Application Transformation Market

Application Transformation Market Outlook (2022-2032)

The global application transformation market was valued at US$ 12.1 Billion in 2021 and is projected to register a Y-o-Y increase of 11.6% in 2022 to be valued at US$ 13.5 Billion. During the 2022-2032 period of assessment, demand is expected to rise at a 10% value CAGR, likely to reach US$ 34.9 Billion by the end of the said forecast period.

Overall, the application transformation landscape is poised to yield an absolute dollar opportunity worth US$ 21.5 Billion until 2032. Sales of application integration services will continue to flourish, with a documented CAGR of 11.5% from 2015-2021.

Moreover, large enterprises will continue to remain the primary beneficiaries of application transformation services, likely to register a CAGR worth 9.6% from 2022 to 2032. North America will remain at the forefront, generating an opportunity worth US$ 7.4 Billion during the forecast period.

Attributes	Details
Anticipated Base Year Value (2021)	US$ 12.1 Billion
Expected Market Value (2022)	US$ 13.5 Billion
Projected Forecast Value (2032)	US$ 34.9 Billion
Global Growth Rate (2022-2032)	10%
Market share of US (2022-2032)	9.8%
Expected Market Value of China (2032)	US$2.6 Billion
Dollar Opportunity in Japan (2022-2032)	US$ 1.2 Billion
Prominent Players in The Global Market	Atos Tech Mahindra Fujitsu Limited HCL Technologies Cognizant Unisys Corporation Accenture Plc. IBM Corporation Tata Consultancy Services (TCS) Asysco Software B.V

Application Transformation Market Revenue Analysis 2017-2021 vs. Future Outlook 2022-2032

Rising penetration of big data technologies, cloud computing and other advanced technologies have prompted application providers to transform services into a whole new level. As per market research and competitive intelligence provider Fact.MR, the market for application transformation witnessed a staggering 11.8% CAGR from 2017 to 2021. As enterprises strive to attain a competitive edge, application transformation is a necessity.

Consistent upgradation of application technologies to provide a seamless user experience is the need of the hour. By incorporating avant-garde breakthroughs, service providers are not only able to reduce operational costs, but also enhance their returns on investment. Furthermore, changing compliance and governance requirements are also widening the scope for application transformation services.

In the future, as more businesses rely on digital transformation, they are continuously innovating their approaches, ushering in efficiency, enhancing quality and improve client experience. Whether it is to migrate, transform or build, deploying the right application strategy can work miracles. From 2022 to 2032, the application transformation market is forecast to grow 2.6x.

Prominent Application Transformation Industry Growth Drivers

Increasing Adoption of Cloud Technology & Reliance on Big Data

In the 21st century, cloud computing is one technology which underpins all digital business models. The cloud has enabled data-oriented, highly adaptable, asset light and anywhere services. This technology has proven instrumental in enabling digital models by providing access to “everything-as-a-service” (EaaS) models, building multiple automation processes to create a streamlined system.

As organizations move more workflows to the cloud, they are building more cloud-native applications, as well as investing in advanced cloud-based solutions, thereby improving scope for application transformation services implementation. Application transformation helps assess current applications to help in planning and conducting migrations. Before planning any application transition, it is essential to understand the basic characteristics and features of traditional and cloud-native applications.

The contemporary technology landscape has made it clear that infrastructure-as-a-service (IaaS) virtual machine services are now considered the very minimum capability for a public or enterprise private cloud. Application transformation is the longer-term goal which is expected to take up the most amount of time. Hence, prominent service providers such as Mphasis and CRM Trilogix are emerging at the frontiers of the global application transformation market.

Implementing Legacy Modernization Exercises to Widen Application Transformation Deployment

Legacy modernization is a critical element of change in any business or enterprise. Simply speaking, it is a process of transforming legacy systems to mitigate IT environment costs & complexity, enable cross-platform collaborations, increase data consistency and improve process flexibility. Contemporary business approaches provide minimal to no room for traditional operational models, as the latter are highly rigid and inefficient.

Consequently, corporations are investing copious budgets in modernizing their legacy systems, enabling them to align company objectives with business goals. This helps them to serve customers efficiently, achieve better economies of scale and improve client relationships. To achieve this, demand for application transformation services is rising exponentially.

A major component of legacy modernization through the use of application transformation is ensuring data security. Indeed, legacy systems are usually less resistant to cyberattacks, harmful programs, and malware. If the software solution had been around for years, the attackers most likely had enough time to get familiar with the code and find its vulnerabilities. Hence, protection against such entities is a part and parcel of such systems.

Key Challenges Prevalent in the Global Application Transformation Market

Resistance to Adopt Digital Transformation May Impede Growth Prospects

Although digital transformation has proven to yield major operational benefits, many enterprises are reluctant to implement it due to a variety of reasons. These typically range from high resistance to organizational change to inability to meet transformation costs. This is largely the case in medium and small enterprises. Moreover, data vulnerability concerns are prompting businesses to not extensively adopt digitalization, which is limiting application transformation prospects to a significant extent.

