Adoption of Low-code and Related Investment Activity Continues to Experience Strong Tailwinds
Presenting the latest edition of Novistra’s Low- Code Market Update, a curated report bringing to you the most recent updates and M&A transaction news from the low-code industry.
Digital transformation is disrupting industries as many enterprises are integrating digital technologies and tools to gain a competitive advantage over their peers. This has resulted in a surge in demand for low-code development platforms (LCDPs) to optimize internal workflows for efficiency gains or for enhancing customer experience (CX).
Low-code has revolutionized software development as it facilitates the rapid development and deployment of new solutions with reduced coding. LCDPs saw a sharp uptick during the COVID-19 pandemic as organizations struggled to find trained software developers to facilitate digital transformation. It is estimated that by 2025, 70% of new enterprise applications will use low-code or no- code technologies, up from less than 25% in 2020.
Low-code solutions are predominantly offered by SaaS vendors and companies with business process management and application development capabilities. Select large players continue to dominate the market supported by their extensive global partner network. However, positive market trends are encouraging technology giants, and small to mid-sized platforms to launch or expand their own low-code offering, targeting specific markets, verticals and customers.
The low-code industry witnessed strong M&A and fund raise activity in H1 2022 across both LCDP and low-code implementation/ consulting. PE and VC investors remained bullish as they joined funding rounds to support start-ups in their growth plans. Strategics pursued acquisitions to augment their delivery capabilities. We expect this trend to accelerate, as increased customer demand for low- code capabilities and growing use-cases in more complex verticals (i.e., AI and hyper-automation) will continue to drive market consolidation.
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COVID-19 has accelerated digital transformation by several years as organizations tried to remain competitive in the new business and economic environment. Remote working and heightened demand for custom built software sparked the need for fusion development and faster delivery of new solutions, in- turn influencing the rise in low-code. Gartner suggests that, on average, 41% of non-IT employees customize or build technology solutions. LCDPs provide cost and time effective enterprise-grade software development solutions, with minimal coding requirements. In addition, LCDPs offer professional and managed services, including mobile first app, database app, process app and request handling and general-purpose solutions. Low-code suites have so far been used mostly by marketers and analysts, but shifting winds indicate a growing acceptance in DevOps and security.
The IT/ ITeS industry has been the prominent user of LCDPs over the last few years, especially third-party vendors. However, the fast-changing environment and the increased need for scalability and rapid customization has resulted in the widespread adoption of LCDPs across industries such as retail, healthcare, BFSI, education, energy & utilities and media.
Extensive partner network with fast delivery channel partners is another reason for the rapid adoption of LCDPs. Most LCPDs have widespread, global network of implementation partners, technology providers and resellers, offering businesses with a global footprint to choose from. Partner ecosystems are expected to grow in line with their vendors. As developer challenges and demand for automation contribute towards the growth of LCDPs, there exits an opportunity to reengineer workforce for improved business performance by automating repetitive and inefficient tasks.
The US remains the market leader for LCDPs with ~30% market share and is expected to dominate the low-code market given the region’s high IT expenditure, robust demand for customized applications and the diversified presence of small, mid size and large sized enterprises. Moreover, the demographic maturity and its inclination on smartphone applications in sectors such as gaming, BFSI and purchasing will be a key growth driver for the region. The APAC region is to poised to become the future hotspot given high population and increasing internet and smartphone penetration.
Expanding Low-Code Platform Landscape with Increased M&A Activity Across Platforms and Partner Network
Leading low-code platform offerings:
Outsystems: Offers multi-experience, robust security and continuous integration/ delivery, along with advanced capabilities, such as AI- augmented development to companies primarily based in North America and Europe, with an increasing presence across APAC
Mendix: The Siemens owned company, offers support for fusion teams, multi-cloud and on- premises deployments, as well as cloud native development and services to companies primarily in Europe
Microsoft: Global platform providing power BI/ Analytics, Power Apps and Power Virtual Agents, for chatbots, complementing with Microsoft Office 365, Dynamics 365 and Azure services
ServiceNow: Geographically distributed platform popular for its IT service management (ITSM) and SaaS offerings, including operational workflows
Appian: Differentiates on full-stack low-code automation capabilities focused on complex case management and business processes
20+ M&A transactions in the low-code space in H1 2022. Select transactions below
- Magic Quadrant for Enterprise Low-Code Application Platforms, Gartner 2021
- Low-Code Development Technologies Evaluation Guide, Gartner
- How Low-Code Tools Can Fill a Void Caused by the Great Resignation – Computer World
- Spending on Digital Transformation Technologies and Services Worldwide from 2017 to 2024- www.statista.com
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