Application Transformation Market
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The global application transformation market was valued at USD 14.8 billion in 2023 and is projected to grow at a CAGR of 14.9% between 2024 and 2032. The market is often biased by digital transformation projects, especially as companies strive to digitally enhance. Those projects propose the use of technology to improve business processes, customer experiences, and innovation. Companies seeking agility and responsiveness to the market usually face a challenge with their existing applications due to stale functions and features. This pushes them towards investing in application transformation projects that help them update and replace legacy systems, support new technologies, and move to the cloud.
In September, 2024 Cognizant partnered with the Danish municipally owned IT company KOMBIT with respect to testing and quality assurance of public service application systems in order to enhance the efficiencies and user experience for the 26 public service applications that are used by 98 municipalities in Denmark.
| Report Attribute | Details |
|---|---|
| Base Year: | 2023 |
| Application Transformation Market size in 2023: | USD 14.8 Billion |
| Forecast Period: | 2024 to 2032 |
| Forecast Period 2023 - 2032 CAGR: | 13.8 |
| 2023 Value Projection: | USD 46.9 Billion |
| Historical Data for: | 2021 - 2023 |
| No of Pages: | 170 |
| Tables, Charts & Figures: | 200 |
| Segments Covered: | Deployment Model, Organization Size, Service, Industry Vertical |
| Growth Drivers: |
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| Pitfalls Challenges: |
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The application transformation market is starting to develop as issues related to legacy systems persist. These already established systems which were designed with the earlier technology architecture, may be costly and inefficient as well as incompatible with modern solutions. Obsolete legacy systems block agile and innovative enterprise capabilities because they have a limited ability to respond to changes in market conditions and consumers’ behavior. In addition, these systems are outdated and cannot integrate modern data analysis tools or even cloud-based solutions, which creates additional challenges for the businesses.
Hence, the service for transformation of enterprise applications is emerging to help organizations re-engineer their legacy systems by means of refactoring, modernizing, or agile replacing the set legacy systems with cloud-driven applications.
A global alteration is the growing proclivity towards the adoption of cloud-native architectures. More and more businesses are consolidating their applications to gain the benefits of their size and flexibility and cost savings for fast deployment and continuous integration. To aid these changes, more focus is being put into microservices architecture, which helps in building applications as a set of components that can be changed independently to enable more agile business responses.
The user experience is essential for businesses prior to the construction or redesign of an application. This is a dire need which prompts the adoption of new design methodologies and technologies to create better applications that suit users. Such applications are in high demand now because of the increase in mobile and remote work as companies have to ensure that there is high usability and performance of their applications on many different devices and situations.
App transformation, however, faces hurdles, including the emerging cyber threats that are more challenging to protect against. There may be several reasons why the transformation initiatives fail, such as migration of data to new repositories and systems, integration of different systems, and shifts to cloud systems without proper planning and implementation.
The constant fear of data breaches has resulted in companies having to tighten the protection of customers’ personal data, billing info, and businesses confidential documents or else suffer financial loss and damage to the company’s reputation. Furthermore, regulatory policies like GDPR and HIPAA restrict them further as it makes them modify their data handling processes entirely. Most of the time, organizations are likely to abandon or limit their application transformation projects if it means switching from a legacy system that is perceived to be more secure but less efficient. It stifles competitiveness and innovation within the ever-changing business environment.
Based on service type, the market is segmented into application portfolio analysis, application modernization services, cloud migration services, integration services, application replatforming, and others. The application modernization services segment accounted for 25% of the application transformation market share in 2023 and is expected to exceed USD 10.5 billion by 2032.
Based on organization size, the application transformation market is divided into SME and large enterprises. In 2023, the large enterprises segment held around 69% of the market share.
In 2023, U.S. accounted for a application transformation market share of over 78.5% of the North America region and is expected to reach around USD 10 billion by 2032.
Google, AWS, and Microsoft collectively held a substantial market share of 11% in the application transformation industry in 2023.
Major players operating in the application transformation industry are:
The application transformation market is seeing a lot of international companies practicing merger and acquisition strategies to strengthen their presence in the market. With the goal of modernizing applications in an all-encompassing way, companies started forming alliances with IT consultants, software publishers, and cloud service providers. This aids in streamlining the Modernization of applications, improving operational effectiveness, and even increasing the scalability for enterprise clients due to heavy investment in emerging technologies such as AI, ML, and even low code/no code technologies.
In particular, the cloud-native development strategies of application built above coupled with the principles of DevOps aid these companies to accelerate the way their applications are transformed. Because of the greater attention being paid towards sustainability within IT, enterprises have started looking for green application transformation practices.
These enterprises are helping their clients reduce energy consumption and carbon emissions by modernizing their legacy systems while reducing the reliance on hardware. Further, these enterprises gain competitive advantage in the industry by meeting the new sustainable IT practice standards with the efficient use of resources and green cloud technology.
Market, By Deployment Model
Market, By Organization Size
Market, By Service
Market, By Industry Vertical
The above information is provided for the following regions and countries:
The U.S. market held over 78.5% of the North America market share in 2023 and is anticipated to reach around USD 10 billion by 2032, supported by a well-established technology infrastructure and a high concentration of IT and innovation firms.
The key players in the industry include Accenture, Atos, AWS, Bell Integration, Capgemini, Cognizant, DXC Technology, Fujitsu, Google, and HCL.
The market size of application transformation reached USD 14.8 billion in 2023 and is projected to grow at a 14.9% CAGR from 2024 to 2032, led by increasing digital transformation initiatives to enhance business processes and customer experiences.
The application modernization services segment accounted for 25% of the market share in 2023 and is expected to exceed USD 10.5 billion by 2032, as organizations seek to update legacy systems to adapt to rapidly changing business environments.