Enterprise software is inherently complex. New technologies can be intimidating. This is a large challenge for organizations undergoing digital transformation – both from an implementation and data integration perspective, as well as from an end-user experience perspective. Digital transformation is not an easy project, and intensive transformation efforts can take years to accomplish.

However, several businesses are beginning to realize that change is inevitable. Therefore, they are reconciling with the fact and allocating budgets to ensure proper digitalization of workforce is implemented. This will likely sustain growth prospects for application transformation in the years to come.

Comparative View of Application Transformation Markets

Application Transformation Market :

Attributes	Application Transformation Market
Growth Factor	Increasing investments in data security solutions and growing use of application transformation services in large enterprises to boost market growth.
Opportunity	Increasing applications in retail, telecom and healthcare are expected to provide opportunities for the growth of the application transformation market

Big Data Technology and Services Market :

Attributes	Big Data Technology and Services Market
Growth Factor	With the increasing need for gathering and analyzing valuable business information and insights arises, demand for big data analytics software continues to remain high this will drive the big data technology and services market.
Opportunity	Incorporation of leading technological solutions further harnessing the potential of data analysis has led the supply chain managers to opt adopt big data solutions are some of the factors propelling the global big data analytics market.

Application Management Services Market :

Attributes	Application Management Services Market
Growth Factor	The rising need for improving the performance of applications and achieving better business results is one of the factors improving the growth of the application management services market
Opportunity	The growing need for improving the performance of applications and achieving better business results in the industry provides the opportunity for the growth of the application management services market

Country-wise Analysis

What is the Growth Outlook for Application Transformation in the U.S?

Extensive Digitization of the Business Landscape widening Growth Opportunities

According to Fact.MR, demand for application transformation services in the U.S is likely to expand at a 9.8% value CAGR until 2032, forecast to yield an opportunity worth US$ 7.4 Billion. Demand is further expected to be valued at US$ 12.2 Billion by the end of the said forecast period. Growth is attributed to extensive digitization of professional workspaces to streamline workflow and enhance productivity.

As the pandemic recedes, businesses across the country have extensively shifted to the virtual space, going so far as to usher in this sea change among organizations who were not necessarily prepared for it. This was a blessing in disguise, as it exposed the amount of technical debt each organization had accumulated in the pre-pandemic times. As per research, 87% of digital leaders agree that their organization's ability to compete depends on the flexibility of their technology infrastructure.

Consequently, major enterprises are transitioning towards cloud-based business models, prompting them to introduce various business applications. Moreover, they are investing in key application management solutions to ensure easy processing of data, ensure data security and improving client relationships by providing efficient services. Presence of numerous vendors in the region such as Oracle Corporation, Microsoft Corporation, and IBM Corporation, actively promoting modernization is likely to boost the market.

How do Growth Prospects Appear in the Chinese Market?

Focus on Implementing “Industrial Internet” catching Fancy of Key Solutions Providers

Emerging as the pinnacle of the global telecommunications and digital transformation landscape, China is likely to present highly attractive growth opportunities for application transformation service providers in the long –run. In March 2020, the Chinese government proposed the initiative of “industrial internet”, which included policies for constructing new digital industrial infrastructure.

Accordingly, leading telecom operators were called on to build high-quality communications networks covering the entire country. In line with this objective, Alibaba Cloud has been constructing 10 industrial internet platforms for various industry sectors, including textiles, clothing, food and beverage, processing, home appliances, electronics, and textile printing and dyeing.

The newly-applied technology provides for integrated product development, manufacturing, sales, logistics, warehousing, and energy management, essentially creating a singular digital service ecosystem. Likewise, in 2018, the company introduced a digital transformation initiative in the region with new products and a partnership program known as ASEAN Partner Alliance Programme, which is anticipated to boost regional growth. Such initiatives are likely to open new growth frontiers for China, which will likely reach US$ 2.6 Billion by 2032, growing at a 9.7% CAGR.

Is Japan likely to emerge as an Opportunistic Application Transformation Industry?

Rising Embracement of Innovative Business Models Increasing Uptake

The application transformation market in Japan is poised to yield a dollar opportunity worth US$ 1.2 Billion from 2022-2032, anticipated to expand at a CAGR of 8.5%. Furthermore, the country is anticipated to reach a valuation of US$ 2.1 Billion by the end of the said forecast period. Extensive migration towards cloud-based business models as a part of business innovations is propelling market growth.

