Now enterprise and internet companies are building their own platforms. Exploring enterprise segment: Traditional software product engineering service providers are focused on the ISV segment.This partial monetization enables customers to share the risk and reduce up front investment. We are observing an increasing number of initiatives and participation by service providers through this investment model. Co-investment model is becoming popular: Using co-investment-led business models to partner for developing next-generation products is becoming popular in the software product engineering space.Service providers need to develop strong expertise in these emerging areas. These technologies are instrumental in the overall customer journey, competitive advantage, user experience, and other business outcomes. Increasing influence of digital technologies: The technology change agents in software product engineering include automation, IoT, cloud, and artificial intelligence.Service providers have also mentioned several examples of outcome-based and risk-reward pricing models for both vertical and enterprise ISVs. As the SaaS model is cannibalizing customers’ traditional product license and revenue channels, they are more becoming more inclined toward nonlinear pricing models. New business model: Customers are trying to reduce cost overhead and engage in unique commercial models with their service providers. Service providers are engaging with the clients for joint investment and go-to-market initiatives in this area. Non-core functions and products are outsourced for cost savings and operational efficiency, with a long-term and collaborative engagement with the service providers. In their portfolios, they are segregating their core and non-core products and functions. Focus on strategic outsourcing: Customers are adopting a lean approach to run their businesses.Recommendations for both service buyers and service providers to get the most out of their relationships and to stay relevant in this market respectively.Areas we expect to see the most growth in over the next few years.The strengths and challenges to take into consideration for the service providers including their capability, vision, and investment priorities.
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