Industry news

25 July 2018

Organisations must harness the power of talent analytics to build truly efficient workforces – or risk falling behind competitors which do. That is the advice from global talent acquisition and management specialist, Alexander Mann Solutions.

The call comes in response to a report from the Chartered Institute of Personnel and Development (CIPD), People analytics: driving business performance with people data, which highlights a strong and demonstrable link between ‘people analytics culture’ and overall business performance. The paper finds that 65% of HR leaders who report working in an organisation with a ‘strong people analytics culture’ believe that their business performance is strong when compared with competitors, but just 32% of those in ‘weak analytics cultures’ say the same.

The report also highlights the areas where respondents believe people analytics can be used to address key business challenges. For example, two thirds (66%) trust that this type of data can be used to attract and retain high performing individuals, while three quarters (75%) see people analytics being useful in understanding workforce performance and productivity.

In response to the findings, Erica Titchener, Global Head of Technology and Operations Consulting at Alexander Mann Solutions, comments:

“We have long promoted the benefits of tapping into talent analytics during the talent acquisition process and beyond to inform both immediate and longer-term workforce planning strategies. As such, reports that HR’s visibility of data correlates directly with improved business outcomes is unsurprising.

“Workforce planning is absolutely integral to wider organisational strategy and now every HR team – in theory – has access to huge rafts of valuable data. The benefits of harnessing this information to implement total workforce planning strategies, in order to aid organisational efficiency, should not be underestimated. By digitally tracking the availability of skills, both within the business and externally in the market, leaders can map where permanent workforces can be deployed most effectively, the places where artificial intelligence can pick up process-driven tasks which zap productivity, identify the skills they are lacking, and determine if these can or should be acquired on a full-time, flexible or contingent basis.

“By working in this way, organisations can ensure that teams are performing to maximum efficiency, without skills gaps – or a skills surplus. Ultimately, however a workforce is structured, it should be built to maximise output, reduce costs and increase productivity – and also be adaptable to future needs. HR leaders who ignore the valuable data at their fingertips are side-lining the resource that makes this strategy possible.”

24 July 2018

LONDON, UK – July 24, 2018 – Liquidware, the leading third-party provider of platform-agnostic end-user computing solutions, today announced that its FlexApp application layering software has nosed out Citrix’s App Layering and VMware’s App Volumes products to take top billing in WhatMatrix’s community-curated independent analysis of application layering solutions.

“We compared these three products against some 140 key criteria in our rigorous evaluation of Application Layering software,” said Rory Monaghan, lead consultant at WhatMatrix. “Liquidware FlexApp emerged as community number one – with the richest feature set of all Application Layering products on the market.”

WhatMatrix is different from other product comparison endeavors in that its community evaluations are all based on in-depth technical analysis, reflected in comparisons of 100-plus evaluation points, and untainted by vendor submission or pay-to-play models. Comparisons are moreover managed by named, independent community experts and validated by open community curation.

Significantly, Liquidware remains the last independent platform-agnostic player in this market segment that is dominated by giants – a fact that is of particular importance to enterprises aiming to avoid vendor or platform lock-in when it comes to their business-critical software. The company’s FlexApp application layering software delivers applications instantly to any Windows desktop environment, regardless and independently of the operating system version in use. The solution is optimised for Citrix and VMware desktop platforms, for Microsoft RDS/RDmi and physical desktops, as well as Amazon WorkSpaces, and desktops running on Amazon, Google and Microsoft Azure cloud platforms.

Among the criteria measured by WhatMatrix, FlexApp was the sole solution to: offer per named user licensing; allow users to layer their own apps; offer click-to-layer; allow apps to upgrade while in use; provide data store support of MongoDB; offer both Azure and AWS native features; centrally manage file type associations; and hide layers from other users on shared machines.

“This accolade really means a great deal to us. With only three products to be measured in this comparison, it was David versus the Goliaths,” said Jason E. Smith, VP of Product Marketing of Liquidware. “What an honour to be measured against industry-leading companies, such as VMware and Citrix, and whose desktops FlexApp supports. To be number one in this category is not only gratifying but validates the tremendous functionality of FlexApp.”

Enterprises drove 15 percent growth of Supply Chain Management (SCM) Business Process Outsourcing (BPO) in 2017 as they sought to reduce high operating costs, address evolving customer demands, and manage risk and compliance. The solution to much of these problems, according to Everest Group, is digitalization.

