isg sic 2016 market update

© 2016 Information Services Group, Inc. All Rights Reserved.

Harvey Gluckman

Market Update

© 2016 Information Services Group, Inc. All Rights Reserved 33

Recapping Past SIC Market Updates

Digital Disruption

Service IntegrationPivot to Industry Solutions

Changing Provider Landscape

2014

Automation

2013

Changing Sourcing StrategiesGlobal Business ServicesHybrid Data Center

2015

Think Like The Jetsons!

Rise of Bimodal ITOperating Model Changes

Impact of Digital EnablementDigital Services & Provider Maturity


Recapping Past SIC Market Updates


Digital Adoption is Accelerating

SaaS

IaaS

Legacy $26.1

$23.7

$22.3

$3.1 $3.6 $4.1

$3.5 $4.9 $6.9

2014 2015 2016E

95%

‘14-’16E

33%

-15%

% ChangeGlobal ACV $B

113%

Americas

34%

5%

51%

APAC

33%

-35%

90%

EMEA

31%

-25%


Digital Adoption is Accelerating

Legacy 80% 74% 67%

SaaS 9% 11% 12%

IaaS 11% 15% 21%

2014 2015 2016E

Market Percentage Mix(ACV Based)

Market Observations

New skills are needed to manage As-A-Service adoption and digital transformation.

Clients lack capital to move entirely to new service architectures for adopting broader As-A-Service solutions.

Incumbents are often challenged to transition from labor-based to outcome-based models.

Incumbents are not proactively redesigning “out with the old, in with the new.”


As-A-Service Market

The ISG IaaSMarket Basket

30

carriercloud firms

co-location firms public cloud

infra providers

leading IaaS/PaaSproviders

550+$100M+Co Revs

17% with

< $100MCo Revs 83% with

Across Functional Domains

The ISG SaaS

Market Basket

leading SaaS providers


23%

19%

11%

11%

9%

8%

10%

7%

Vertical Industry Insights: SAAS Solutions

0%

Banking, Financial Services

& Insurance

Manufacturing

Telco & Media

Energy

Retail & CPG

Health & Pharm

Business Services

10% 20% 30% 40% 50%

Travel & Transportation

28%

28%

13%

20%

21%

28%

17%

10%

550+ SaaS Providers

Industry Market Share (based on ACV ’15-’16 1H)

49%

35%

23%

28%

14%

49%

38%

23%

SaaS Providers > $50m


Market Direction

Platform EconomyPlatform-based business models will be a predominant core growth strategy within the next three years.

Service Provider Competitive Positioning Pure Play vs. as-a-Service Provider? Clients will be indifferent when they want to buy outcomes and industry solutions.

Client RelationshipsEthics and trust will be heavily relied upon as digital enablement matures. As digital adoption continues to expand, clients will continuously be in transition.Managing relationships will become more complex.

PREDICTIONS


ISG Digital Enablement Framework

65% of ISG’s transaction engagements are RFS-led versus RFP-led.

Companies in their 1st or 2nd generation of Managed Services relationships are aggressively seeking digital enablement solutions.

Enterprise

Processes Cloud

CustomerAnalytics

Collaborative Product

Innovation

BusinessInsights

Customer Experience

Product Analytics IoT

Automation

Platforms

Access Channel

Social MediaCollaboration

@@Customers

Suppliers

Partners

Employees


ISG Survey Results

1st Generation 2nd Generation 3rd Generation0%

10%

20%

30%

40%

50%

60%

70%

80%Transactions including a digital component


ISG Clients: Digital Solution CompositionCloud 72%

58%Analytics/Social 31%

3%Robotics

19%

3%

Automation

Mobility/Social

IOT

8%Other

Internet of Things

Analytics & Big Data

Social Media

Cloud

Mobility

Automation


What is Weighing Down Our Clients’ Success?

Digital Transformation

Digital Enablement Provider experience Legacy complexity Solution complexity Operating model Transition disparity


Transition Performance

Delayed 4 or more months:

0%

36%

14%

50%

0%

33%

17%

All Lift & Shift Digital Projects

57%

14%

29%

0%

3%

33%

12%* ISG Survey Response: 40% L&S, 40% Digital, 20%

Projects

50%52%On Time:

Ahead of Schedule:

Delayed 1-3 months:


Top Reasons for Transition Delays

1-3 Month Delay• Client experience• Provider experience• Client dedication• Legacy complexity

4+ Month Delay• Provider experience• Client experience• Legacy complexity• Governance


Technology Led Consulting Led

Industry Solutions

Horizontal Solutions

Positioning For The Digital Economy

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