Hello. This is Stanton Jones with your weekly briefing on what’s important in IT and business services.
Daily COVID-19 cases in India dropped below 300,000 for the first time since April 21, and – thankfully – cases are plummeting in major cities like Delhi, Bangalore and Pune. Also in this edition: Asia Pacific is now an as-a-service region. Pitney Bowes selects IBM for infrastructure transformation. Unisys acquires experience management provider Unify Square.
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Asia Pacific is now an as-a-service region. Combined market ACV in Asia Pacific grew 11 percent between 1Q20 and 1Q21 due solely to as-a-service activity. As-a-service bookings now comprise a full 85 percent of the Asia Pacific ACV, and this sector of the market is consistently posting 20 percent year-over-year gains (see Data Watch). Large managed services deals have all but disappeared over the past six quarters.
Cloud-only strategies are gaining traction as organizations opt exclusively for IaaS and SaaS solutions. As this happens, bigger chunks of infrastructure management are being incorporated into as-a-service agreements and are leading to more agile product development with a focus on continuous delivery. At the same time, enterprises are exercising more control of their provider relationships by breaking scope into smaller pieces or bringing work back in house. We’re seeing a number of companies build panel-based arrangements to shift time-and-materials contracts to be more agile with the goal of driving specific outcomes without significant upfront financial commitments.
Government organizations also have been breaking large sourcing contracts into smaller pieces to give local entities more opportunity to engage. Of course, there are exceptions to this – and many of the large deals in this region are being extended rather than going to market. Outside of ANZ, digital take up in the region remains slow. Regulators in Asia have been slow to accept cloud, and data centers are geographically distributed and subject to regional regulatory control, all of which make cloud migrations more challenging. Digital talent is also at a premium. However, the rapid growth of China’s economy will be a catalyst for digital transformation across the rest of the Asia Pacific region, and we expect digital adoption to accelerate.