Small and Midsize Enterprises (SMEs) are adopting Microsoft Business Applications to transform their operations, gain visibility, and manage end-to-end processes, including modernizing their customer experiences. In contrast, large enterprises leverage Microsoft Business Applications to strengthen their core systems by building on their existing systems. The Microsoft Business Applications market is driven by a lower Total Cost of Ownership (TCO) and faster time-to-market. Enterprises adopt Microsoft Business Applications due to their AI integration with offerings and seamless connection with other Microsoft offerings. In response, providers are developing talent pools and building robust accelerators to support enterprises’ digital transformation journeys. In this report, we analyze the Microsoft Business Applications services market, deal trends, and key enterprise demand trends, including gen AI. The report also offers key takeaways for enterprises and discusses implications for service providers. Scope All industries and geographies This report is based on interactions with leading IT service providers and client reference checks as part of the Microsoft Dynamics 365 Services PEAK Matrix® Assessment Contents In this report, we: Analyze the Microsoft Business Applications services market, highlighting market size split by geography, industry, product areas, and buyer size Evaluate Microsoft Business Applications services deal characteristics, including spending across the value chain and deal trends analysis across geographies and industries Examine key enterprise demand trends, including enterprise transformation areas, buyer satisfaction across key Microsoft Business Applications product areas, buyer imperatives, gen AI strategies across enterprise platforms, and AI transformation strategies for enterprises Assess implications for service providers Membership(s) Enterprise Platform Services (EPS) Sourcing and Vendor Management

As enterprises are maturing digitally, they are becoming more focused in their spends to transform their technology landscape. Consequently, the objectives of such investments are becoming more aligned with businesses outcomes. Enterprises are demanding faster time-to-value, enhanced user experience, new revenue streams, and scalability through these transformations. While the objectives are clear, enterprises find it difficult to derive value due to lack of knowledge around their application portfolio and difficulty in training their employees to adopt new processes. Service providers take up the critical task of chalking out the transformation roadmap for these enterprises and provide the necessary expertise through talent, technology solutions, and products to accelerate enterprises’ transformation journey. They are increasingly coming up with innovative funding models and change management strategies to instill confidence among enterprises and realize benefits sustainably. Scope In this report, we present a comprehensive analysis of the application transformation market. The report leverages data from Everest Group’s annual RFI process for the calendar year 2019, interactions with leading application transformation service providers, client reference checks, and an analysis of the application transformation services market. Contents This research analyzes the evolving dynamics of the application transformation market, including enterprise demand themes, consumption patterns, and evolving priorities. We also provide an easy-to-follow playbook to act as a starting point for enterprises to begin their transformation journeys. Membership(s) Application Services

As enterprises remain doubtful of what digital transformation and application modernization truly mean for their environment, their view of the application strategy remains skewed. As a result, their focus completely lies either in investing into new technology stacks or blindly replacing the legacy applications. In our survey of 194 CXOs of global enterprises, very few were able to achieve the desired business outcomes from their application portfolio. The enterprises who were able to differentiate themselves from this lot were able to achieve significant improvement on metrics such as time-to-market, operational efficiency, and application quality. The application strategy of these leading enterprises is pivoted around taking a balanced view of their legacy and new application investments. Right from the time of setting the application modernization objectives and allocating budget to the point of defining a talent and automation roadmap, these enterprises take into consideration both legacy and new application portfolios. In this report, we discuss in detail the five essential building blocks of an effective application strategy. In addition to the key trends in application services, this research also provides a fact-based analysis of buyer trends by geography, industry, and revenue size. It analyzes major trends impacting the application services market and provides an outlook for the year ahead. Scope Key trends shaping the Application Services (AS) market (effective strategy for application portfolio) IT services market size (split across applications, consulting, & infrastructure services, geography, and industry verticals) Market share of leading IT service providers in applications, consulting, and infrastructure services AS deal trends and buyer adoption trends across geography, industry verticals, and revenue size Membership(s) Application Services