Enterprise Spending on Application Development and Maintenance Increases, Driven by Interest in AI
January 19 2024 - 10:00AM
Business Wire
ISG study finds IT service management and
ERP applications key areas for cost optimization
New survey research from leading global technology research and
advisory firm Information Services Group (ISG) (Nasdaq: III) finds
planned enterprise spending on application development will rise by
nearly five percent in the coming year, driven by interest in
realizing the business benefits of AI technologies.
The ISG Application Development and Maintenance (ADM) Study,
conducted globally last month, asked 200 executives with
decision-making responsibility for application development,
maintenance, management and operations about their priorities,
budgets, performance and challenges, their use of managed services
and their next-generation approach.
Despite ongoing cost optimization efforts, the ISG study found
ADM spending continues to increase, driven in part by interest in
AI. Planned development spending is accelerating faster than
maintenance spending, rising at 4.6 percent, compared to 1.6
percent for maintenance.
“Enterprise priorities for ADM center on developing and
deploying AI, improving use of data and supporting customer
experience,” said Alex Bakker, ISG Distinguished Analyst and
co-author of the ISG study. “However, AI interest is not universal
within organizations. Our survey found business line
decision-makers prioritize customer experience and use of data,
while enterprise executives are more focused on developing AI
capabilities. This suggests that different audiences may be
prioritizing different time horizons in their ADM contracts.”
Fifty-five percent of respondents said developing and rolling
out AI capabilities is one of their top five focus areas for their
enterprise application portfolios between now and year-end 2024.
Other top priorities for 2024 are improving data usage and access
(a top priority for 50 percent of respondents); supporting an
improved customer experience (49 percent); application portfolio
cost reduction (46 percent) and migrating applications to the cloud
(45 percent).
Organizations rated ERP, customer relationship management (CRM),
and IT service management (ITSM) applications as meeting their
needs most often, with around 60 percent indicating they were
meeting most or all business needs. However, of these three
application categories, ERP and ITSM were also identified as top
targets for cost optimization, with 39 percent and 31 percent of
respondents targeting them, respectively.
In contrast, only 25 percent of respondents say their business
expectations are being met by their AI and data products
development applications, and these applications were expected to
get the greatest level of investment, with greater than 60 percent
of enterprises expecting to prioritize investment in them over the
next two years.
“With relatively fewer enterprises reporting their business
expectations are being met at least in part by their AI and data
products applications, it is no surprise that they, along with
broader BI, ML and analytics applications, are the top enterprise
application priorities for the next two years,” said Michael
Dornan, principal analyst and co-author of the study. “Enterprises
will typically embed AI capabilities into their current application
portfolio rather than rebuild from scratch, which will cause
spending on application development to increase.”
Sixty-five percent of respondents said BI, analytics, ML and AI
will be an application development priority over the next two
years, and 60 percent cited AI and data products development.
Legacy applications are still a significant cost burden, with a
third of respondents (33 percent) reporting their organization
continues to support 100 or more "end of life" applications due to
legacy data in those applications (reported by 54 percent of
respondents), the cost of transitioning users to a new application
(44 percent) or employee resistance to the transition (38
percent).
ISG Buyer Behavior Research combines the results of surveys of
senior-level global executives with expert ISG research and
analysis on market trends and strategic business initiatives.
Recent studies explored cost optimization, cybersecurity, global
capability centers, network modernization, banking and the future
workplace.
Contact ISG for more information on ISG Buyer Behavior
Research.
About ISG
ISG (Information Services Group) (Nasdaq: III) is a leading
global technology research and advisory firm. A trusted business
partner to more than 900 clients, including more than 75 of the
world’s top 100 enterprises, 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;
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 1,600
digital-ready 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20240119525454/en/
Press: Will Thoretz, ISG +1 203 517 3119
will.thoretz@isg-one.com
Julianna Sheridan, Matter Communications for ISG +1 978 518 4520
isg@matternow.com
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