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Remodeling of the Software and Services Market

By Jeffrey M. Kaplan

11 June 2018 08:36 AM

In the ancient world of information technology, systems integration and consulting firms have flourished, helping businesses of all sizes to reunite a plethora proprietary systems from a wide range of software and technology providers.

Despite the promises of the cloud, little has changed. While there may be fewer proprietary systems and applications pure play, the need to customize software solutions and integrate disparate databases has steadily grown.

It is therefore not surprising that the demand for IT services – including initial guidance, system integration and software development skills – has also increased.

IT services expenditures worldwide in 2018
According to Statista, it is expected to exceed 1 trillion US dollars, a jump of 5.5% over the previous year.

Of course, much of the growth has been driven by the combination of rising customer expectations and intensifying competition in all sectors. IT services are required to help companies not only continually update their current software and systems to keep pace with market forces, but also to pursue their unique digital transformation goals.

Yet, there are several important differences in the current requirements of IT departments that distinguish them from the demands and offers of the past. The biggest differences are due to the changing customer preferences.

Higher expectations

First, when the market for systems integration services appeared in the 1980s, companies recognized that facing the challenges of conflicting proprietary technology and software was a necessary evil to do business. In the world of free software and application programming interfaces, companies expect their suppliers to offer interoperable solutions to each other.

Although this becomes a reality, the perceived added value of "simple" systems integration services has been reduced. As a result, system integrators must offer a new set of value-added services.

Second, business decision makers are no longer willing to entrust all of their IT operations to a third party under a multi-year outsourcing contract, as they do. Made during the 1990s and the first part of this century.

Business executives now view their IT operations as strategic assets that should not be left to others. In addition, they found that subcontractors were rarely able to fulfill their promise of "managing the mess at a lower cost." As a result, subcontractors can no longer rely on long-term contracts to generate large-scale profits.

Finally, there has been a shift in customer attitudes about the benefits of working with IT service companies that can provide reproducible and software-compatible solutions. In the past, business leaders were a little schizophrenic about this idea. On the one hand, they preferred to work with IT service companies and professional services that could demonstrate in-depth expertise in the field and a successful roadmap in specific industries or disciplines.

On the other hand, they were concerned about acquiring a solution produced by the computer services and professional services firm that was designed to solve a similar set of common problems facing peers in the US. Customer organization. Now, smart business executives and information technology are more willing to take advantage of past experiences and intellectual property from an IT service provider.

Develop trends

These changing attitudes have helped to create a new generation of cloud-based professional services companies over the last 10 years – including Appirio, Blueolf and Cloud Sherpas. This more agile group of companies is focused on shorter-term projects aimed at helping their customers capitalize on the latest innovations in Software as a Service, Platform as a Service and Software. Infrastructure as a Service. They also found various ways to produce some of their repeatable solutions and found a more receptive audience for them among their customers.

The rapid deployment methodologies of these companies, along with the success of their software development efforts, have made them an acquisition target for the world's largest IT service companies. Cloud Sherpas was acquired by Accenture. Bluewolf has become a part of IBM. Appirio was bought by Wipro.

Among these companies, Appirio attracted its first round of venture capital more than a decade ago, due to the promise that it would ultimately become a software and services company . Although she has found much of her success in providing people-oriented services, Appirio's software solutions have gained enough weight to demonstrate that they could fulfill her original vision.

I recently discussed with Appirio's new leader within Wipro, who stated that the demand for productized solutions continued to grow in three areas: in the white spaces of horizontal application , among industry-specific vertical markets, and for a new set of DevOps tools that make the entire software development process easier and more efficient.

With the first generation of cloud-based professional services companies in global IT services companies, you should see two new trends in the industry: first, how large IT companies are transforming their operations and recalibrating their operations mix of software and services; and second, how the next generation of IT / cloud consulting firms is defining its own path to redefine the way the software is developed and the services provided.

The opinions expressed in this article are those of the author and do not necessarily reflect those of ECT News Network.

Jeff Kaplan has been a columnist for the ECT News network since 2009. He focuses on cloud computing, SaaS, IT management, managed services and the Internet. Objects. He is General Manager of THINKstrategies.
Email Jeff.

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