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Modernization, Cloud Enablement, Managed Services

What’s driving the move to managed application service providers?

[fa icon="calendar"] November 10, 2017 / by Highstreet

More and more organizations are turning to Managed Application Services. So much so that the managed services market is expected to grow from USD $145.33 billion in 2016 to USD $242.45 billion by 2021 (10.8% CAGR year-over-year)1.

The overriding reasons companies move to Managed Application Service Providers (MASPs) are to reduce operating costs and free up internal resources so they can focus on more strategic initiatives—both very important and compelling benefits. But as the number of MASPs continues to skyrocket, it’s gotten more difficult to tell the difference among them.

Reduce costs

There is constant pressure to reduce capital costs in an environment where application operating costs are increasing. In many cases, application support costs take up 60% – 70% of IT budgets, limiting investments for new initiatives.

Enterprise Software Continues to Grow

Enterprise software is expected to grow 7.6 percent by year’s end to $351 billion, then 8.6 percent in 2018 to $381 billion3. More enterprise software causes more demand for support.

Proliferation of Point Solutions

Even with the growth of enterprise software, many companies are finding it easier to add cloud-based point solutions (e.g., CRM, Expense Management)2, creating application and data silos throughout the organization. Coordinated support and maintenance become unmanageable.

Adoption of Cloud-first Strategies Acts as a Decision Point

As companies embrace a cloud-first strategy, they are realizing they don’t have the staff or expertise to 1) make the move and 2) support the applications in a hybrid environment (cloud and on-premise). Many organizations are taking this inflection point to move to an MASP.

Summary

Organizations across many industries are embracing Managed Application Service Providers (MASPs) to reduce operating costs and free up internal resources, so they can focus on more strategic initiatives. But as the number of MASPs continues to skyrocket, it’s gotten more difficult to tell the difference among them.

A new type of MASP has emerged out of the haze of confusion. Business-Driven MASPs deliver all that Application-Driven MASPs deliver, but they go beyond maintenance and support. A Business-Driven MASP focuses on getting the most out of your applications to enable business growth.

Whether you are looking for a service provider for the first time or looking to switch providers, download the Insight Brief: Are You Looking for Someone to Support Your Apps or Grow Your Business? to help you determine which service provider best fits your organization’s requirements and priorities.

 

  1. MarketsandMarkets, August 2017
  2. “The Top Seven ERP Trends for 2017 -- and Beyond” SearchERP
  3. Gartner: Worldwide IT Spending Projections, July 17, 2017

 

Topics: Managed Application Services

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Highstreet provides modernization, cloud enablement, and managed services for your Oracle applications and IT infrastructure.

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