What happened to the Billion $ deal?

I recently came across a wonderful piece by Stanton Jones from #ISG. I am putting forth a crisp extraction for industry leaders to give it a thought:

-         Managed Service market is growing at 3.5% Y-O-Y (IT-BPM Services $1.2 T), SAAS Market is growing at $250 B Y-O-Y (in yr. 2019 ~ 20+%)

-         Fundamental changes happening in the industry

-         Deals getting smaller and shorter while markets are expanding

-         There are very few companies that are outsourcing all their IT services to a single company

-         They outsource- Application, Infrastructure & workplace: These are getting disaggregated and outsourced to a number of service providers and vendors

-         It is important to consider both the above markets as a combined entity because that is how the companies are using them today

ISG divides the business era into 3 Generations:

Generation 1 (1999 – 2006): $ 19 B deals were signed; In this era, companies used to outsource all their IT needs to a single service provider, who therefore would manage it through their vendors.

Generation 2 (2007 – 20014): $ 14 B deals were signed. In this era, the recession was really knocking on the door. But there was a 25-30% cost reduction in the outsourcing, considering the monitoring using the Internet. Keeping the model similar to that of 2006 but with downsizing the cost.

Generation 3 (2015-2018): $ 8 B deals were signed. By this time AWS has a $8B run rate and the emergence of cloud services like email, CRM, etc. moved to SalesForce, Office 365 & workday & other cloud applications. 20-30% of application which worked on our infrastructure moved online.

Companies need both MS and Technology services, for ex: the companies want scalable solutions like AWS but will also need their legacy ERP system to be integrated with it.

Sourcing as a service between both buyers and suppliers. Where both share a standard war of continuous innovation & not a lift and shift exercise.

There are more buyers, more suppliers in the market now. There is a definite need of shifting the application 50% -70% to the public cloud in the next few years. Hence the companies need to help their clients to pave the way to the cloud & help their clients to understand the need for a cloud operating model.

Research shows, automation will eliminate 20%- 40% labor outsourcing agreement, which means the service providers need to forego some revenue today for a sustained revenue in the future.

The agile approach should also play a pivotal role in the time to come, which also means companies should adopt to agile methodologies of DevOps to accelerate the development of new digital products. Therefore, speed to innovation/development should be on the top of the chart.

Sooner or later every provider will understand about the generational shift. The larger question which remains is overall pie is getting bigger, but the size per piece is getting smaller and smaller every year.

#sales #deals #windeals #dealmakers #rainmakers #dealsize #Billiondollardeals #milliondollardeals #cloudbusiness #managedservices #professionalservices