Optimizing application is a mandate for enterprises of all sizes, but enterprises seek more business value from sourcing engagements.
According to Everest Group enterprises with revenue less than US$5 billion have witnessed a steep increase in adoption of application services (AS), increasing from 55% to 79% in the last two years.
The growing share of smaller enterprises in AS engagements reinforces the fact that optimizing the application estate has become a universal mandate.
The COVID-19 pandemic has also forced many smaller enterprises to undertake modernization initiatives to remain resilient in the wake of another black swan event.
Although AS engagements take the top spot (more than 70%) in an IT services market expected to grow by 5-7%, most enterprises consider application management to be a necessary evil and the sourcing of application management to be solely a cost take-out function.
According to Everest Group’s most recent poll of enterprise buyers of application services, enterprises believe service providers have not been able to add value to application management initiatives beyond cost-take out; value addition received the lowest score among assessment criteria.
The key value-add benefits enterprises desire from their AS engagements include:
- Enable better experience for customers
- Increase scalability and resiliency of existing applications
- Facilitate advanced analytics and forecasting capabilities
- Increase security, reduce risk and adhere to compliance
To help organizations derive more business value from application services, Everest Group proposes a model that enterprises can use to drive transformation in their AS function.
The “Business Value Orchestrator Platform” views application management as one part of a broader initiative comprising other technology towers, operating models, service management solutions, delivery enablement, and next-generation sourcing.
Everest Group defines Business Value Orchestrator (BVO) as a platform that acts as a nodal centre, orchestrates integration of operations data, generates actionable insights using advanced analytics, and facilitates intelligent automation of IT and business processes to improve business performance and efficiency.
