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Large IT projects are hard to execute, particularly when in-house staff are often pulled into their day jobs and distracted by other priorities. This can be costly for organizations. In fact, McKinsey suggests that early cost and schedule overruns can cause projects to cost twice as much as anticipated. One common resolution to this challenge is for companies to seek outside support to ensure success. 

There are four critical ways that outside support can make a difference.

Rapid talent aggregation

One of the most challenging aspects of software engineering in today’s environment is assembling quality talent. CIO magazine identifies the top 10 most in-demand tech jobs and says that 86% of technology managers say it’s challenging to find skilled professionals. If your current team does not have the capacity or skills to tackle the required project, consider an outsourced partner.

The right partner can bring a team of highly skilled engineers together in a matter of days or weeks, allowing you to accelerate development and deliver your key projects in a timely fashion. Key talent can be added and removed from projects as needed. Selected properly, your outsourced provider will have a group of tried and tested experts with deep knowledge of the chosen tech stack and therefore can iterate and compose much faster.  

Developer velocity 

Time to market is critical for the success of any project, particularly when it impacts revenue. Therefore, IT projects must be scoped, ramped, and run expeditiously in order to take advantage of market dynamics. 

In an in-depth study of 440 large enterprises, McKinsey identified the most critical factors that enabled organizations to achieve high developer velocity. Four key areas have the greatest impact on software development performance: tools, culture, product management and talent management. The study revealed those with higher developer velocity outperform competitors by up to five times. 

When selecting an outsourcer, validate what tools and project management structure they will bring to the table; validate past project success in terms of both budget and on-time delivery. Inspect project plans to ensure it includes full and rigorous testing, especially around security, full quality assurance, and performance optimization. 

A project outsourced to an established applications platform provider with dedicated experts, like Edgio, will include rigorous testing and rollout plans, full quality assurance, and performance optimization—ensuring that your investment ultimately delivers peak efficiency for your customers and your business.

Knowledge sharing

Great professional services teams accumulate best practices over time and will bring complementary skill sets into the business they’re partnering with. Shared knowledge helps grow the skillset of your internal team, and enables them to contribute more meaningfully to the success of your business.

Your employee satisfaction can even increase from personal and professional progress felt when learning new technology, frameworks, or languages throughout major IT projects developed in partnership with external experts. 

This aspect cannot be overlooked, given that 91% of employees report being frustrated with inadequate workplace technology and 71% consider looking for a new employer as a consequence. Expert teams have the depth of knowledge on a breadth of tools that help save tremendous time and many headaches by creating ​efficient, automated workflows. 

Ensure that your team gets the opportunity to work directly with your outsourced development team to facilitate knowledge sharing.

4. Faster deployment cadence

Companies integrating software development with IT operations are seeing increased productivity and 83% faster releases. We’ve personally seen deployment cadences double through the use of Edgio’s integrated workflow for web application deployment. 

Leveraging experts who start on day one with automated deployment and testing, standardized processes, and improved development and operations communication can bring releases to market faster. Enable your team to innovate more and wait for code less. 

To outsource or not to outsource?

Large projects can take a significant toll on an organization if they are not managed properly. To be effective and efficient, project teams need a common vision, shared team processes, and a high-performance culture.

If you’re asking yourself the following questions, consider hiring a team of experts: 

What architecture do we need to support a next-generation operating model?How can we rapidly build, scale and sustain a cutting edge customer-centric tech stack?What technologies, frameworks, or API integrations provide a high-quality experience? How do we create the most secure workflow for fast releases and updates?

At first glance, outsourcing can seem an expensive option. However, I advise businesses considering software development outsourcing to think long-term. The right team will minimize costs and bring more value by delivering a better product quicker with a more robust and flexible IT architecture, and will ultimately generate significant ROI.

Edgio accelerates your web development and application performance. Learn more about Edgio and our expert services.

IT Leadership

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During the opening keynote at the recent Gartner IT Symposium in Barcelona, Gartner analysts said that CIOs should look to its latest moniker, IT for sustainable growth, to drive business transformation by focusing on three key strategies: ‘revolutionary work’ to empower the workforce, ‘responsible investment’ to balance financial and sustainability objectives, and ‘resilient cybersecurity’ to support business outcomes “without constraining them”.

