ISG Provider Lens™ Future of Work - Services and Solutions - Managed Workplace Services – End-user Technology – Large Accounts - U.S. 2023

The age of business-focused XLAs and generative AI has begun for workplace

When we analyzed the future of the work and workplace technology services and solutions market in 2022, we remarked that enterprise workplace leaders are at the center stage of the transformation. 2023 has experienced two significant developments so far. First, there is a growing concern about a possible economic slowdown. Second, there have been substantial developments in artificial intelligence technology. These developments, combined with the trends we observed last year, namely growing acceptance of hybrid working and increasing focus on sustainability and a tech-savvy workforce, are largely influencing enterprise workplace technology buying decisions.

Re-evaluating costs

Insights from ISG’s recent enterprise survey with U.S. enterprise IT leaders reaffirm the growing concern over a possible economic downturn. Amid slowdown speculations, discretionary spending is on hold. Clients have suspended investments in the latest technologies, such as metaverse (which generated much hype at the end of last year), if they do not translate into tangible business benefits. Clients have rated high availability and uninterrupted technology access as the most required attributes in their digital workplace service provider. The ability to showcase the economic impact and reduced costs follows this. Interestingly, based on ISG’s interaction with many digital workplace service providers, employee experience (EX) takes precedence over cost consideration. This indicates that clients are less interested in enhanced EX initiatives that don’t translate into tangible business benefits or cost optimization.

Collaboration and productivity drive hybrid working needs

ISG survey results offer interesting insights about clients’ priorities. Clients prioritize employee productivity to decide whether employees should work from the office. They also consider end-customer experience and employee mental health. This shows a healthy mix of employee empathy and concerns about the ability to deliver to customers. A happy employee can contribute to achieving better customer experience. U.S. clients understand the relationship between high EX and enhanced CX. Many clients are also redesigning their physical workspaces to foster a more collaborative and participative working environment. According to the survey and other studies, U.S. clients allow about 40 percent of their workforce to work remotely.

Non-IT business functions participate in workplace technology buying decisions

The survey also shows that the human resource function is increasingly playing an important role among U.S. enterprises in determining workplace strategy and evaluating workplace solutions and services. As non-IT business functions increasingly play a significant role in workplace technology buying decisions, leading service providers must design and offer services that cater to them, which is difficult for many traditional end-user technology service providers. However, providers that can cater to both audiences are leading the market.

Increased focus on XLA models, digital technology adoption a key differentiator

ISG’s work with enterprise clients has indicated that clients are open and, in some cases, proactive to outsourcing their workplace technology-managed services in an experience level agreement (XLA) model. Clients want to take a phased approach in adopting an XLA model. Many managed digital workplace service providers have had difficulty converting clients engaged through a traditional SLA model to an XLA model. However, most of their new clients currently use the XLA model. Service providers have realized the gap and are working toward mending the bridges by applying appropriate change management and technology adoption nudges. Those who have been successful in bringing their clients at the same or similar level of maturity with respect to experience measurement are leading this year’s study.

Generative AI opens many possibilities for the workplace

At the beginning of 2023, generative AI technology took the world by storm. It holds many promises and opportunities to make man and machine work more effectively.

Shortly after the success and popularity of ChatGPT and large language models, major workplace productivity and collaboration solution technology providers started embedding the technology in their product portfolios. Beginning with Microsoft 365 Copilot and Duet AI for Google Workspace, almost all unified communications and collaboration technology providers started implementing generative AI technology in their products. The possibility of providing intelligent and human-like insights based on a large set of language and information distinguishes generative AI from other recent technological innovations. It can potentially bring large technological changes similar to those brought by Apple’s iPhone. Both the consumer world and enterprises are adopting the technology simultaneously. Any technology that makes a breakthrough in the consumer world eventually finds its place in the workplace. From supporting IT service desk operations and enhancing users’ ability to auto-resolve their IT issues to improving employee productivity while working on different applications, AI has multiple workplace use cases.

Bring-your-own-AI (BYOAI) users using different generative AI technologies may become common in the near future. Workplace technology and service providers may be required to manage and secure technology access. Both enterprise clients and managed workplace service providers are exploring and experimenting with this new powerful technology.

Based on the abovementioned trends, ISG considers the following three main areas of technology investments where clients work with managed service providers.

1. An overarching employee experience service requirement that focuses on providing necessary digital nudging to better define and implement XLAs. This also involves leveraging the latest technologies, such as generative AI and metaverse. Another important aspect of transforming EX is supporting the new smart physical workspace.

2. Extending the end-user technology management to support hybrid and remote working needs and ensuring uninterrupted technology access. This involves proactively managing and correcting IT issues. 

3. Managing IT support by enabling user self-help, service desk and onsite support. This service is focused on enabling and enhancing end-user experience.

This report dives deep into these three areas of service provider comparisons and highlights providers that stand out with their differentiated offerings.

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