Market Trends and Forecasts 2022 is based on TechMarketView’s proprietary Digital Evolution Model (DEM), which we launched in 2019. The model segments the market in terms of the categories of offerings that SITS buyers consume and is an analytical framework that provides a more detailed view of how rotation to the “New” (Digital, Platform, Cybersecurity) is impacting market activity. The DEM also reflects the increasing breakdown of boundaries between traditional asset demarcations by focusing primarily on the nature of what is being delivered, namely:

• Consulting

Project-based services centred on the provision of expert advice to help improve organisational and business performance through the best use of information technology. The scope of these offerings covers business and IT architectures, technology futures, innovation, customer engagement, operational transformation, people, and organisation.

• Solutions

Discrete services centred on the creation and/or supply and deployment within a customer of new business and/or technological capabilities. Services are usually conducted on a project/time bounded basis and often include appropriate testing and training as part of the underlying services.

• Operations

The assumption of day-to-day delivery responsibility for the continuous provision of one or more elements of a client’s business process and information technology service portfolio (including Infrastructure, Applications, and Business Processes). It includes both traditional outsourcing support and maintenance activities as well as platform/as-a-Service provision.

• Enterprise Software

Refers to SaaS (the supply of applications as a service by a software publisher),Infrastructure & Information management software, and Productivity & Business applications software products. Within each of these we consider the development of the New relative to the Heritage-focused services,albeit that in many cases the latter are groundworks in preparation for subsequent larger scale digital transformation. Furthermore, TechMarketView is of the opinion that the term Heritage is important as it better reflects the potential value held within existing systems and services portfolios than terms such as “legacy”.

As with previous years, we provide discrete estimates and forecasts for the UK Cyber Security market. This is an overlay analysis, which comprises both expenditures counted in other parts of the model and associated hardware demand that sits outside of the scope of the DEM. We also overlay the core market model with a view by industry sector and break down our sector data in Public Sector and the Financial Services by the New/Heritage taxonomy.

Project-based services centred on the provision of expert advice to help improve organisational and business performance through the best use of information technology. The scope of these offerings covers business and IT architectures, technology futures, innovation, customer engagement, operational transformation, people and organisation. These services include, inter alia:

• Audit and assessment 
• Innovation and design Strategy formulation Future/Target Operating Model and transformation roadmap development Proof of concept execution 
• Product, service and supplier selection support 
• Programme and project management/quality assurance (where separate from a Solutions service) 

Solutions refers to discrete services centred on the creation and/or supply and deployment within a customer of new business and/or technological capabilities. Services are usually conducted on a project/time bounded basis and often include appropriate testing and training as part of the underlying services. Service execution can include any or all elements of the technology stack (operating system, web server, middleware, database, programming language, applications etc.). Their scope includes: 

• Custom systems development: Developing, and/or configuring and implementing proprietary application solutions for the exclusive use of a specific client and integrating it with the client’s own and third party supplied IT portfolio. 
• Platform/Packaged software implementation: Installing, tailoring, and implementing third-party platforms/packaged enterprise software and integration with the client’s own and third party supplied IT portfolio. 
• Deployment: Deployment of platforms/enterprise applications to the client’s end-users (e.g., roll-out of a new mobile app or a new function in SAP). 
• Renovation: Modernisation of existing systems to bring in line with current technologies (e.g., re-platforming, refactoring, rearchitecting, rehosting, re-engineering). 
• Testing: Validating that a system is functioning correctly, particularly after changes have been made (where provided as a stand-alone service). 
• Training: Training client personnel on how to operate and use systems (where provided as a stand-alone service).

Infrastructure Operations definitions

Platform Services

The provision of supplier-owned and operated infrastructure ‘off-premise’ as a service. Provisioning services are typically charged on a recurring, variable (typically usage-based) fee basis, though often require a one- off ‘entry fee’ and a minimum spend. Contract duration can vary from as little as one month (for IaaS/PaaS and web hosting), up to (typically) three years for managed hosting. Provisioning services do not involve the transfer of assets and/or personnel from the client to the supplier.