Gartner’s managing VP Mary Mesaglio said she remained optimistic for tech investments, with the latest crisis offering CIOs yet another opportunity to “make the difference”. But released the next day, the 2023 Gartner CIO and Technology Executive Survey revealed that EMEA-based CIOs expect IT budgets to increase 4.4% on average over the next year, somewhat lower than the projected 6.5% global inflation rate.

The report, which surveyed over 2,000 respondents across 81 countries, says that EMEA CIO business priorities for the remainder of 2022 and next year are growth and digital transformation, with the top areas of increased spending in 2023 including cyber and information security (70%), business intelligence and data analytics (53%), and cloud platforms (48%). Approximately 34% are increasing investment in artificial intelligence (AI) and 24% in hyper-automation as well.

Revolutionise work

Gartner has identified three ‘force multipliers’ that CIOs should focus on to help make their organisation an employer of choice, and to create sustainable performance in the workplace:

Take the friction out of work: Friction is when work is unnecessarily hard and degrades employee performance and staff retention. By removing it and investing in digital skills, analysts believe organisations can create a more engaged workforce that’s better equipped to sustain future performance.Invest in AI augmentation: Employees require tools and technologies that empower them and increase the impact of their work. Analysts say AI can increase the impact of employees by extending their reach, range and capabilities.Experiment with the “highly visible and highly hyped”: Gartner repeatedly pointed out that organisations that innovate during tough economic times “stay ahead of the pack”, with Mesaglio in particular calling for such experimentation to be public and visible. Gartner believes one such area for innovation is in the fusion between remote and office working, with the ‘intraverse’ representing a virtual office incorporating emerging metaverse technologies to bring employees together in immersive meetings. Highlighting perhaps the nascency of such technologies, Gartner predicts that immersive meeting technologies will not plateau on its renowned Hype Cycle chart for up to 10 years.

Citing its own research, which found that only 31% of employees have the technology they need to do their jobs properly, Gartner analysts also believe that a greater collaboration between IT and HR, and better technology in the workplace, could lead to an improved employee experience that would, in-turn, benefit staff retention.

“This provides a tremendous opportunity for CIOs to make the difference,” said Mesaglio. “Employers who revolutionise the work and empower their workers with technology will become the employers of choice.”

Responsible investment

Gartner’s latest data from its board of directors survey shows that its top focus area is the economy, but IT for sustainable growth does at least hint at CEOs, boardrooms and CIOs being in unison about marrying financial performance with environmental impact.

“Sustainable growth in traditional financial terms means growth that is repeatable without taking on financial debt,” said Daniel Sanchez-Reina, VP analyst at Gartner. “But sustainable growth is more than just financial results. It also includes ethical and environmentally sustainable growth. Now, let’s add IT into the mix. IT for sustainable growth is a set of digital investments that delivers repeatable financial results in an efficient and responsible way.”

Gartner identified three more force multipliers that will create both financial and sustainability returns:

Intelligent connected infrastructure (ICI): Equating intelligent connected infrastructure to an air traffic control system for smart city infrastructure, Gartner says ICI combines mesh fabric, AI, IoT, cloud, analytics and edge computing to share data among otherwise ‘silent’ infrastructure, such as bridges, roads and ports. Investing in ICI would supposedly increase growth for cities and businesses, and improve the lives of citizens.Leverage autonomous sourcing: In a bid to drive more value from the vendor ecosystem, and seemingly move away from laborious RFPs, Gartner says that autonomous sourcing would use AI, machine learning (ML) and natural language processing (NLP) to give organisations access to a much wider range of suppliers – and purchase in a “more sustainable, profitable way.” Sanchez-Reina suggested this was putting procurement in a shaker to find the best supplier and service.Digitally reduce energy usage: Gartner believes that CIOs should use cloud, data and analytics to establish a “base load” – an overview of how much energy the organisation has consumed. The company also calls on IT leaders to implement an energy and optimisation system (EMOS) to reduce energy usage by making proactive, data-led decisions in near real-time, with EMOS able to reduce energy use by up to 15%, and for IT leaders to sell energy back to the grid when combining microgrids with advances in ML and AI.

