Key Findings & Highlights:

DTS is a relatively vague notion that groups social mobility analytics cloud (SMAC). SMAC and DTS largely refer to areas of investment and growth from buy-side clients and IT service vendors respectively. DTS is more than a series of independent offerings in high demand: service offerings have become more integrated, and e-commerce sites are hosted on public clouds, systematically include integration with social tools and reporting and big data projects, and can be part of omni-channel initiatives.

Taking a wider perspective, digital transformation also refers directly or indirectly to security services, a pervasive offering that is found embedded in most other DTS and software development methodologies such as Agile or technologies (DevOps). DTS also refers to new business approaches (invest little/fail fast) and new business models (Airbnb and uberpop).

Not all clients active in digital transformation services want to reinvent their business model. We think cost savings is an element of any DTS project, and we estimate that ~10% of spending is purely focused on savings, through contracts such as hosting migration to Amazon Web Services or Microsoft Azure, or through to SaaS based personal productivity applications (Office 365, Apps for Work).

Another client segment focuses purely on improving its IT and business operations, and does so by deploying digital technologies. The range of use cases and possible technologies is broad; it ranges from clients implementing data integration portals to centralize information from different potentially aged software, to mobile enabling a web application. This can also include a client using a new way of developing applications. This client segment is primarily about technology transformation with an intention of providing a better service to businesses. We think this is the largest client segment, representing 40% of current DTS spending.

A third client segment, which we call digital increment clients, involves clients which want to take part in the business model disruption of their industries. Typically, this includes manufacturing firms implementing IoT projects and driving their product portfolio towards service-led. Digital increment clients are relatively uncommon and represent, we estimate, 20% of DTS spending.

Finally, clients reacting to a potential threat in their industries, generally either the retail banking industry, or the retail sector investing in omni-channel to integrate traditional and online/mobile purchasing businesses and respond to online competitors. This represents 30% of spending.