• IaaS/PaaS: Public cloud style provisioning of infrastructure (typically servers, storage, network) and associated operating system platform software as a service, such as by Amazon, Microsoft Azure, and Google.
• Managed hosting: Where an IT services supplier runs the client’s application portfolio on infrastructure provisioned and operated by the supplier (servers, storage, network, etc.). The supplier is only responsible for service levels up to the application layer. The client is generally responsible for supplying, developing, deploying and maintaining applications. The supplier may optionally assume responsibility for application monitoring and alerting the client’s software support organisation when problems occur.
• Web hosting: Where an IT services supplier provides access to infrastructure and software platforms provisioned and operated by the supplier upon which clients can build and run a website and web-based applications. The supplier is only responsible for service levels up to the application layer. The client is generally responsible for developing and maintaining the website.

Data Centre Services

The housing, operation and management by a supplier of client-owned infrastructure, including any or all of a client’s data centre, network and end-user devices. Run services are usually charged on a periodic, pre- determined fee basis for a fixed term, though the contract may provide for variations (typically increases) should the extent or scope of the assets being operated and managed increase.

• Colocation: The provision of controlled and managed data centre space to house client-owned server, storage and network infrastructure. The supplier’s responsibility is typically limited to providing a suitable physical operating environment to ensure that the client-owned infrastructure operates to specification. The client is usually responsible for the delivery, installation, operation, support, and decommissioning of the infrastructure, though some co-lo suppliers may perform some aspects of these activities as part of the service or for a fee. The supplier may optionally assume responsibility for system monitoring and alerting the client’s infrastructure and/or software support organisation when problems occur.
• Remote infrastructure management (RIM): The operation and management of client-owned infrastructure through a network service delivered remotely from the supplier’s operations centre. RIM services may be provided for any part of a client’s entire IT infrastructure including data centre, network and end-user devices. The supplier assumes responsibility for the availability and performance of the infrastructure under its management but usually not the applications. RIM includes appropriate helpdesk and infrastructure support activities as an integral part of the service.
• Infrastructure outsourcing: The operation and management of client-owned infrastructure that has been transferred to a supplier on a long-term contract (typically at least three years). Historically, IT infrastructure has been outsourced in ‘towers’ (typically, data centre, network, end-user devices and often to different suppliers), but this trend is being eroded. IT outsourcing contracts usually involve the transfer of client personnel to the supplier. The supplier assumes complete responsibility for the achievement of service levels including applications. However, the supplier may not necessarily be responsible for the development of new applications or for significant functional upgrades to existing applications, even though these may run on the outsourced infrastructure.
• Service Integration & Management (SIAM): The operational management and control on behalf of the client of a number of ‘tower’ service providers which are delivering one or more services, and the integration of those services. We see the role of the SIAM service supplier to provide direction, management and coordination for the delivery of end to end services; to provide a single, clear and concise interface to all users of ICT services (service integrator and management functions across the Service Tower providers); and to act to ensure all ICT services are transitioned, integrated, managed, monitored and improved during the service lifecycle.
• Cloud Brokerage: A service provider that will manage the usage of cloud services as well as manage the relationship–and negotiate the contracts–between cloud providers and the end customer.
• Business Continuity & Disaster Recovery: Where the supplier provides access to infrastructure owned and operated by the supplier, usually on a stand-by basis for the client to use when there is catastrophic and enduring disruption to client-owned infrastructure. BC/DR services often include assistance with setting up the stand-by infrastructure environment and periodic testing. Note that where the supplier is only providing real estate to house the client’s own stand-by infrastructure, we count this as a colocation service. Where BC/DR services are provided as a component of a remote infrastructure management service we do not attempt to split out the BC/DR revenues from that service.
• Infrastructure procurement: Where the IT services supplier procures third-party infrastructure on behalf of the client for a fee (typically a small margin). As this is usually only offered as part of a Build, Run or Support service we have assumed that any revenues generated are included in those segments. However, we have included the definition of the activity here for the sake of completeness and to recognise that there may be independent suppliers who provide IT procurement services, but we have not attempted to identify and measure them as we believe that the revenues are insignificant compared to the rest of the infrastructure services market.
• Private cloud: The cloud infrastructure is provisioned for exclusive use by a single organisation comprising multiple consumers (e.g. business units). It may be owned, managed, and operated by the organisation, a third party, or some combination of them, and it may exist on or off premises.

Support

Services to assure the correct functioning of infrastructure owned and managed by the client. Support services may be charged on a task by task basis (more typical for remedial maintenance) or via a periodic, pre-determined fee for a fixed term (typically at least one year), though the contract may provide for variations (typically increases) should the extent or scope of the assets being supported increase.