Sanchez-Reina also described such investment as a two-for-one strategy, bringing together financial performance with an organisation’s environmental and social values, thereby appeasing customers, employees and investors. But a timeline for when this concept will become an everyday reality for most organisations remains to be seen when today most CIOs are struggling to get on top of sustainability.

Resilient cybersecurity

Despite the clamour for new digital investments, Gartner’s analysts did recognise that this would represent a new cybersecurity risk, with some attributing the increased spending in security over the next year down to ongoing uncertainty regarding Russia’s invasion of Ukraine.

A 2022 Gartner survey of board directors found that 88% of boards now view security as a business risk, not just a technical one, meaning that “organisations need to start treating resilient, sustainable cybersecurity as a business risk that needs new types of investment,” said Ed Gabrys, VP analyst at Gartner.

Three more force multipliers identify competitive advantages for organisations in the long term:

Manage the attack surface: Gartner says external attack surface management (EASM) can discover vulnerable external-facing assets. The firm also calls on CIOs to implement software composition analysis to get visibility into software supply chain vulnerabilities, and leverage maturing threat intelligence platforms to prioritise and fix them.Protect business outcomes and customers: Organisations should prioritise their most important business outcomes by identifying technology dependencies that have a direct line of sight to their most important business or mission outcomes.Use outcome-driven metrics and protection-level agreements: Outcome-driven metrics attempt to align security concerns with business impact, so the organisation can decide its risk appetite and how much it wants to invest to solve the problem, like patch management, for instance. Gartner is benchmarking 16 ODMs that organisations can use to compare their protection levels to their peers. This creates an outcome-based priorities and investments roadmap. “Organisations should invest in achieving protection-level outcomes, not the implementation of tools,” says Gartner.Artificial Intelligence, Digital Transformation, Innovation, Machine Learning

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Workflow automation provider ServiceNow on Wednesday said it remained optimistic about growth for the rest of the year, despite the uncertain macroeconomic environment, hoping the situation will in fact boost demand for its offerings.

“As you know, they (enterprises) are either not hiring, they’re laying people off, and they have to do more with less. We’re built for that,” said Bill McDermott, CEO of ServiceNow, during a call with analysts to discuss the company’s third-quarter earnings.

“They need the computers and the platforms to do the work so that people have a more pleasant experience on the employee side … we take care of that,” McDermott said, according to a Motley Fool transcript

Though the company is not immune to the macroeconomic environment, its sales team is preparing for uncertainties by doubling down on staying closer to the customer to understand their needs, added company CFO Gina Mastantuono.

In fact, Mastantuono said the company will continue to keep hiring for the rest of year, in contrast with several large technology companies—such as Google, Oracle and Microsoft—that have been laying off large number of employees.

“ServiceNow is hiring and will continue to hire and we are investing for growth. So, we are absolutely committed to continuing to build up our world-class, go-to-market organization,” Mastantuono said, adding that ServiceNow will also hire critical engineering staff.

ServiceNow reports robust Q3 results

ServiceNow reported strong quarterly results Wednesday, with 25% year-on-year growth in revenue backed by at least 69 deals that were worth over $1 million each.

The company reported total revenue of $1.83 billion for the quarter, with subscription revenues accounting for $1.74 billon, an increase of 28.5% year-on-year, without considering the effect of currency fluctuations.

Multiple products including IT service management (ITSM), IT operations management (ITOM), Customer and Employee Workflows and Creator Workflows were included in the top 20 deals signed by the company, McDermott added, pointing out the diversification of the company’s products portfolio and increasing customer awareness.

“In Q3, both ITSM and ITOM were in 17 of our top 20 deals, with six deals each over $1 million. Security and risk were in 15 of the top 20 with five deals over $1 million,” McDermott said.

Customer and Employee Workflows were also a part of 12 of the top 20 deals signed during the quarter in question, along with Creator Workflows, which featured in all the top 20 deals, the CEO added.

The company reported that it had a total of 1,530 customers with more than $1 million in annual contract value by the end of September.

