2023 Year in Review / 2024 Year Ahead

2023 in Review

In 2023, MGI published:

• The Global Tech Market Is Bigger Than You Think

Historically, technology spend estimates have focused on corporate IT budgets combined with consumer tech spend. While useful, they miss corporate technology spend outside IT budgets – the so-called “grey-market IT.” In this report, MGI Research presents a bottom-up estimate of global technology spend including spend outside the formal IT budget. The results of this study indicate global technology spend is significantly larger than previously estimated: growing at a Compound Annual Growth Rate (CAGR) of 7.75% and on-track to surpass $11 trillion by 2026. For users looking to manage IT costs, it’s time to look beyond the IT budget. And for vendors, the real money is found selling outside the IT department.

• Not A Typical Recession: Making Sense of the Global Economy

In March, inflation was on the rise while GDP growth appeared to weaken. We identified high interest rates, elevated energy prices, structurally constrained labor supply, and geopolitical tensions as factors that would shape the economy for the remainder of the year – these currents have intensified in the months since. This research note details how economic scenario planning can help business leaders prepare for the worst – and the best – during periods of economic uncertainty.

• Survival of the Fittest in Economic Uncertainty

This research note, a companion to the report above, summarizes the opportunities and threats that technology buyers and suppliers are likely to face during economic downturn. It highlights the importance of the “Vivaldi approach” – that is, managing for success in all four seasons. Although it’s been almost a year, this research note is still relevant as we head into a slightly rosier – if still hazy – outlook for 2024.

• Is Software Still Eating the World?

“Software is eating the world,” said Marc Andreessen in a 2011 interview with The Wall Street Journal, commenting on the escalating expansion of software across industries and geographies. Over a decade later, has demand for software been sated? The simple answer: not even close. MGI Research assembled a bottom-up estimate of the software industry by aggregating revenues of all software companies globally. MGI Research forecasts that the software industry will grow to $1.36 trillion by 2026, representing a 5-year CAGR of 11.17%.

• 3 Total Addressable Market (TAM) Forecasts centered around services and professional services:

Service-as-a-Business (SaaB) Software spend is expected to exceed $280 billion in the five years spanning 2022-2026. SaaB is a reference model that brings together key capabilities for running any services business efficiently and effectively. It encompasses the business management needs of services organizations, including professional services as well as services teams within product companies.

Finance Automation for Services Organizations (FASO) Software represents a large, expanding, and all-season opportunity with a rapidly expanding 5-year (2022-2026) TAM of more than $190 billion. FASO describes spend by services organizations on cloud-based financial management software such as Financials, Billing, ARM, FP&A, and more.

Professional Services Automation (PSA) Software represents a large growth opportunity with a rapidly expanding 5-year TAM of more than $170 billion. This report covers a five-year potential spend estimate by services organizations globally and includes categories such as Project Management, Time and Expense Management, CPQ for services organizations, and more.

• The Agile Billing Top 50: A Buyer’s Guide

This comprehensive buyer’s guide evaluates, analyzes, and scores the top 50 leading Agile Billing software suppliers, and provides strategy and product selection recommendations for organizations evaluating providers in this market. The report provides MGI 360 Ratings™ of 35 leading suppliers using a quantitative rating (0 to 100) and a qualitative analyst outlook (Positive, Neutral or Negative), as well as 15 “honorable mention” suppliers who are noteworthy, but don’t yet merit an official rating. The 35 individual MGI 360 Ratings in Agile Billing are available here.

• 35 MGI Use Case Notes™ in Agile Billing

In addition to the 360 Ratings presented in the Buyer’s Guide, we published MGI Use Case Notes™ for the 35 top suppliers in the Agile Billing market. Use Case Notes describe the ideal customer profile for a given solution in terms of customer size, business models, selling regions, tech ecosystems, sales channels, primary verticals, and more.

• MGI MarketLens™ in Agile Billing:
  • Agility vs. Complexity
  • Agility vs. Volume
  • Complexity vs. Volume

In conjunction with the Agile Billing Top 50, we published three new MarketLens charts comparing billing providers’ agility, ability to handle complexity, and volume. All 35 of the 360 Rated™ billing vendors are plotted, and they are further subdivided by market segment: HyperScale, Enterprise, MidMarket, and SmallBiz. These charts can help buyers identify the billing solution best suited for their company’s needs by comparing like with like.

