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Wednesday 12 December 2018

*NEW RESEARCH* Application Services Predictions 2019

In our recent Legacy vs. New: An Alternative Analysis of the SITS Market for the Digital Era report, we concluded thatTheme the velocity of “New” (digital, platform and cybersecurity services) growth for individual suppliers - and within the market as a whole - will be determined by the 3 R’s; Readiness, Risk and Relationship. It is, however, the quality and completeness of the multi-faceted relationships that Application Services (AS) providers, be they internal or external, must now sustain which will determine the strength of the foundations upon which growth and impact can be built.

The Year of the Relationship is TechMarketView’s research theme for the next twelve months and goes to the core of what we will be focusing on in AS during the coming twelve months. In 2019, we expect to see the following major factors at play:

It gets harder in the middle

Both the market conditions and the competitive landscape are changing to something far less favourable for the more digital native players that have been enjoying rapid growth for the last decade. These larger AS SME’s are at risk of finding themselves too small to be considered for large contracts and too large and established to be viewed as being a part if the next wave of innovation.

Ambitious run pricing assumptions come home to roost

A rapidly contracting market for traditional applications support, maintenance and operations services has placed a premium on contract retention. Pricing has often become a commercially led “to win” exercise based on aggressive assumptions regarding the efficiency impacts of multiple automation deployments. It is highly probable that neither the scale of savings envisioned nor the estimated speed at which they would accrue will materialise.

The skills bottleneck tightens

Buy and sell-side demand for “New” talent will continue to further outstrip its supply. The ever-widening array of technology skills sets required to deliver in the new AS world, moreover, will only exacerbate the problem. The possibility of a large, Brexit driven applications change bubble, moreover, could make the next two years challenging in the extreme.

Hyper-agility becomes the AS mantra

“Good” in the AS world will increasingly centre around hyper-agility. This necessitates the bringing together of established agile and DevOps approaches with microservices architecture-based, distributed applications that use techniques including containerisation. Expect plenty of hype about hyper-agility in the coming months.

Acquisitions accelerate

As anticipated in last year’s Application Services Predictions, the level of acquisitive activity in the AS arena increased in 2018. Our research indicates that purchases of UK consulting, SI and vertical solution businesses is up nearly 15% so far this year. We expect this pace to accelerate as we head through 2019 and beyond as AS suppliers seek both alternative sources of improved top-line performance and to build out the capabilities now demanded for success.

 Application Services Predictions 2019 provides a deeper dive into these topics and the report is now available for download. Readers who don’t have a subscription can contact Deb Seth for details about how to take one out.

Posted by Duncan Aitchison at '07:47' - Tagged: predictions   ApplicationServices