“Enterprises can struggle with broken supply chains for many different reasons, not the least of which are siloed operations, inefficient processes and lack of visibility,” said Vikas Gujral, practice director at Everest Group. “Enterprises that adopt digital solutions to combat these challenges are achieving better supply chain efficiency at lower cost. We have identified analytics, cloud computing, control tower, Internet of Things (IoT) and master data management (MDM) solutions as the emerging drivers for success in the SCM BPO market.”

- Analytics: Analytics capabilities will help streamline supply chain operations through actionable insights to enhance visibility and control. However, despite the growing adoption, analytics penetration within supply chain remains low when compared to procurement.

- Cloud: Cloud is becoming a major disruptive force for seamless supply chain operations, because it enables agile operations, cost containment and increased collaboration. Cloud ties all underlying pieces and technologies together, forming the basis for the supply chain of the future.

- Control tower: Control tower—a central platform which tracks, monitors and directs activities across the supply chain—provides better visibility, cost benefits through accurate demand forecasting and inventory management, and reduced cycle time. Organizations have started realizing the benefits of control tower solutions, leading to cases of increased implementation.

- IoT: IoT, coupled with other technologies, forms another key building block of efficient supply chain operations. IoT is valuable in numerous applications for alleviating supply chain woes and preparing enterprises for the future.

- MDM: Demand for visibility, efficiency and smarter organization is increasingly creating the need for better data management. Consistent increase in MDM FTEs indicates greater focus on data management services

These results and other findings are explored in a recently published Everest Group report: “Supply Chain Management (SCM) BPO—Annual Report 2018: Moving Toward a Digital Supply Chain Ecosystem.” In the report, Everest Group analyzes the global SCM BPO market in 2017, focusing on the state of the market, market size and adoption trends, and the service provider landscape.

Key Adoption Trends:

Market size and growth: The SCM BPO market is now estimated at US $1.5 billion and is expected to grow at a similar pace in the future.

Geography distribution: North America is the key geography in terms of SCM market share, followed by Europe. Asia Pacific registered the highest revenue growth in the market.

Industry adoption: While manufacturing still leads the adoption in SCM outsourcing, newer industries such as travel & logistics have seen an uptick in adoption.

Buyer size: Although large buyers still form the majority, SMBs and midmarket buyers have awakened to the benefits of outsourcing.

Pricing: FTE-based pricing witnessed the maximum inclusion, very closely followed by hybrid pricing.

Sourcing dynamics: Although onshoring has seen an uptick from past years, offshore/nearshore delivery still forms the major chunk of the SCM BPO market.

About Everest Group

Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empower clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.

Worn Again Technologies is leading the charge to solve part of the world’s plastic crisis and the growing problem of textiles waste to landfill. After more than six years of intensive R&D, Worn Again Technologies is coming out of the lab and bringing its patented technology to market.

CEO, Cyndi Rhoades said, “There are enough textiles and plastic bottles ‘above ground’ and in circulation today to meet our annual demand for raw materials to make new clothing and textiles. With our dual polymer recycling technology, there will be no need to use virgin oil by-products to make new polyester and the industry will be able to radically decrease the amount of virgin cotton going into clothing by displacing it with new cellulose fibres recaptured from existing clothing.”

Worn Again Technologies’ patented process can separate, decontaminate and extract polyester polymers and cellulose (from cotton) from non-reusable textiles, as well as plastic bottles and packaging, to go back into new products as part of a repeatable process. The innovation cracks the code not only by being able to separate both polyester and cotton but also by being able to produce two end products that are both comparable in quality and have the aim of being competitive in price to virgin resources. The process saves energy and will accelerate us towards a waste-free, circular resource world.

Currently, less than 1% of non-wearable textiles are turned back into new textiles due to technical and economic limitations of current recycling methods. Worn Again Technologies can reprocess pure and blended cotton and polyester textiles (together representing 80% of all clothing and textiles) meaning its solution offers the potential to increase the recycling of raw materials in textiles exponentially from the current 1%, with no price premium to manufacturers, brands or the consumer.

