Modernization, Simplification, and Innovation - the Nuts and Bolts for Application Management Growth in Europe, Says IDC

(PresseBox) ( Frankfurt am Main, )
The Western European application management services market reached almost $7.7 billion in 2006, a growth of 8.9%. A positive growth trend will pervade over the forecast period until 2011, but new technologies and delivery models are causing disruption. "Achieving operational efficiency and the simplification of key business processes continues to be a key driver of application management services," said Jennifer Thomson, research manager, European IT Outsourcing and Infrastructure Services. "However, value propositions must evolve beyond cost savings and quality improvements to focus on the business impact of high performance application portfolios."

Application modernization is top of the CIO agenda, and, in combination with clients being more mature in how they procure application management services, this means that effective full life-cycle services are becoming increasingly important. In addition, clients are increasingly demanding that high-value project work be combined in application management contracts, particularly legacy modernization, SOA, and rationalization.

Vendors must change their game plans, focus on a reduction in pure maintenance spending, and build a more innovative focus into application outsourcing contracts. In addition, development of blended delivery models for excellence in execution along with the right blended delivery model is an advantage (both cost and competitive) as well as a differentiator. Ensuring that application development activities in offshore locations are supported with nearshore and onshore sites and with appropriate language skills is critical.

"Building messaging, customer successes, and partnerships to support the modernization story will be important. Past focus was on the rationalization of applications, now focus is on supporting business flexibility and agility" said Thomson. "Furthermore, clients' attention will be on the modernization of key industry-specific applications that are critical for competitive advantage, demanding not only technical but also business and industry knowledge."

In the study, Western European, Application Management Services Market 2006, and Forecast 2007-2011 (Doc #RI03P, May 2007), IDC provides an assessment of the 2006 market in Western Europe for application management services as well as forecasts for 2007-2011. The Western European application management market is segmented and forecast by country. The forecast is based on preliminary annual data for 2006 and projects the market out to 2011.
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