Application Services Expand to Meet Enterprise Demand for Digital Transformation

By AIT News Desk On Jan 18, 2021

ISG Provider Lens report finds three major types of clients define requirements for next-generation application development and maintenance service providers

As enterprises carry out broad overhauls of their IT capabilities to solve business problems, application development and maintenance services are expanding to support such large-scale digital transformations, according to a new report published by Information Services Group (ISG), a leading global technology research and advisory firm.

“Next-gen ADM services help companies make both their technology and their culture more competitive in a changing world.”

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The ISG Provider Lens Next-gen Application Development & Maintenance (ADM) Services Archetype Report finds projects and engagements in this area are increasingly focused on providing packaged software solutions, software-as-a-service (SaaS) platforms and managed services contracts. Providers are stepping up from traditional ADM services to incorporate automation, artificial intelligence (AI), more extensive testing and metrics and new development methodologies.

“As applications become more central to enterprise success, service providers are taking on more important roles,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Next-gen ADM services help companies make both their technology and their culture more competitive in a changing world.”

The disruptions caused by the COVID-19 pandemic have sharpened enterprise focus on the business benefits and cost efficiencies of software modernization projects, according to the report. Overall, enterprises launching major digitization projects are looking for improved operations and efficiency, competitive advantage and more feature-rich applications demanded by their customers. Digital transformation can also help companies create new markets and ways of doing business.

Next-gen ADM services are allowing enterprises to take on the complexity of using both traditional business software and cloud-native applications based on microservices and APIs (application programming interfaces), the report says. Providers can assist clients with the standardization, modernization and management required for this transition, often by introducing Agile and DevOps methodologies.

Next-gen ADM provider engagements include traditional services such as consulting, design, custom development, packaged software integration, operations and testing. They address needs including customer experience (CX), user experience (UX), security and mobile applications. Projects often include greater use of metrics and key performance indicators (KPIs). It is becoming more common for contracts to be based on business outcomes rather than the performance of tasks, ISG says.

The ISG Provider Lens Next-gen Application Development & Maintenance (ADM) Services Archetype Report examines three different types of clients, or archetypes, that are looking for next-generation ADM services. The report evaluates the capabilities of 23 providers to deliver services to the three archetypes:

Digital transformation: These clients are nimble, adaptive enterprises looking for competitive advantage from a combination of existing platforms and new, cloud-native applications. They seek rapid development and adaptation and make extensive use of emerging technologies such as AI, machine learning (ML) and natural-language processing (NLP). In this buying scenario, companies seek service providers with a dedicated digital business focus and the ability to blend old and new technologies. Because business impact is at the heart of this approach, engagements are usually based on outcome-based pricing.

Leverage packaged software platforms: This archetype seeks consolidated and simplified enterprise applications to use data more readily and reliably for core business solutions. They may prefer to rely on external platforms such as Oracle or SAP HANA or build one in-house. In this category, clients increasingly look for providers with a mix of qualifications, including expertise in enterprise resource planning (ERP) and business process management (BPM), as well as newer capabilities such as DevSecOps and automation for ongoing monitoring and improvement.

Managed services: These clients want to hand over ADM services to one or more service providers to make better use of resources and improve their operational processes. Providers manage applications to ensure they are reliable and available. The enterprise customer may have dozens to thousands of applications, including software developed in-house and by third parties. The key benefits they seek from service providers include lower costs and minimal downtime. Automation plays an increasing role in these types of engagements for cost management, defect detection and incident management. Most contracts are fixed-fee or applications-based.

Among the providers ISG evaluated, Atos, Capgemini, Cognizant, HCL, Infosys, Mindtree, TCS and Wipro were named leaders across all three archetypes. Coforge, LTI, Persistent Systems, Tech Mahindra and UST Global were named leaders in one archetype each.

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