• Preventive maintenance: Scheduled, routine maintenance to service, repair or replace infrastructure prior to failure, typically provided under the terms of a fixed-term maintenance contract.
• Remedial maintenance: Services to repair or replace infrastructure not functioning correctly.
• Helpdesk (stand-alone): Provide a central point of contact (usually off premise) for a client’s internal end-users to report incorrect functioning of their IT service or to request assistance on usage. This will usually include both infrastructure and applications. 

Platform Services

The ‘off-premise’ supply of one or more enterprise applications as a service by an IT services supplier. Platform services include Application Provisioning, delivered from the IT services supplier’s own infrastructure and are charged on a recurring, variable (typically usage-based) fee basis, and Application Evolution, delivered on client or third-party cloud infrastructures. The supplier may require a one-off ‘entry fee’ and a minimum commitment on spend and/or contract duration. The supplier is responsible for the service levels for the application, and for the ongoing development and enhancement of the application. Application Platforms may be: •

• Proprietary IP-led: The supply of an enterprise application as a service where the application is wholly or significantly the IT services supplier’s proprietary IP. The service may include third-party IP, but the essential benefit of the service depends on the IT services supplier’s proprietary IP. •
• Third-party IP-led: The supply of an enterprise application from a third-party software vendor as a service. There may be some ‘value add’ from the IT services supplier, but the essential benefit of the service depends on third-party IP.

Platform Services includes both AaaS delivery and ‘legacy’ bureau-style processing services, historically referred to as application software provision (ASP), such as with payroll processing. Note that our definition of ASP confines the supplier’s responsibility to the correct operation of the software (i.e. meets agreed service levels and produces the right ‘outputs’). If the supplier also assumes responsibility for the end-to-end business process associated with the application (e.g. runs the payroll help desk for the client’s employees as well as running the payroll processing) then in DEM the service is deemed to be a Business Process Operations service.

Application Management

The supplier hosts one or more client Heritage enterprise applications on its own infrastructure and provides some or all application lifecycle services associated with the applications being hosted, e.g. ongoing development, upgrade, operations and support. Application outsourcing typically differs from managed hosting in Infrastructure Services because: 

• Managed hosting usually includes the client’s entire applications portfolio 
• With managed hosting, the client generally retains responsibility for the ongoing development, upgrade, and support of the applications being hosted.

The difference between application outsourcing and IT outsourcing in Infrastructure Services is more in the scope and direction of travel. With application outsourcing, the supplier assumes full lifecycle responsibility for specific client applications. The client may well continue to run other of its enterprise applications on its own infrastructure or on infrastructure provisioned by another IT services supplier. In other words, the scope of an application outsourcing contract tends to be more specific to the applications than the infrastructure. With IT outsourcing, the client’s entire application portfolio and IT infrastructure is transferred to the supplier, though the supplier may not necessarily be responsible for ongoing application development and upgrade. In other words, the scope of the contract is more specific to the infrastructure than the applications.

Support

Services to assure the correct functioning of the client’s applications whether bespoke or packaged. Note that in the case of packaged applications, the IT services supplier does not usually take responsibility for fixing bugs in the software vendor’s code. Support services are often charged a pre-determined fee for a fixed term (typically up to three years), though the contract will usually provide for variations (typically increases) should the extent or scope of the applications being supported increase. Application support may also include minor application functional enhancements.

TechMarketView defines Business Process Services (BPS) Operations as the third-party provision of ‘white collar’ and professional business services in which the provider takes responsibility for delivery of services to support defined business outcomes across the front, mid and/or back office. What distinguishes BPS from other SITS activities is the end-to-end responsibility providers assume on behalf of the customer.

Platform Services

The BPS supplier assumes full responsibility for the client’s desired outcome measured against key performance indicators (KPIs) and service levels. The essential benefit of the service is substantially dependent on a proprietary and/or third-party application suite, which is designed to automate a significant part of the business process itself and provide a more transparent view on performance. Platform services can be delivered in either of the following ways:

• Provisioning (BPaaS): where a supplier takes on responsibility for one or more customer business processes ‘off-premise’ on an ‘on-demand’, pay-for-use basis, using a multi-tenanted software platform, and pooled resources (i.e., no dedicated resource for a single client). BPaaS is ‘asset-free’ from the customers’ perspective which means the supplier is responsible for supplying all assets used in provisioning the business process–software platform, the people and the IT infrastructure.
• Platform-based BPS: the client’s business process is adapted to conform to the supplier’s standard business process design to operate on the supplier’s software platform. The software platform may be proprietary to the business process services supplier or may be primarily based on a third-party application. The approach may involve a completely new platform migration, for example to a new ERP, or a lighter touch approach such as a business process management (BPM) system that sits on top of existing software and IT infrastructure.