• Q2C Success: How to Achieve Excellence

Agreeing on a standard definition of Quote-to-Cash (Q2C) is a challenge for most organizations, let alone understanding what Q2C success looks like. This research note contextualizes quote-to-cash within the scope of the broader agile monetization ecosystem, defines what Q2C excellence looks like, and outlines practical steps to achieve success. It also explores the friction in quote-to-cash and why Q2C remains a challenge for many businesses today.

• Dirty Data Kills!

Bad data is cited as one of the major barriers to success in over 70% of billing software implementations that fail or miss their stated objectives. This research note highlights the role of data in monetization project success, explores the causes of Q2C and billing data problems, articulates the scope of the billing data challenge, and details why organizations need to invest in data management.

• Declouding: Will Curiosity Inspire Action?

Has cloud migration hit its peak? This year, some companies are reconsidering whether the agility of cloud infrastructure is worth the growing price tag. While “declouding” is not a widespread trend, it is worth tracking as more and more companies explore the possibility of moving select workloads back to data centers. This research note describes the driving forces behind the idea of declouding – namely, high costs and vendor lock-in. Is it time for a return to the premises?

Out of every edition of The Margin we sent out in 2023, the most clicked-on links were the Agile Billing Top 50 Buyer’s Guide and the Agility vs. Complexity MarketLens™ in Agile Billing.

Our most popular research note in 2023 was The Global Tech Market Is Bigger Than You Think.

What research and insights would be most beneficial to you in the new year? Let us know here.

2023: Year in Review / 2024: Year Ahead

This month’s webinar highlighted MGI’s takeaways from the past year and our predictions for how the monetization market is likely to evolve in 2024. Select highlights:

• The office of the CFO will continue to rise as a tech buyer.
• Tech M&A transactions are down, but not dead. 2024 is shaping up to be a more active year for M&A.
• Interest rates may remain at current levels. Series C, D, and later companies are positioned to have more luck with fundraising in 2024.
• Data-first is the future of CLM. Watch for more research in this area.
• Usage billing can’t thrive without a robust mediation capability. But billing isn’t the only use case for mediation: it’s also necessary for revenue management, CPQ, dynamic pricing, and more. Expect to see more mediation capabilities being offered by monetization vendors over the next 12-36 months.
• AI sped up the market in 2023. Product half-lives will get shorter and shorter going forward – this will benefit mega-vendors with big channels and deep pockets.
• In 2024, AI will begin to transform less-flashy, meat-and-potatoes business areas like implementation. This will have a meaningful impact on ROI.

The webinar also covered five “black swan” events (low-probability/high-impact events) and five “green ducks” (somewhat low-probability/somewhat high-impact events). Understanding these possibilities and incorporating them into 2024 business plans helps mitigate business risk going into the new year.

MGI hosted five other webinars in 2023. They are available to watch on-demand on the MGI website. If your organization is not an MGI client, you can still access these webinars by registering for a free account.

• The Agile Billing Top 50
• Usage Billing! Adopting & Optimizing Consumption Models
• 2024 Tech Budgets Preview
• AI and the Future of CLM: A Conversation with Grant Peterson, CPO of Conga
• Software Valuation and M&A Outlook

What’s in Store for 2024

The MGI Research team has an aggressive research agenda planned for 2024.

• A new Configure-Price-Quote (CPQ) Total Addressable Market (TAM) Forecast (2022-2026)
• The Contract Lifecycle Management (CLM) Top 20 Buyer’s Guide
  • Plus 20 new 360 Ratings™ and Use Case Notes™ in CLM
• Monetization A-Z: an Executive Guide to the agile monetization market. This video series and e-book will sharpen the edge of any business leader associated with finance and quote-to-cash.
• Updated Market Forecasts
• Updates to MGI 360 Ratings™ in CPQ, Agile Billing, and Automated Revenue Management (ARM)
• A brand-new, totally free Resource Library on the MGI website

Make your voice heard – take this 4-question survey to help shape MGI’s 2024 research agenda.

Complete Survey

That’s it for 2023. Happy Holidays and a Joyous New Year from MGI Research!