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Digital transformation driving as a service demand

Customers across EMEA are warming up to the as a service approach as they look for help getting digital solutions

Customers are turning towards managed services because of the need to get access to digital solutions to underpin the transformation process a lot of businesses are starting to go through.

The acceptance that as a service is going to be the best option has come more slowly in the UK than the US and Asia but is starting to gain momentum, according to the latest research from ISG.

The firm has found that over the course of last year more money was put into the as a service space, with annual contract value up by 2% from 2015 at €11.8bn.

Some of that growth has come at the expense of the traditional outsourcing market, which saw its value hit a level not seen since 2009 and drop by 10% in the UK.

Brexit is casting a slight shadow over predictions in the UK market because the weakness of the pound has had an impact in contract valuations.

In terms of verticals the telecoms and media sector are strong spenders and manufacturing was also turning to managing services. The weakest vertical was travel and transport.

John Keppel, partner and president of ISG, said that EMEA was embracing the flexibility that as a service could provide.

"Our key takeaway for 2016 is the welcome emergence of as-a-service contracting in EMEA. Although growth in the use of these new technologies and services has been slow to take off in EMEA, we expect to see the impetus around these new solutions build in the region as public cloud providers expand their data center footprint across Europe," he said.

"In turn, it is likely that traditional sourcing will feel an impact as spending moves from operational projects to business-led digital initiatives, and we anticipate double-digit combined market growth in EMEA in 2017," he added.

Signs that customers are increasingly happy using hosted apps and services also came from Okta, which has just issued its Business@Work report.

The report found that Office 365 was the most popular cloud app in the UK, followed by Google.

The firm did signal that one danger was the lack of adventure some 365 users had when it came to using new apps that could help them build a cloud ecosystem.

"We discovered that G Suite customers use 30% more apps on average than Office 365 customers (29 apps compared to 22). More isn’t always better, but it certainly can be. Our data shows G Suite customers are employing a best-of-breed IT strategy to build out their cloud ecosystem...They’re adopting apps to meet specific needs versus investing in an entire cloud app stack up front," stated the report.

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