Cambridge PhD and Worn Again Technologies Chief Scientific Officer, Dr. Adam Walker sums it up, “The solution to the world’s plastics problem is not to stop using plastic altogether. We have a solution to address the burgeoning need for recycling non-rewearable textiles and plastics and we’ve been clamouring to get on with it for many years. This investment, combined with the increasing geopolitical awareness of the need for this technology, is enabling us to push through the scale-up and validation work to reach the market on an accelerated timescale.”

The industry is starting to wake up to Dr. Walker and the Worn Again scientists. Last month, the company was awarded a grant to become the first chemical recycling technology to be Cradle to Cradle (C2C) certified.

“For the last few years, fighting against industry inertia and resistance to investing in our solution was incredibly difficult. Everyone in the industry was waiting for someone else to take the lead” said angel investor and Chairman Craig Cohon. “It’s been a challenge but we have now brought together an esteemed group of pioneers who share a likeminded vision for the future.”

The catalyst for the investment was fashion retailer H&M, now joined by new partners including Sulzer Chemtech, one of the world’s largest chemical engineering companies; Mexico based Himes Corporation, a garment manufacturer; Directex, a textiles producer and Miroslava Duma’s Future Tech Lab. The combined investment and support enables the optimisation phase of the technology in the lab as well as industrial trials, scaling and designing of the industrial process with Sulzer Chemtech. These crucial steps will finalise developments to the point at which the technology is complete and ready for commercialisation. Worn Again Technologies has also partnered with Qvartz, a management consultancy firm with Nordic roots and global reach, to support its direction setting, partnership development and commercialisation model.

Worn Again Technologies is currently enlisting local, national and global investors and strategic partners who want to be part of the rapid expansion plan as it prepares for the first industrial demonstration plant to be launched in 2021.

Worn Again Technologies is leading the charge to solve part of the world’s plastic crisis and the growing problem of textiles waste to landfill. After more than six years of intensive R&D, Worn Again Technologies is coming out of the lab and bringing its patented technology to market.

CEO, Cyndi Rhoades said, “There are enough textiles and plastic bottles ‘above ground’ and in circulation today to meet our annual demand for raw materials to make new clothing and textiles. With our dual polymer recycling technology, there will be no need to use virgin oil by-products to make new polyester and the industry will be able to radically decrease the amount of virgin cotton going into clothing by displacing it with new cellulose fibres recaptured from existing clothing.”

Worn Again Technologies’ patented process can separate, decontaminate and extract polyester polymers and cellulose (from cotton) from non-reusable textiles, as well as plastic bottles and packaging, to go back into new products as part of a repeatable process. The innovation cracks the code not only by being able to separate both polyester and cotton but also by being able to produce two end products that are both comparable in quality and have the aim of being competitive in price to virgin resources. The process saves energy and will accelerate us towards a waste-free, circular resource world.

Currently, less than 1% of non-wearable textiles are turned back into new textiles due to technical and economic limitations of current recycling methods. Worn Again Technologies can reprocess pure and blended cotton and polyester textiles (together representing 80% of all clothing and textiles) meaning its solution offers the potential to increase the recycling of raw materials in textiles exponentially from the current 1%, with no price premium to manufacturers, brands or the consumer.

Cambridge PhD and Worn Again Technologies Chief Scientific Officer, Dr. Adam Walker sums it up, “The solution to the world’s plastics problem is not to stop using plastic altogether. We have a solution to address the burgeoning need for recycling non-rewearable textiles and plastics and we’ve been clamouring to get on with it for many years. This investment, combined with the increasing geopolitical awareness of the need for this technology, is enabling us to push through the scale-up and validation work to reach the market on an accelerated timescale.”

The industry is starting to wake up to Dr. Walker and the Worn Again scientists. Last month, the company was awarded a grant to become the first chemical recycling technology to be Cradle to Cradle (C2C) certified.

“For the last few years, fighting against industry inertia and resistance to investing in our solution was incredibly difficult. Everyone in the industry was waiting for someone else to take the lead” said angel investor and Chairman Craig Cohon. “It’s been a challenge but we have now brought together an esteemed group of pioneers who share a likeminded vision for the future.”

