A new year (and a new decade) are ideal times to prognosticate about the future. While it's one thing for a business to predict great things for its future, it's quite another for a respected, trusted analyst in the industry to predict great things for your industry...and your business.
That's precisely the case when viewing Gartner Predicts 2020: Negotiate Software and Cloud Contracts to Manage Marketplace Growth and Reduce Legacy Costs.
It seems Gartner's outlook for third-party enterprise software support is positively bullish - an assessment leveraging their many years of working with enterprise software customers and a forecast of the future based on evolving market trends, real inquiry data and acceptance of third-party support as a mainstream option. The Gartner report is available for free download right here; some key takeaways and what they mean for IT leaders are:
The third-party software support market will grow from $351 million in 2019 to $1.05 billion by 2023 - a 200% increase
This represents an industry growth path tripling in size in four years. The reasons? Enterprises are seeking professional, experienced service with lightning-quick SLAs, saving them significant funds to be redirected to game-changing IT initiatives...and with no lock-in to vendors who may not have the enterprises' best long-term interests in mind. It's no surprise then, that Gartner received a 50% increase in inquiries related to third-party support in 2019 compared to the same period in 2018.
Annually, costs for legacy software support increase while corresponding benefits gained from that support decrease
Continued diminishing returns from software vendor-based support are leading enterprises to seek higher-quality/lower-cost support from independent, expert service providers. The balance between service and price is no longer about sacrificing one for the other; rather, with independent, third-party service the equation can be one of expert support and savings.
Organizations should evaluate third-party support as an alternative to the vendor's support, in order to help fund future innovation
As software vendors focus investments on new cloud platforms, current, robust licensed applications receive less investment and fewer resources dedicated to support. The significant savings from third-party support allows customers to fund digital transformation projects that they may be unable to deliver on while under vendor support. Customers can potentially move more quickly to innovate by removing the overhead and burden of vendor support, as well forced migration projects.
Third-party support can provide a safe haven for enterprises while they evaluate longer-term plans
As enterprise software vendors make their own plans to force customers to their own cloud offerings, many enterprises will seek support service alternatives to allow for time to assess their own Business-Driven Roadmaps. These types of enterprises include:
- Customers that are not ready to move to the cloud
- Customers that are not ready to drop support entirely
- Customers that are unable to fund the move to a new version of on-premises software on the vendor's time scales
Gartner predicts great things for the third-party enterprise software support industry, with actual inquiry volumes pointing to the acknowledgement of third-party support as an established offering. Read more of their predictions here in the complimentary Gartner Predicts 2020: Negotiate Software and Cloud Contracts to Manage Marketplace Growth and Reduce Legacy Costs.
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner's research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.
Gartner Research Report − Predicts 2020: Negotiate Software and Cloud Contracts to Manage Marketplace Growth and Reduce Legacy Costs
This must-read from Gartner Report enables IT leaders and sourcing/procurement/vendor management personnel to identify the trends and impacts of pursuing digital transformation in tandem with cost control.
Pat Phelan, VP, Market Research
Pat Phelan is VP of Market Research at Rimini Street. Prior to Rimini Street, she spent 18 years at Gartner providing CIOs and IT leaders with research and advice on strategies for managing the ERP/business application life cycle.