According to the latest procurement intelligence report from Technavio, the global market for IT application development services is expected to grow at a CAGR of 5.6% over the next five years due to the need for businesses to gain a competitive edge.
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Technavio has published a new report on the global IT application development services market from 2017-2021. (Graphic: Business Wire)
The research report titled ‘Global IT Application Development Services: Procurement Intelligence Report 2017-2021’ provides an in-depth analysis of category spend, best procurement practices and cost saving opportunities, aimed at helping organizations achieve superior business performance. The report also provides insights on pricing, supplier positioning and top companies, enabling sourcing professionals to improve their competitive advantage through procurement excellence.
“During the forecast period, businesses around the world need to build an intelligent operational framework to achieve sustainability. Therefore, companies are moving toward custom application solutions to improve business performance and meet organizational goals,” says lead procurement specialist Angad Singh for category spend intelligence. “The growth of the cloud platform has enticed organizations to acquire cloud-based application development services to enhance scalability with low operational costs. This ensures the availability of service to global customers with short development cycle time and with minimum risks,” adds Angad.
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Cost saving opportunities in IT application development services
The adoption of various cost-optimization levers helps buyers of IT application development services realize direct cost savings and enhance category management and value benefits (including reduced procurement complexities).
Technavio procurement experts have segmented the cost saving opportunities in the IT application development services into the following value-enhancement opportunities:
- Adoption of technology
- Supplier Competition
- Adoption of negotiation strategies
- Optimization of procurement practices
- Bundling of services
Adoption of technology saving aspects
Use of latest programming languages, mobile application tools, and web application tools can help minimize application development costs, by 8-10% of the total category spend.
Buyers prefer suppliers that have highly skilled coders with global knowledge of technical solutions and industry acumen. Buyers also prefer the client-centric model, which offers personalized solutions by combining global experience with localized interactions.
Optimization of procurement practices saving aspects
Optimization of procurement practices is critical in the IT application development services market. Technavio analysts suggest procurement of the right mix whereby a centralized procurement model needs to be adopted, along with term-based contracts with periodic renewal system. The pricing model to be adopted must be based on time and materials. Buyers need to ensure that the business system and application performs as per their specifications and requirements to ensure a higher return on IT investments.
Bundling of services saving aspects
One of the most opportunistic strategic cost saving levers is the bundling of services related to the implementation and maintenance of the application, which involves implementation planning, training to the users, and providing related documentation.
Buyers should identify suppliers that can provide error-free solutions in short TATs to ensure workflow efficiency. This will assure the buyer of having a large mean time between failures, resulting in fewer error occurrences.
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About Technavio
Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries. Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.
Technavio analysts employ primary as well as secondary research techniques to ascertain the size and vendor landscape in a range of markets. Analysts obtain information using a combination of bottom-up and top-down approaches, besides using in-house market modeling tools and proprietary databases. They corroborate this data with the data obtained from various market participants and stakeholders across the value chain, including vendors, service providers, distributors, re-sellers, and end-users.
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