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Tuesday 12 December 2017

**NEW RESEARCH** Predictions 2018 – Application Services

imageBreaking the Boundaries is TechMarketView’s research theme for 2018 and goes to the core of what we will be seeing in Application Services (AS) during 2018.

Longer-term, survival and success for today’s Application Services (AS) providers will demand radical changes to current business models, service portfolios and mixes, skills strategies, delivery models, supply chains, pricing and contractual constructs and beyond. Driven by both rapidly developing technological possibilities and ever heightening customer expectations, traditional service tower boundaries are breaking quickly and convergence is accelerating fast in this domain.

In 2018, we expect to see the following major factors at play:

Self-cannibalisation accelerates as the full impact of resistance is felt. With competitive renewals now regularly resulting in 40% price cuts, vendors will increasingly choose to get ahead and seek to both best ameliorate the short-term pain while positioning to maximise for longer term returns. Observing Steve Jobs’ maxim of “If you don't cannibalize yourself, someone else will," will become mainstream practice.

 Convergence and hyper-specialisation are the new the watchwords. The AS paradigm is shifting to one of mass micro manufacturing – hyper-specialisation based approaches capable of offering bespoke customisation of platform based services at (or below) ‘apps store’ prices. This in turn is both challenging fundamentally the de facto delivery model that forms the core of most established AS suppliers and breaking down the boundaries between traditionally adjacent service towers.

Commercial ‘creativity’ comes to the fore. Suppliers will increasingly leverage their balance sheets and those of their ecosystem partners to offer buyers substantial co-investment incentives and bring forward anticipated longer-term benefits. Attitudes towards risk will also embolden, with outcomes of enterprise-wide digital transformation programmes underwritten in efforts to both loosen customer purse strings and land elusive bigger deals.

AS suppliers break into BPS. The new world of Business Process Services (BPS) is developing apace. It is also becoming a key battleground between AS suppliers seeking additional sources of revenue through product extension and established BPO players looking to reinvent themselves for the Business 4.0 age.

Acquisitions regain their mojo. Having fallen back significantly this year from record breaking levels of acquisitive activity in 2016, AS suppliers will be back out in the market and shopping with gusto as we head through 2018 and beyond as they seek alternative sources of improved top-line performance and to build out the capabilities now demanded for success.

More detail on these predictions can be found in Application Services Predictions 2018. Readers who don’t have a subscription can contact Deb Seth for details.

Posted by Duncan Aitchison at '09:08' - Tagged: predictions   ApplicationServices