The catalyst for the investment was fashion retailer H&M, now joined by new partners including Sulzer Chemtech, one of the world’s largest chemical engineering companies; Mexico based Himes Corporation, a garment manufacturer; Directex, a textiles producer and Miroslava Duma’s Future Tech Lab. The combined investment and support enables the optimisation phase of the technology in the lab as well as industrial trials, scaling and designing of the industrial process with Sulzer Chemtech. These crucial steps will finalise developments to the point at which the technology is complete and ready for commercialisation. Worn Again Technologies has also partnered with Qvartz, a management consultancy firm with Nordic roots and global reach, to support its direction setting, partnership development and commercialisation model.

Worn Again Technologies is currently enlisting local, national and global investors and strategic partners who want to be part of the rapid expansion plan as it prepares for the first industrial demonstration plant to be launched in 2021.

LONDON, July 17, 2018 – The sourcing market in Europe, Middle East and Africa (EMEA) rebounded in the second quarter of 2018 as European businesses focused their attention on building their digital backbone, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The EMEA ISG Index™, which measures commercial outsourcing contracts with an annual contract value (ACV) of €4 million or more, shows that the EMEA market posted a combined second-quarter ACV of €3.7 billion, up 23 percent over the prior year. Traditional sourcing grew 11 percent to €2.5 billion, bucking a four-quarter downward trend. As-a-service ACV in the region surged, rising 50 percent, to €1.2 billion. Both Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) gained record highs and contributed equally to the growth.

Steve Hall, partner and president of ISG, said: “The EMEA sourcing market rebounded strongly in the second quarter despite an economic environment focused on GDPR preparation and issues around BREXIT. Companies are now investing in technology to build their digital backbone. In the context of EMEA’s uncertain economic and political times, it’s encouraging that businesses are recognizing the strength that a strong digital backbone provides in allowing them to be agile enough to adapt with the times.”

Globally, second-quarter ACV for the combined global market advanced 31 percent to a record €9.9 billion. Demand for technology and business services continued to accelerate, with traditional sourcing ACV reaching €5.6 billion, up 19 percent, and as-a-service ACV up 51 percent to €4.3 billion. ACV in this space has almost doubled in the last two years, powered by new highs in both SaaS and IaaS.

Market Insights

Second-quarter traditional sourcing ACV in the UK rose 11 percent year-on-year. Despite this uptick, first half ACV in the UK finished down more than 50 percent compared with 2017’s exceptionally strong results. The number of UK contracts signed remained consistent at 112 but lacked the unusually large deals which lifted the market in the first half of 2017.

Traditional sourcing in DACH rebounded in the second quarter, following a notably slow start to the year, with ACV rising 70 percent compared to the previous quarter. Despite this rise, DACH ACV remained flat year-on-year, with the number of contracts reaching just under half of their total 12 months ago.

Traditional sourcing ACV in France grew 58 percent compared to the previous quarter, despite a sharp drop in the number of contracts signed. For the half year, France saw a decline in contract numbers and ACV, both down around 25 percent year-on-year.

The Nordics region showed robust growth in the first half of 2018, with ACV up 47 percent year-on-year and a 17 percent increase in the number of contracts. The smaller EMEA markets also showed strength with gains in Southern Europe, Russia/Eastern Europe and Africa/Middle East.

Sector Breakdown

As-a-service ACV grew substantially across all business sectors in EMEA, compared to the same period in 2017. The business services, financial services and telecom & media sectors all posted as-a-service ACV gains in excess of 50 percent.

The retail sector was the only vertical to show growth in both traditional sourcing and as-a-service, with combined ACV surging 90 percent compared to the first half of 2017. While traditional sourcing ACV in the manufacturing sector held steady, all other industries posted a decline.

Alpha Logistics, a specialist in managing equipment across Europe, has selected Real Asset Management’s (RAM) cloud-based fixed asset tracking solution in order to improve traceability of its equipment. Alpha Logistics decided to replace a spreadsheet system to benefit from a full audit trail and the ability to update the company’s asset register in real-time using the mobile app to scan Radio-frequency identification (RFID) tags.

Alpha Logistics supplies logistics solutions for its clients, helping with the management of a number of events across Europe simultaneously. An example of the service it provides can be seen in the company’s work with a leading online poker organisation, ensuring equipment is transported efficiently in preparation for tournaments. Alpha Logistics uses its articulated lorries to transfer the required assets.

Joe Page, Live Events Manager at Alpha Logistics comments, “We transport 4 articulated lorries full of equipment required to set up tournaments and events around Europe. This includes expensive items that are reusable as well as dispensable assets. RAM’s asset tracking solution enables us to keep a detailed catalogue of all items along with their locations and conditions.”

