Hello. This is Stanton Jones with your weekly briefing on what’s important in IT and business services.
In this edition: Mega-deals are still significant– but not as significant as they used to be. U.S. chemicals company signs full ITO deal. McDonald’s is selling its conversational AI unit to IBM.
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Mega-deals are still significant to our market – but not as significant as they used to be. On a YTD basis, there have been 14 deals with ACV over $100 million. At this point last year, we had 15 mega-deals, and in 2019, there were 21 in the first three quarters.
That reduction in mega-deal activity may sound like a soft result – but we believe it’s actually a sign of a healthy market. Take a look at the Data Watch section below. You’ll see that mega-deals account for a significant portion of the total ACV awarded each year, but that portion is diminishing.
In 2015 and 2017, mega-deals made up 20% of the total ACV awarded. In two of the three years since then, mega-deals made up less than 15% of the total ACV. And that trend is continuing into 2021. Mega-deal ACV is just 11% of the total ACV awarded so far this year.
As we discussed last week, the market is growing. Both award counts and ACV are up from 2019. So, while mega-deals are still significant, they don’t move our market as much as they did in the past.