Since 2016, the Japanese business landscape has taken a turn for the better, with the introduction of Google Cloud Tokyo. Since its introduction, approximately 40% of Google Computer Engine core hour usage in Tokyo was from new customers. One of the biggest retailers in Japan, FamilyMart, is working with Google’s Professional Services Organization to reform its store operations and build a retail model for the next generation. FamilyMart is using G Suite to facilitate a collaborative culture and transform its business to embrace an ever-changing landscape.

Likewise, Kewpie, a major food manufacturer in Japan famous for their mayonnaise, takes high standards of food production seriously. For its baby food, it used to depend on human eyes to evaluate 4 - 5 tons of food materials daily, per factory, to root out bad potato cubes - a labor-intensive task that required intense focus on the production line. But over the years, Kewpie has tested Cloud Machine Learning Engine and TensorFlow to help identify the bad cubes. The results of the tests were so successful that Kewpie adopted the technology.

Category-wise Insights

Why is Demand for Application Integration Rising Rapidly?

Ensuring Data Consistency to be Top Growth Driver in the Coming Years

According to Fact.MR, application integration is likely to remain the top service category, growing at a value CAGR of 9.9% from 2022-2032. Demand is increasing due to the requirement of maintaining data consistency across independently designed applications, orchestrating integrated flow of multiple activities by disparate applications and providing access to data and functionality from independent applications.

Application integration also facilitates access to organizational data from anywhere, helps resolve endpoint visibility and helps integrators focus more on building business logic. By addressing error recovery, fault tolerance, log capture, performance analysis, message tracing, and transactional update and recovery, an integration tool enables users to create integration flows more without requiring a deep knowledge of the various platforms and domains.

Which Organizations will Leverage Application Transformation the Most?

Deployment to be Maximum across Large Enterprises

Application transformation solutions for large enterprises are expected to register maximum demand, attributed to the sheer large operational scale of such enterprises. As businesses continue expanding their scope of operations, the need to streamline the entire workflow is increasing with each passing day. Moreover, investments in data security solutions is also rising.

With their primary focus being enhanced customer outreach, large enterprises are investing in extensive cloud-based and virtual business ecosystems, necessitating deployment of application transformation solutions. A CAGR of 9.6% has been projected for the large enterprises segment by Fact.MR until 2032.

Start-Ups for Application Transformation Market

Some key start-ups in the application transformation market include – WEQ Technology, Fidel Softech Ltd, Cube Match, and Ranosys, EastBanc Technologies, Prophet among others.

• In March 2022. Krish Compusoft Services, Inc. (KCS), and Biarca, Inc., announced that KCS has completed the acquisition of Biarca. This acquisition significantly strengthens KCS’s digital transformation portfolio with Security Operations as a Service, DevSecOps and Continuous Compliance.
• In March 2021 – EastBanc Technologies announced it has earned the Modernization of Web Applications in Microsoft Azure advanced specialization. This specialization recognizes EastBanc Technologies' deep knowledge, extensive experience and proven expertise in migrating and modernizing production web application workloads, and managing app services in Azure

Competitive Landscape

The global market for application transformation is characterized by the presence of multiple vendors, aiming to offer extensive consulting and integration services to clients. Additionally, enterprises are seeking out specialized service providers, offering solutions tailor-made to suit their business objectives. In addition, the vendors are likely to leverage upgradation and product differentiation to gain an edge over other competitors in the market.

• In April 2022, Fujitsu Limited introduced its Fujitsu Computing as a Service (CaaS) portfolio. This service will accelerate digital transformation and empower customers globally by offering access to some of the world’s most advanced computing technologies via the cloud for commercial use. This encompasses Fujitsu’s Digital Annealer quantum technology and software applications to solve AI and ML issues
• In December 2021, Cognizant acquired Devbridge, a privately owned software consultancy and product development company in Chicago. The acquisition expanded Cognizant’s software product engineering capabilities and global delivery footprint by adding over 600 engineers, designers and product managers across multiple countries
• Atos has announced recently in April 2022 that it intends to forge a 5-year contractual agreement to deliver managed services for digital operations, applications and cybersecurity for Independent Health (IH). Atos’ operational solutions will leverage infrastructure and digital platforms to optimize operating costs and generate efficiencies across the business landscape.

Key Segments Covered in the Application Transformation Industry Report

• Application Transformation Market by Organization Size :

  • Application Transformation for SMEs
  • Application Transformation for Large Enterprises

• Application Transformation Market by Vertical :

  • Retail
  • BFSI
  • Healthcare
  • IT & Telecom
  • Government
  • Manufacturing
  • Other Verticals

• Application Transformation Market by Service :

  • Application Portfolio Assessment
  • Cloud Application Migration
  • Application Re-Platforming
  • Application Integration
  • UI Application Modernization
  • Post Modernization Application Transformation

• Application Transformation Market by Region :

  • North America
  • Latin America
  • Europe
  • Asia Pacific
  • Middle East & Africa