RAM’s software will help Alpha Logistics refine the services it provides. Page states, “A lot of the time, we have a number of live events taking place simultaneously and these will often be sharing equipment. The new software will enable staff from every department of the company to know the exact location of each piece of equipment at all times. In our line of business, traceability is incredibly important, so having a complete audit trail is imperative to us operating at full efficiency.”

Alpha Logistics has opted to utilise RFID labels in conjunction with the asset tracking solution, meaning that equipment can be recorded without the tag being in the scanner’s line of sight. This will save the company a lot of time when it comes to performing audits. This method of scanning will be particularly useful when searching for equipment within enclosed spaces, such as in the back of the artic lorries used to transfer required items.

The central database is hosted on RAM’s cloud platform, which ensures that the company’s IT department does not have to maintain the system internally. Storage of back-ups and other important files is completely managed by RAM, meaning that Alpha Logistics’ staff can focus on essential jobs whilst RAM’s support team completes administrative tasks.

“RAM’s customer support is always on hand,” Page concludes. “The team has always answered any questions we have had quickly and efficiently. It’s great to know that a service like this exists.”

Facebook is a major social media platform that is used worldwide by 2.13 billion people.

Cambridge Analytica have caused widespread panic to the 87 million people effected for political purposes. They were supposedly working for Donald Trump’s political campaign via an online survey that was created by a research associate at Cambridge University, Mr Kogan.

The ICO, Elizabeth Denham said "Facebook has failed to provide the kind of protections they are required to under the Data Protection Act, fines and prosecutions punish the bad actors, but my real goal is to effect change and restore trust and confidence in our democratic system."

Had this scandal occurred in May, they would have been fined 4% of their global turnover or £18 million depending on which one was most substantial. This half a million pounds fine is no financial burden to Facebook as statistics have shown that £500,000 revenue is earnt every 18 minutes.

Erin Egan, chief privacy officer at Facebook said, “We should have done more to investigate claims about Cambridge Analytica and take action in 2015.” In 2015 Facebook requested that both parties deleted all the data that was stolen, however they never followed through with their actions.

Facebook’s CEO, Mark Zuckerberg has been to meetings both with the US and EU lawmakers about this scandal.

Facebook has since edited their app to restrict the amount of data that people can harvest from it. Cambridge Analytica are constantly being reviewed by British Lawmakers.

There is speculation about a caution message being sent to 11 different political parties to inspect their data protection practices.

In business, power lies in partnerships. ‘Gatekeeper’ departments that drown employees in paperwork for little return garner less respect than those who team with others in the company to bring them real value. Sadly, many procurement departments find themselves dismissed as gatekeepers, which limits their traction with the rest of the business. Now, that’s changing.

Successful procurement teams are transitioning to a new role as business enablers. They are winning the hearts and minds of their business colleagues and carving out a new niche for themselves as a value centre in the business. This article describes a three-part strategy to transform the role of your procurement department and become a critical asset for the modern company.

Get what the business needs

A successful procurement team is adept at knowing what the business needs and going to get it in the best way possible. Many employees think that they can do this perfectly well on their own. The procurement team must show these employees the gaps in their abilities and persuade them that they can benefit by working with a central procurement function. The tricky part is doing this diplomatically.

Employees might well see a procurement department as an obstacle standing in the way of their goals, especially if they think that they are adept at getting a deal. Business managers will be used to a particular way of doing things. They will buy everything from office supplies through to online services and even computing equipment themselves. It isn’t uncommon for tensions to develop when people believe that they don’t need help.

These environments can be challenging for new procurement managers who struggle to change an organisation’s culture. Tackling this change requires a subtle mix of strength and understanding. They must acknowledge that employees traditionally worked in a certain way while being firm about the need to do things differently in the future.

The process starts with management support. Employees follow their managers’ lead, and without buy-in from senior executives, procurement teams will have a tough time establishing a new order. Getting the ear of the board and having senior managers promote and enforce the role of centralised procurement is a crucial piece of the puzzle.

A procurement team equipped with management support can begin demonstrating that it brings value to the business. It must show that it can find the right suppliers, vet them, and negotiate with them to create deals that make sense for the company. It must show that it can save money where appropriate and get products delivered on time, giving business managers a resource on which they can rely. In short, it must become a trusted advisor and a go-to partner that gets the business what it needs.