The number of customers paying over $10 million in annual contract value grew 60% year‑over‑year by the end of September.

ServiceNow announces new training program

ServiceNow has also introduced the RiseUp with ServiceNow program, aimed at training  one million ServiceNow certified professionals by 2024.

As part of the program, the company will offer 600 free courses along with 18 job-related certification paths.

Service Management Software, ServiceNow, Technology Industry

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A report issued Monday by private investment company Bain Capital indicated that, despite the numerous disruptions to the technology industry—including a global supply chain crisis and Russia’s invasion of Ukraine—most IT decision makers foresee either stable budgets or increases for the coming year.

Over the past two years, the pandemic’s effects on that figure have been noticeable—at the onset, less than half of those polled said that they expected anything but a decrease in their budget for the coming year. The number changed rapidly as the economy emerged from the worst effects of the COVID crisis, however, with 75% in 2021 and 90% in 2022 saying that they expected stable or increasing budgets to come.

That number shrank in the latest report—to 77%—but that’s still an indicator of strong demand for products and services in a sector that’s still facing more than its share of headwinds, according to the head of Bain’s global technology practice, David Crawford.

“CIOs and CTOs are increasing their technology spending,” he wrote in the report. “Of course, there may be budget pressure in the future, but over the long term, to them—and to us—tech is not so much a cost as an investment that spurs productivity.”

Much of the report is devoted to vendors and their potential best moves to weather a tough economic situation, which offers some insight into what IT departments can expect from companies they deal with in the future.

Along with changes to streamline sales and reduce travel, businesses can expect some of their vendors to move in the direction of consumption-based pricing, thanks to higher demand for that model, and to do more strategic work around product development, as Bain’s research shows that return on investment for R&D spending is frequently not at the level that management is looking for.

The chip shortage, according to Bain, is gradually easing, but recovery isn’t unlikely to be particularly fast or painless. Given global economic conditions, a simple lessening of demand may be one of the most important contributing factors to the silicon market’s recovery, and the company’s researchers identified two other factors likely to determine how short—or long—the recovery is.

Extreme ultraviolet lithography equipment—$150 million machines that are necessary for the latest generation of silicon, and are only made by one manufacturer—represents a present bottleneck to building out fabrication capability.

Moreover, geopolitical friction among numerous countries presents its own stumbling blocks to recovery, as import restrictions make it difficult to source key resources. Russia’s restriction on the sale of noble gases like neon, which is important to silicon fabrication, Japan’s tightening of control over the supply of high-purity hydrogen fluoride, and similar trade issues are likely to exacerbate the chip shortage in the short term unless those issues can be resolved.

Budgeting, IT Strategy, Technology Industry

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Global spending on software will continue to grow despite headwinds in the form of inflation, geopolitical risks and labor shortages, a new report from Forrester shows.

Driven to a large degree by deployment of cloud and enterprise applications, software spending worldwide is expected to grow at a compound annual growth rate (CAGR) of 10.3% from 2021 to 2023—more than two times faster than the rate of spending in other segments of IT, which is forecast to be 4.4%, according to the market research firm.

The report, which is based on a survey of 657 publicly traded software companies, forecasts that dramatic macroeconomic conditions and other factors will have little to modest impact due to the “underlying strength” of the software industry fundamentals.

More than half of the companies surveyed are expected to grow revenue at a medium pace, or between 10% and 20%, the report says, adding that leading software vendors will see another year of solid revenue and profit, albeit at a slower pace than 2021.

The report also shows that software has been the fastest growing category within enterprise IT budgets,  and has delivered high revenue growth rates consistently for vendors.

Cloud to drive enterprise software growth

Enterprise software—including application and infrastructure software—is expected to grow by 12% growth in 2022, buoyed by investment in cloud technology as a result of accelerated digital transformation efforts due to the pandemic, the report says.

“Investment in cloud to modernize legacy applications will drive strong software sales momentum in front- and back-office applications,” the report reads.

The application software market will see a 11.4% CAGR in 2022 and 2023, exceeding $400 billion, Forrester says. Front-office apps—such as CRM software and industry vertical programs—will grow the fastest in this segment, according to the report, which forecasts the $64 billion CRM market to grow by 11.9% in 2022.

