ISG exec admits XaaS project deals losing steam
Technology research advisory firm Information Services Group (ISG) is seeing a downward trend in cloud-based anything-as-a-service (XaaS) projects that are successfully signed into deals.
“It’s something we haven’t seen in nearly six years. The global combined market for IT and business services actually declined versus the prior year in the third quarter. The last time that happened was the fourth quarter of 2016.” Steve Hall, ISG President for Europe, Middle East and Africa said in a blog entry on the company’s website.
He noted that the demand remains sizeable but spending is dipping.
Hall said that ISG’s Data from the 3Q22 Global ISG Index™ confirms demand remains strong, but rising interest rates, energy shortages, supply chain disruptions and continuing inflation are injecting some caution in the market right now.
In Europe, the annual contract value (ACV) of the deals ISG tracks rose by seven per cent to $7.6bn.
The firm spotted signs of “dampening demand” in the region, ISG said, however, with XaaS registering its lowest quarterly growth since the start of 2015 at five per cent. ACV here hit $3.8bn, with IaaS rising 13 per cent to $2.9bn and SaaS falling 14 per cent to $924m.
“European enterprises continue to press ahead with their digital transformation initiatives, but we are seeing signs of a slowdown in spending over concerns about the region’s economy,” Hall said.
“Spending on cloud computing has been growing rapidly in Europe, averaging more than 40 per cent growth a quarter over the last five quarters. This quarter marks a decided slowdown in that trend, primarily due to a pullback in SaaS spending, as decision-making slows in response to the broader economic climate.”