Get the best price, not necessarily the cheapest

Getting the business what it needs doesn’t always mean hammering suppliers for the lowest possible price. The procurement team will understand that any corporate purchase is a multi-dimensional transaction with more than the mere cost of goods and services at stake.

One dimension to consider is the quality and specification of the product or service. The cheapest possible product may not be the one that serves the business best. Vendors may offer a bargain-basement service, but a procurement department that has done its homework may realise that it won’t work for employees. Instead, it might choose a version for a slightly higher cost that will delight employees and save headaches further down the line.The other factor to consider is the supplier relationship. Successful procurement is about reaching a win-win outcome with a supplier that knows your business and is itself a valued partner. Companies that squeeze margins from every supplier eventually exhaust those relationships, making it difficult for vendors to bring any added value or build a deeper understanding of the customer. They will ultimately work their way through the top tier suppliers until there are none left of that quality, sacrificing the opportunity to create those rich, value-building relationships in the future.

The more complex and sophisticated the product or service in question, the more critical this understanding and added value becomes. A one-off purchase of office pens may not need a deep level of resonance between supplier and customer. A business process outsourcing project to manage your payment operations will. Most of the things that companies spend money on will need that level of detail and quality.

Mitigate organisational risk

The other way to build effective partnerships between procurement and the rest of the organisation is to mitigate risk. Employees assume they can handle purchases on their own, but often don’t manage or even see the associated dangers.

These dangers increase with the sophistication of the product. For example, buying software licenses may seem straightforward, but the devil is in the detail. If a vendor links a license to a specific laptop, then when the device fails, the company may incur unexpected costs.

Procurement risks also grow in line with regulations. The General Data Protection Regulation (GDPR) will force companies to vet suppliers’ compliance with it, for example.

Finally, procurement departments can better handle risks around long-term agreements, putting contingencies in place for eventualities such as the supplier going out of business or getting acquired.

A successful procurement team will highlight the risks that employees miss and will have plans in place to handle them adeptly. It will quickly become an ally, making people feel more comfortable that someone knowledgeable is watching out for them when they make a procurement decision.

The way forward

The days of the ivory procurement tower are over, and those that try to stay there will quickly find themselves marginalised and struggling for survival. After all, we don't have jobs if the rest of the company doesn't see a need for us.

This layered approach to building an effective procurement strategy is a way forward. Creating a platform based on these principles of partnership and demonstrable value will help to win procurement departments a seat at the table. Those that get there will be able to counsel forward-thinking companies on qualities such as risk protection, economies of scale, and long-term planning. Are you prepared to become a valued player for your business?

About the Author

Canda S Rozier is SVP Global Procurement & Real Estate at NTT Security, the specialised security company and center of excellence in security for NTT Group. She is responsible for establishing and leading best practices in corporate procurement, strategic sourcing, and global real estate strategy and management across Europe, Asia and the US. She is also the senior liaison with NTT Security’s parent company, NTT Holdings, on procurement-related matters as well as being on the Advisory Board for the Sourcing Industry Group (SIG). Since joining NTT Security in May 2011, she has achieved more than 20 per cent in procurement savings annually.

Global demand for technology and business services continues to accelerate, with as-a-service contract value climbing to another record high in the second quarter and traditional sourcing value reaching $7 billion for only the fifth time in history, according to the latest state-of-the-industry report from Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

Data from the ISG Index™, which measures commercial outsourcing contracts with annual contract value (ACV) of $5 million or more, show second-quarter ACV for the combined global market (including both as-a-service and traditional sourcing) surged 31 percent, to a record $12.4 billion. That figure includes traditional sourcing ACV of $7 billion, up 19 percent, and record as-a-service ACV of $5.4 billion, up 51 percent and nearly double that of two years ago. It was the first time as-a-service ACV surpassed $5 billion in a quarter.

The continuing surge in as-a-service value was fueled this quarter by a 58 percent increase in Infrastructure-as-a-Service (IaaS), to $3.9 billion, and a 35 percent increase in Software-as-a-Service, to $1.5 billion, as enterprises continue to move more workloads to the cloud.