Non-Platform Services

Traditional Business Process Outsourcing (BPO) Non-platform services are those that transition and run one or more client business processes to a BPS supplier. The BPS supplier assumes full responsibility for the outcome and end-to-end KPIs and service levels of the business process. Non-platform BPO services usually involve the transfer of client personnel (also known as “lift and shift”). The services supplier takes on responsibility for managing the client’s business process and continues to run it using the existing application environment. The supplier may move the application environment to its own infrastructure or transfer client-owned infrastructure. The supplier may implement or host new technology to assist in delivering services and improving efficiencies but meeting the overall client outcome(s) will not be dependent on the use of that technology.

Enterprise Software comprises the two top level categories of:

•  Infrastructure and Information Management software products and Productivity
• Business Applications products

Revenue from on-premise licence and maintenance fees, SaaS, hosted and non-SaaS subscriptions is factored into the revenue estimates. Professional Services, PaaS and IaaS revenue is excluded and allocated as appropriate to other market segments

Enterprise cyber security software and services include the provision of on-premise and mobile security tools andapplications and their associated support and maintenance activity, together with externally and cloud hosted “asa service” security and managed security service propositions. The definition also includes consulting/advisory andprofessional services engagements delivered as part of security, risk and regulatory compliance assessments andassociated product/service implementations.

• Infrastructure-as-a-Service (IaaS)
• Platform-as-a-Service (PaaS)
• Software-as-a-Service (SaaS)

• On demand, self-service (i.e. user-provisioned)
• Broad network access (essentially, accessed via the internet with a thin client)
• Resource pooling (i.e. multi-tenant)
• Rapid elasticity (scale-up/down–though not necessarily automatically)
• Measured service (i.e. pay for use).

• Business Process-as-a-Service (BPaaS), to describe an ‘end to end’ business service primarily operating on a SaaS platform.

• Application-as-a-Service (AaaS), which is basically SaaS as delivered by an IT services company as distinct from a software publisher. AaaS is also not recognised by NIST but we felt it important to make the distinction between software publisher-delivered ‘cloud’ applications and IT services vendor- delivered applications ‘cloud’ as the nature of the services (and where the vendors are ‘coming from’) are often different. Today, and we believe for the foreseeable future, the market sees software publishers as different ‘animals’ to IT services suppliers. As such, we think it useful to give different labels to their application delivery services. Typical usage would be for testing new operating system platforms or complete subsystems, or for providing additional processing capacity for core applications at peak times. The IaaS supplier is only responsible for the service levels relating to the provision of the infrastructure (primarily availability and capacity), but not for the service levels of the client software.

• Platform-as-a-Service (PaaS) PaaS (platform as a service) is the off-premise provision on a pay-for-use basis of a development and deployment environment to allow developers to code and deploy applications. The development environment may range from‘simple’ programming languages (e.g. C++) through to integrated development and deployment platforms, such as Salesforce’s Force.com, Microsoft’s Azure, and ‘collaboration’ products such as SharePoint. PaaS generally includes the provision of database software and associated management tools, including so- called ‘business intelligence’ tools such as Business Objects et al. The PaaS platform may be provisioned as a shared service or dedicated to the customer, depending on specificity of customer requirements. The PaaS supplier is responsible only for the service levels of the development platform (and of course the underlying infrastructure) but not for any applications that are created.

• Software-as-a-Service (SaaS) SaaS is the off-premise provision of applications on demand on a pay-for-use basis by a software publisher (as distinct from IT services supplier—see AaaS). It is the best-known, most mature area of cloud software provision and typical vendors include Microsoft, Salesforce.com and Workday. In SaaS, the software publisher is responsible for end-to end service levels of the applications. The software publisher is also responsible for the provision of the underlying infrastructure although may not necessarily own it themselves. For example, many SaaS start-ups run their software on infrastructure operated by third-party IaaS suppliers such as Amazon Web Services.

