EquaTerra Reports New Deal Pipelines Surged a Record 44 Percent in 2009
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Game Changing Trends for 2010: Cloud Computing, SaaS and Large Scale Global Sourcing
Houston and London (January 12, 2010) – Growth in new deal pipelines increased a record 44 percent in 2009, according to global service providers polled for EquaTerra's 4Q09 Advisor and Business/IT Service Provider Pulse Survey*, the second highest single-year surge in demand since the inception of EquaTerra's Pulse survey in 1Q05. EquaTerra forecasts demand for global sourcing will gain momentum as economic activity revs up and organizations retool to compete in an increasingly diverse marketplace.
"The recession has profoundly reshaped the marketplace and now both buyers and service providers are analyzing ways to adapt to the current market and take advantage of new opportunities," said Stan Lepeak, managing director of global research for EquaTerra. "Ways to reduce costs and optimize operations continue to top the business agenda, but new competitive strategies are emerging."
Key Findings from EquaTerra’s 4Q09 Pulse:
- Strong demand for outsourcing continues – Market demand for outsourcing as measured by growth in the new deal pipelines of global service providers rose steadily in 2009, finishing the year 44 percent higher than 2008. Seventy six percent of service providers polled in the 4Q09 survey cited continued growth in their new deal pipeline and nearly two-thirds of them (63 percent) predict demand will remain steady through the first quarter of 2010. Fifty four percent of EquaTerra's advisors - who provide a forward view of demand two to three quarters out - also cited increased demand, up six percent from last quarter.
The recession caused organizations worldwide to hit the reset button. Now, as the turmoil subsides, three trends are shaping up to transform business fundamentals - global sourcing on a larger scale, cloud computing and software as a service (SaaS). The urgent need for cost reduction forced new buyers to enter the global outsourcing market and compelled experienced buyers to renegotiate contracts, demand ROI and improve governance to ensure they realized expected outcomes. Lessons were learned. It's expected this experience will be put to good use as organizations emerge from recession and find themselves on a new playing field.
Cloud computing is a step toward comprehensive outsourcing of essential business systems - core infrastructure, computing power, data storage and recovery systems and software applications. Not only will cloud computing relieve organizations of the burden of buying, managing and upgrading hardware and software, it will usher in a dramatically different cost model.
For many, SaaS will be the first foray into the cloud. Small and midsized enterprises view SaaS as a competitive advantage, a way to bypass the capital expense associated with the purchase and maintenance of commercial enterprise software. Larger organizations can use SaaS as a catalyst for transformation, forcing the adoption of more cost-effective standardized systems and processes. For now, big organizations are typically deploying SaaS to support underserved areas such as HR, but wide-scale adoption of SaaS is inevitable. The speed of change will depend on organizational objectives and how quickly enterprises can transition from legacy systems.
"Traditional outsourcing was a step in the right direction because it created economies of scale," says Lepeak. "But cloud computing and SaaS are game changers. There are plenty of challenges to be overcome, but they are dwarfed by the potential cost savings and improved operational efficiencies these innovations will ultimately deliver."