate digital journeys.

“With a traditional software architecture approach, the enterprise focus is on ‘how’—basing their software architecture on the technologies they want to adopt,” said Yugal Joshi, vice president at Everest Group. “Instead, enterprises should focus on the ‘what’—user expectations and business outcomes—as they design and modernize their software architectures. Unfortunately, enterprises aren’t hiring the right talent to accomplish this.”

Joshi explains that a wide chasm exists between the next-generation architecture aspirations of enterprises and the skills of their enterprise architects. Unfortunately enterprises are not moving fast enough to fill this gap. For example even for hiring next-generation architects, 5 percent of enterprise architects are expected to have expertise in containers, 10 percent in microservices, 15 percent in DevOps, and only 1 percent in serverless technologies.

These next-generation technologies and development approaches are key foundational elements for creating sentient architectures, software architectures that are agile and responsive to business needs. Sentient architecture systems are driven by the 3Ds of design centricity, dynamic adaptability and discrete structures:

  • Design centricity: Systems need to be intuitive and should be designed collaboratively rather than being the responsibility of the enterprise architect alone.
  • Dynamic adaptability: The architecture should be adaptable so that it can be easily refactored or re-architected, without requiring a massive time-consuming investment to deliver value to customers.
  • Discrete structures: Software should be composed of discrete components that are granular in nature and can be integrated with other components when required. This will require architects to break down application components into software-enabled services that are independent, distributed and loosely coupled.

These results and other findings are explored in a recently published Everest Group report: “Application Services—Annual Report 2018: The Future of Architecture is Intelligent.” This research provides fact-based analysis of buyer trends by geography, industry and revenue size. It analyzes major trends impacting the application services market and provides an outlook for the year ahead.

 Key Findings About the Applications Services Market

  • Stand-alone application deals continued their upward trend, constituting two out of every three deals signed (67 percent). Bundled deals that combined application services and infrastructure services also witnessed a slight uptick (11 percent from 9 percent), suggesting that enterprises are beginning to find more value in the convergence of these layers than in the silos.
  • The declining deal size trend saw reversal, and the deal sizes for application services grew by over 25 percent this year, compared to the previous year. This is indicative of a vendor consolidation exercise where a lesser number of service providers are getting the larger share of client’s spend.
  • Application services deal duration continued to be dominated by deals with durations of less than three years (40 percent); deals with a duration over five years constituted only 16 percent of the deal volume.
  • New contracts took up a slight majority (52 percent) in contract type, suggesting that the trend of anti-incumbency and customer dissatisfaction prevails.
  • Surprisingly, deals with consulting in scope dropped sharply to 43 percent of the deal volume. However, 55 percent of deals included system integration in scope, suggesting that the precipitous drop in consulting deal volume might be an anomaly.

***Download the Complimentary 11-page Abstract*** (Registration required.)

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

  • Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.