Global 2000 organizations are investing considerable financial and human resources in the development and maintenance of applications across the IT portfolio, according to META Group. The application portfolio is becoming more complex as the proliferation of web services drives exponential growth of interapplication integrations and as the number of enterprise applications increases due to applications migrating from being experimental to becoming core to strategic business processes. The increased use of more sophisticated and heterogeneous applications by small and medium businesses (SMBs), coupled with the drive to integrate with Global 2000 trading partners, is also complicating the application portfolio.
‘The question is not whether or not to outsource, but rather which elements of the IT portfolio are most suited to an outsourcing engagement,’ said Kip Martin, vice president with META Group’s Technology Research Services. ‘Although the benefits of outsourcing are well established, determining the applicability of outsourcing to applications is more challenging and the benefits potentially more elusive.’
The primary selection criteria for service providers are the cost of services and return-on-investment (ROI) metrics. METAs latest report also showed that organizations that choose to outsource are not doing so as short-term strategies. Application specialists and local/regional providers are the most frequently used type of application management service provider. In contrast, management consultants and offshore outsourcers are the least used type of service provider for application management.