In recent years, there has been a significant rise in the adoption of custom software systems and enterprise applications. This growth is attributable to the increasing demand for tailored solutions that meet specific business requirements. As a result, there is a greater need for specialized Application Managed Services. The complexities in managing mission-critical applications underscore the importance of a meticulous and organized approach to managing their dependencies and safeguarding against vulnerabilities.
Projecting the AMS Landscape
As per a recent report by The Business Research Company, the global market for Application Management Services (AMS) is expected to grow exponentially, reaching a whopping $63.93 billion by 2027, with a compound annual growth rate (CAGR) of 18.1%. This indicates that the AMS industry has a high potential and demand. [1]
The growth in this sector can be attributed to various factors, such as the increasing adoption of cloud-based solutions, the integration of Artificial Intelligence (AI) into operational frameworks, and the need for efficient management of complex application ecosystems. However, despite the bright future, several factors could impact the adoption of AMS by organizations, which we will explore one by one.
Future Challenges in Application Managed Services
Cyber Resilience: As digital technology advances, so does the sophistication of cyber threats. This makes it increasingly necessary to have strong cybersecurity measures within AMS frameworks. Outdated software patches and configurations can leave systems vulnerable to cyber-attacks and potentially costly data breaches. To prevent this, AMS providers should prioritize regular updates, robust patch management, and comprehensive cybersecurity protocols. These proactive security measures are essential to mitigate risks and safeguard sensitive data. The projected annual cost of cybercrime is a stark reminder of the urgency to fortify defenses and implement proactive security strategies. Cyber resilience, which includes threat detection, incident response, and continual adaptation, is critical in safeguarding AMS operations.
Cloud Adoption: The demand for cloud solutions requires specialized skills, posing a challenge for MSPs. IT decision-makers facing obstacles due to a lack of expertise and experience in cloud adoption underline the necessity for targeted training programs. This underscores the pivotal role of upskilling sales and marketing teams within MSPs to market and support cloud services effectively.
Remote Workforce Productivity: The shift to remote work poses productivity challenges. With many remote workers experiencing burnout, AMS providers face crafting innovative strategies to sustain productivity. This might involve implementing flexible work policies, fostering a supportive work culture, and leveraging technology to streamline remote collaboration, all aimed at maintaining workforce efficiency.
Regulatory Concerns: The evolving regulatory landscape poses compliance challenges for AMS frameworks. Keeping pace with regulatory changes necessitates a proactive approach to staying compliant. AMS providers need to invest in staying abreast of legal alterations, implementing adaptable frameworks, and integrating compliance into their service offerings to ensure adherence to varying regulatory requirements.
IT Talent Shortage: The scarcity of skilled IT professionals impacts service delivery within AMS. Addressing the challenges highlighted by the Global Knowledge IT Skills and Salary Report calls for innovative talent acquisition and retention strategies. Investing in training programs, fostering a learning culture, and exploring alternative talent pools become imperative for AMS providers to effectively bridge the IT talent gap and meet growing customer demands.
Customer Retention: Understanding that client satisfaction directly impacts profitability and can boost profits by increasing customer retention rates is essential. This highlights the significance of client-focused AMS strategies. Building solid relationships, offering personalized services, and maintaining proactive communication channels are necessary to ensure long-term client retention in a competitive AMS landscape. AMS has evolved into a comprehensive suite of services encompassing an organization’s entire application IT landscape. However, client dissatisfaction persists due to unmet promises in AMS contracts. Therefore, AMS should align vendor and client goals, jointly addressing undefined gaps in the contract.