"Global demand for outsourced IT and business services continues to expand, helped by robust economic trends and an unrelenting enterprise focus on all things digital," said Steve Hall, partner and president of ISG. "There were some initial concerns the as-a-service revolution would eat away at the market for traditional sourcing services, but that hasn't been the case. The combined global market is actually getting bigger, with steady quarter-over-quarter ACV growth during the last year bringing us to this new high-water mark. We're in a very strong, sustained market right now."

For the first half, global combined ACV reached an all-time high of $23.6 billion, up 17 percent over the same period last year. Growth was paced by record as-a-service ACV of $10.1 billion, up 39 percent. Traditional sourcing ACV was up 5 percent, to $13.5 billon, on record volume of 946 contracts. Most (61 percent) were smaller contracts – in the $5 million to $10 million range – up 17 percent over the prior-year period.

In the first half, financial services remained the largest global market for combined sourcing services, with ACV of $5.5 billion (up 28 percent), followed by business services, with ACV of $3.8 billion (up 30 percent), and manufacturing, with ACV of $3.1 billion (down 7.5 percent). The fastest-growing sector was healthcare and pharma, which saw its ACV climb 58.3 percent, to $2.5 billion. Retail was the second-fastest-growing sector, with ACV of $1.6 billion, up 57.9 percent.

Americas

The Americas, the world's largest combined sourcing market, generated combined ACV of $5.9 billion in the second quarter, up 33 percent. Traditional sourcing, at $3.1 billion, was up 25 percent, continuing a record string of four straight quarters above the $3 billion mark. Growth was fueled by applications outsourcing and industry-specific business process outsourcing. Meanwhile, records abound in the as-a-service space. As-a-service sourcing reached a record $2.8 billion, up 44 percent, and its share of combined-market ACV climbed to 48 percent, a new high. The two components of as-a-service – IaaS ($1.87 billion, up 50 percent) and SaaS ($951 million, up 32 percent) – both established new quarterly highs.

Europe, Middle East and Africa (EMEA)

The EMEA market rebounded from a soft first quarter to post combined second-quarter ACV of $4.6 billion, up 23 percent over the prior year. Traditional sourcing, which continues to represent the lion's share of the overall market, advanced 11 percent, to $3.1 billion, showing strength in the UK, the Nordics and Southern Europe. It was the first time traditional sourcing ACV topped the $3 billion level in the last 18 months. Although as-a-service represented only a third of the region's combined sourcing market, it was its fastest-growing segment, up 56 percent, to $1.5 billion, with both the IaaS and SaaS portions reaching record highs and contributing equally to the growth.

Asia Pacific

Asia Pacific's combined ACV rose 44 percent, to $1.9 billion, the best such total since ISG introduced this metric in 2016. The as-a-service market broke through the $1 billion level for the first time, with ACV of $1.1 billion, up 65 percent, the fastest growth of any region. Traditional sourcing, meanwhile, turned in its best quarter in four years, with ACV of $865 million, up 25 percent. Growth was paced by the banking, financial services and insurance sector and the transportation industry, application maintenance and design (ADM) services, and the Australia/New Zealand and North Asia markets.

Forecast

"The growth of public cloud is accelerating; we now expect growth to exceed 45 percent for the full year, contributing to the 30 percent growth we are forecasting for IaaS overall," said Hall. "We are also increasing our growth forecast for SaaS to 16 percent, up slightly from the 15 percent we forecast in April. We're also more bullish on traditional sourcing, raising our growth forecast for the year to 4.4 percent, up from 2 percent in April."

About the ISG Index™

Now in its 63rd consecutive quarter, the ISG Index™ provides a quarterly review of the latest sourcing industry data and trends for clients, providers, analysts and the media. For more than 15 years, it has been the authoritative source for marketplace intelligence related to outsourcing transaction structures and terms, industry adoption, geographic prevalence and service provider performance. In 2016, the ISG Index™ was expanded to include coverage of the fast-growing as-a-service market, measuring the significant impact cloud-based services are having on digital business transformation. ISG also provides ongoing analysis of automation and other digital technologies in its quarterly ISG Index™ presentations.

The 2Q 2018 ISG Index™ was presented during a conference call and webcast for media and analysts today. To listen to an audio replay of the call and view presentation slides, please visit http://www.isg-one.com/research/research-detail-page/isg-index.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including 75 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit www.isg-one.com.