ERP application sales are expected to increase at a rate of 10.4% in 2022, also driven by digital transformation efforts. Sales of content and collaboration software, such as Microsoft Teams, Zoom and Slack, are expected to grow at a rate of 11.9%, according to the report.

Sales of custom-built software for various internal divisions across enterprises, which Forrester defines as vertical software, are also expected to grow.

Infrastructure software sales to increase by 12.6%

Infrastructure software sales, meanwhile, are expected to grow at a rate of 12.6% in 2022 and 2023 to exceed $400 billion, driven by the evolution of legacy database technology and investments in devops and database management software, according to Forrester.

Within the infrastructure software category, database management software is expected to grow at 12.8%, driven by demand for real-time analytics.

Further, tech management software, another subcategory within infrastructure software, is expected to maintain growth momentum of 13.1%, driven by the trend for businesses to modernize their tech stacks with complex serverless architectures and containers.

However, security software—also considered by Forrester to be infrastructure software—is expected to grow fastest, at a CAGR of 15.4%, due to multiple attack incidents and geopolitical challenges such as the Russia-Ukraine war.

Software has room for continued growth

Aggregate market capitalization of publicly traded software companies increased from $718 billion in April 2010 to $5.4 trillion currently—equating to a CAGR of 18%, according to the report. The survey also shows that the software sector accounts for only 5.9% of total  global market cap of public companies, indicating more room for growth.

Another reason for continued growth can be attributed to software vendors’ ability to raise prices consistently without losing demand, as software forms a critical part of day-to-day operations, the report says, adding that this strategy results in high and stable margins for vendors.

Companies that have raised prices recently include the likes of Adobe and Microsoft.  

Profit margins, which could be as high as 70% on average, allow software vendors to strategize while weathering challenges such as uncertain macroeconomic conditions, the report says.

Enterprise Applications, Technology Industry

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Plummeting sales of printers and PCs and a growing inflation crisis aside, IT spending will remain strong through 2022, rising 3% year-over-year to a total of $4.5 trillion, according to projections released by Gartner Research.

The 3% increase in total IT spending represents slower growth than in 2021, as the economy as a whole and the IT sector in particular began to recover from the effects of the pandemic, and growth will largely be driven by cloud services and the data center, Gartner said.

According to John-David Lovelock, research vice president at Gartner, inflationary pressures are top-of-mind for most IT decision-makers at the moment, which creates a degree of uncertainty—high prices today could become even higher tomorrow.

“Organizations that do not invest in the short term will likely fall behind in the medium term and risk not being around in the long term,” warned Lovelock in a statement. “The current levels of volatility seen in both inflation and currency exchange rates is not expected to deter CIOs’ investment plans for 2022.”

Inflation is making itself felt in another way, as well, in combination with economic uncertainty driven by the Russian invasion of Ukraine—enterprises are moving heavily away from an ownership model of IT to a service-based one, with cloud spending expected to rise by 22.1% in 2022, according to Gartner.

It’s not all doom-and-gloom for the hardware sector, either, however, as this increased demand for cloud services will push hyperscalers like Amazon, Microsoft and Google to build out capacity. An annual growth rate of 16.6% for server spending will go some way to offset the projected 5% drop in PC, tablet and printer sales, Gartner’s predictions indicated.

Managed services on the rise

The IT talent crunch, as well, has complicated IT spending analysis, Gartner noted. Service providers have been forced to increase prices in order to offer more competitive compensation, which is another factor pushing CIOs toward managed services and the cloud, as hiring in-house IT staff becomes more and more expensive.

These market trends could put small and medium-size businesses, in particular, in a difficult position, according to Gartner senior principal analyst Linglan Wang. Higher prices, combined with a sharper motivation to invest in IT sooner rather than later, is likely to be much less of a financial headache for large enterprises than it is for SMBs.

“Polarization is certainly seen across all IT markets, with a ‘big becoming bigger, winner takes all’ situation,” she said. “We forecast this trend is going to continue over the next couple of years.”

Cloud Computing, Data Center, Technology Industry