• Applications-as-a-Service (AaaS)

• Business Process as-a-Service (BPaaS)

• be inherently multi-tenant, i.e. capable of supporting multiple clients on a ‘shared service’ basis
• allow for consumption-based, value-based or outcome-based pricing models
• be delivered on a utility basis, i.e. drop in and drop out according to demand requirements
• be capable of delivery over a network (both internet and VPN)

• Private cloud

• Community cloud

• Public cloud

• Hybrid cloud

The Public Sector market it tracked in subsectors as follows:

• Central Government

Central government departments and agencies and non-departmental public bodies in the UK. Indcludes all central government departments apart from the Department of Health (which is included in Health) and the Ministry of Defence and Security & Intelligence agencies (which are included in Defence).

• Local & Regional Government

District, county, unitary and metropolitan councils, as well as combined authorities/city regions. Also includes spend by the Scottish Government, Welsh Government and Northern Ireland Executive.  Social care is covered in this sub sector, not under Health.

• Health

Public health systems across the UK, as well as the Department for Health and Social Care, its executive agencies, and non-departmental public bodies.  It does not include the social care market, which is covered under our Local & Regional Government subsector.

• Defence

Ministry of Defence (MOD), its executive agencies and non-departmental public bodies. The MOD is a Ministerial Department supported by two agencies and public bodies. Also includes Security & Intelligence agencies.

• Education

Schools,  further education and higher education in the UK. Department for Education spend is included under Central Government.

• Police

The 43 territorial police forces in England and Wales, Police Scotland and PSNI; the three special police forces in the UK: British Transport Police, Civil Nuclear Constabulary and the Ministry of Defence Police; the National Crime Agency; and Home Office spending that is passed through to police forces.  It does not include major Home Office programmes.

TechMarketView segments the market into four main subs-sectors. These are:

Banking

The banking sector is by far the largest individual contributor to expenditure within the UK financial services SITS market. According to TechMarketView’s own definitions, banking itself comprises four main segments.

• Personal banking: current accounts; deposits; personal loans; mortgages; payment cards; overdrafts; payment processing; credit facilities; savings and investments.
• Commercial banking: SME business banking; business current accounts; overdrafts; business loans; commercial mortgages; deposits; payments processing; foreign currency accounts; trade finance; leasing; letters of credit; clearing services.
• Corporate banking: corporate payments; cash management; cards; deposits; lending and funding; trade finance; asset finance; corporate leasing.
• Banking utilities: clearing and settlement; exchanges; wholesale payments and financial messaging.

Insurance

The insurance sector comprises two main segments, Life and Pensions and Property and Casualty (P&C). In line with the standard classifications of the Associated of British Insurers (ABI), health insurance is included under P&C. This sector also includes reinsurance technology and IT spend relating to brokers/advisors, including aggregators and comparison sites.

• Life & Pensions: personal lines and group insurers providing life insurance; critical illness; endowments; savings with life insurance; personal pensions and annuities.
• General Insurance/Property & Casualty (P&C): personal lines and group insurance covering motor; property; marine; commercial risks; accident cover etc.

Wealth Management

The wealth management sector is the smallest of the four main financial services segments. TechMarketView’s definitions segment the wealth management sector into the following four areas: private banking; retail asset management; retail investment brokerage and financial planning/investment advice:

• Private banking: banking, investments and other financial services provided to high net worth clients; financial planning; investment management; tax advisory services; trusts; property; accounting; legal and payroll.
• Retail asset management: investment fund management; pension investment firms; unit-linked investments (including those provided by banks and insurance companies); investment trusts; personal and family trusts.
• Retail investment brokerage: platforms and services to facilitate the retail trading of financial products (equities and other asset classes).
• Financial planning and investment advice: provision of financial services to the mass affluent segment; investment advice; retirement planning; portfolio management etc

Financial Markets

The financial markets sector is made up of four main areas of operation: investment banking; capital markets; institutional asset management and hedge funds.

• Investment banking: corporate finance and advisory; capital raising; debt and equity underwriting; M&A and structured finance.
• Capital Markets: trading activities and wholesale brokerage; including all back-office and support functions across equities; commodities; FOREX; debt/fixed income; securities; prime brokerage and investment research.
• Institutional asset management: management of securities and financial assets of behalf of institutional investors (e.g. governments; corporates and investment companies) excluding hedge funds
• Hedge funds: short-term trading in alternative investment funds using hedging and leveraged trading.

• Infrastructure
• Data centre infrastructure (servers, storage, peripheral devices)
• Network infrastructure (data-intensive networks only)
• End-user devices (e.g. desktop systems, laptops, notebooks, tablets, smartphones)