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mom INPUT Research Bulletin A Publication from INPUT’S Business integration Programme - Europe Vol. V, No. 2 February 1994 European Project Services Market Valued $41 at billion In 1993, input’s European Systems a variety of information systems products Integration Programme focused specifically and services. For a project to qualify as a on the systems integration market. systems integration project, the client must appoint a single prime contractor responsible In 1994, we are expanding the scope of this for overall project management and programme to cover the whole of the project responsible for the delivery of the complete services market and renaming it the information system to the agreed schedule — Business Integration Programme Europe and price. The projects services market: The project services market includes a wider range of seiwices. Indeed it includes all • Covers a wider range of services than project-related services excluding products systems integi’ation purchased as off-the-shelf software products to be installed by the client or products and • Is eight times larger than the systems services purchased as part of an outsourcing market integi'ation contract. • Will be strongly driven by the adoption of Examples of services within the scope of the software products project services market are: • Is being targeted by the equipment • Management consultancy as part of a vendors. business re-engineering project Wider Range of Services • Strategic IS consulting services Systems integration projects provide • Technical consulting complete solutions to information system requirements through the custom selection of • Implementation support © 1994 by INPUT. Reproduction prohibited. E-BIPR INPUT Research Bulletin • Bespoke software development Exhibit 1 i Project Services and Systems • Education and training Integration Markets, Europe Equipment and software product revenues are also included where these are purchased CAGR as an integral part of an information systems (%) ^ 1993 project. In those instances where software 19 Systems products and equipment are purchased 11.6 1998 Integration separately, these elements are not included in the project services market covered by the European Business Integration programme. 8 Project Revenues for the services listed above are Services included within the systems integration market where these services are supplied 0 10 20 30 40 50 60 within the context of a systems integration Market Size ($ Billion) project. However many project services are the external market. Indeed this same trend purchased outside this context, often as has served to reduce the growth elsewhere in individual consulting assignments or support the professional services market with in- services. Historically, individual professional house IT departments often no longer in a services have tended to be purchased on a position to recruit large numbers of time and materials basis. temporary development staff. While the systems integration market This overall trend is expected to continue. includes combinations of services bundled Similarly the trend to fixed price rather than into an overall fixed price contract, the time and materials is extending itself to project services market also includes smaller projects. standalone services and services purchased on a time and materials basis. Exhibit 2 provides a breakdown of the project services market for France, Germany, and Eight Times Larger than Systems the United Kingdom. Integration Market The project services market in each of these Exhibit 1 contrasts the size and growth of countries is currently depressed by their the European systems integration and economic circumstances. The market in project services markets. France is the most adversely affected with users endeavoring to reduce their IT The growth in the systems integration expenditure, and little sign of overall market has been considerably higher than economic recovery. However new that in the overall project services market in technologies, such as client/server that offer recent years, as major project expenditure users the prospect of reducing their overall has shifted from in-house developments to 2 © 1994 by INPUT. Reproduction prohibited. INPUT Research Bulletin IT expenditure while improving the value of Exhibit 2 to their business, provide some jl^IT Project Services by Country encouragement for growth in the project services market. CAGR Driven by the Adoption of Software (%) m Products 1 1 France Exhibit 3 provides a breakdown of the European project services market by component. 8 Germany The European systems integration market is showing a shift from large bespoke development projects to projects based on client/server architecture and oriented U.K. around the assembly of standard software This trend is mirrored in the overall project 0 5 10 15 services market where the proportion of Market Size ($ Billion) revenues derived from software products is forecast to grow substantially over the next ^ five years. Exhibit 3 Project Services by Component, Europe Increased use of software products and kernels will help to meet users’ needs for CAGR flexibility and immediacy of implementation. (%) The main implications of these trends for Professional vendors is their need to focus skills: Services • Around the leading application software products in their chosen sectors Equipment On • the technical skills necessary to integrate these products into distributed, multi-vendor environments. 20 Software Strongly Targeted by the Equipment Products Vendors i7 0 10 20 30 40 Market Value Exhibit 4 lists the leading project services ($ Billion) vendors in Europe. © 1994 by INPUT. Reproduction prohibited. 3 INPUT Research Bulletin Overall the list of leading vendors in the Exhibit 4 project services market is very similar to Leading Project Services that for the systems integration market. — Vendors Europe, 1992 However large project specialists such as European EDS Andersen Consulting and receive lower Vendor Project Services Revenues rankings in the project services market. M) ($ On the other hand Siemens-Nixdorf and IBM 2,300 Olivetti, who had yet to estabhsh themselves Cap Gemini Sogeti 1,800 in the systems integration market in 1992, Siemens Nixdorf 1,100 achieve higher rankings in the project Digital 1,100 services market. Andersen Consulting 950 700 Olivetti As in the systems integration market, the Serna Group 550 equipment vendors are steadily increasing Finsiel 550 their presence in the project services market. ICL 450 EDS 400 Bull 400 Unisys 300 — This Research Bulletin is issued as part of INPUT’S Business Integration Programme Europe Ifyou have questions or comments on this bulletin, please call your local INPUT organization or Peter Lines at INPUT, 17 Hill Street, London W1X7B, (+44) 71 493 9335. 4 © 1994 by INPUT. Reproduction prohibited.