Highlights of our PAC Horizons event in London

Our PAC HORIZONS event took place in London on 15 November. The event was designed to bring together IT leaders for one day of insight, innovation, and networking. During the event, PAC analysts shared insights on pivotal IT market topics, offering a glimpse into what the future holds. Additionally, we presented our 2024 Research Agenda, which provided participants with a better understanding of our focus topics for the upcoming year, helping them align their strategic planning accordingly. The event was more than just sharing knowledge; it offered an opportunity for people in the IT industry to network and collaborate. Professionals from Software and IT services companies met, exchanged ideas, discussed industry topics, and formed connections. If you want to know about the most important moments and key takeaways from the event, join us in this blog post, where we recap the highlights of our PAC HORIZONS event in the United Kingdom.

Overview of the digital market with a focus on the triad of data, digital, and cloud

Nick Mayes, PAC Principal Analyst, gave an update on the UK software and IT services market. He observes a clear slowdown as we move towards 2024, but it remains the largest, most mature market in Europe and a source of strong growth opportunities for vendors. The challenging economic backdrop is forcing companies to take a more cautious approach to their IT sourcing strategies, with a renewed focus on delivering a short-term return on investment, lengthening decision-making cycles, and negotiations over pricing levels becoming tougher and tougher. There has been a slowdown in growth in areas such as cloud computing and digital customer experience over the course of the last 12 months as companies look to regain some control over the sometimes-chaotic investment that they have made through tactical projects since the pandemic.

Deals, Hotspots & Industries Mapping the most dynamic areas in the UK market

The UK public sector will remain resilient in terms of software and IT services spending, underpinned by legacy modernization programs in central government, healthcare, and defense. But one key dynamic that we see playing out across the commercial sector is the increasing number of tier-two organizations (annual revenue of between £1bn to £10bn) that are leaning on external partners to accelerate their transformation. We highlighted organizations in sectors such as automotive retail, construction, and the legal sector that are facing new levels of pressure to change their business models and harness data to transform the organization.

Sustainability

How can IT providers support their clients in reaching their environmental objectives?

PAC Analyst Mopia Kamdoum shared details about how environmental sustainability has risen to the top of IT users’ agendas. In order to address customer requirements and remain compliant with regulations, businesses must review their business operations. From the strategy to the processes, data management, and IT operations, several dimensions are impacted by the need to reach sustainability goals. Accordingly, IT providers have invested in developing the right expertise and dedicated offerings that can help their clients identify the best course of action with regard to environmental sustainability. Right now, the software and IT services (SITS) market in Europe is very dynamic and we observe various players (e.g., multinational companies vs. medium-sized providers, business application vendors vs. sustainability specialists) trying to secure their share. All in all, the SITS market around environmental sustainability might still be small, but we predict a strong double-digit annual growth over the coming years in Europe and the UK.

Digital Customer Engagement Assessing the Impact of AI

Spencer Izard, PAC Principal Analyst, explained the impact of AI on the Digital Customer Engagement world. Since the onset of the then mega-trend of digital transformation, there has been a race within the digital customer engagement (DCE) world to provide hyper-personalised customer experiences. This has been a topic evangelized every year as the “next big thing that will happen next year”, but, in PAC’s opinion, it has never materialized to the level of the hype or scale needed to be operationally effective. That is until the astonishingly rapid awareness of generative AI (GenAI) around one year ago showed how a deep learning (DL) large language model (LLM) style of AI was ready for mainstream consideration finally by organizations. PAC ran a European-wide DCE survey this year and discussed some of the results and other findings at the event relating to GenAI. From the study results, 83% of UK DCE leaders indicated that GenAI is the key technology for unlocking true personalization capabilities for direct-to-consumer experiences and analytics supporting internal teams. 81% also indicated that GenAI would be an integral tool for optimizing customer service automation through agent experience (AX) in contact centers and field experience (FX) for stores and other field workers. However, as with any new technology, there is caution, and 85% and 84% indicated that customer trust and security concerns need careful consideration. It is clear to PAC that there is not only a demand for this technology but also a need for support by service providers to accelerate the adoption of GenAI for organizations in the coming years.

SAP Modernization What users really think about their future pathways

Sidney Siegertsz, PAC Senior Analyst, shared his insights on SAP modernization. According to PAC figures, the ERP market is expected to witness a surge in growth between 2024-2026. At present, over 50% of UK businesses and organizations are still in the discussion or planning phase for their SAP S/4HANA migration. The high degree of customization, business disruption, and migration costs are some of the top challenges for UK firms. Moreover, with application landscapes no longer meeting the requirements to quickly respond to the needs of customers and other stakeholders for new services and experiences, and the approaching end of ECC6 maintenance and support in 2027, Greenfield and S/4HANA Cloud-native SaaS edition are popular choices in the UK, while SAP BTP is yet to catch on with two-thirds not yet using the transformation and innovation platform. We would like to express our gratitude to all participants who made our PAC HORIZONS event in London a success. We're excited about the insights and connections forged, and we can't wait to meet again in 2024 for more exciting events. See you then!