Julie Sweet: Sure. I mean, what I would say is that overall — first of all, the large transformational programs include managed services, but they also include building, like so putting new modern ERP programs in place, right? So it’s not only kind of managed services just to kind of set the stage for that. And just as you think about the fundamentals, because we think of the transformation deals, managed services are often a way to pay for them. They’re often also a way to go faster and modernize, but we really look at those transformational programs in the round. So when you think about the fundamentals that our clients are facing, there is more reinvention ahead than they have done so far. So huge opportunity ahead. And you see that in where they are in the cloud journey, only 40% workloads, right?
We estimate less than 10% of our clients are mature in data and AI. Only a third have put in the modern ERP programs. And so as you think about what they have to do, managed services will continue to play a huge role in paying for it and in actually modernizing much of it, as well the other big implementations. We do see, however, right, when you kind of go to the market– and by the way, that’s why we’re super well positioned, right? Our strategy is to be that partner and then reinvention begets more, right? So you first build the digital core and then you’ve got a lot of work on top of that. And that is our growth strategy. Now, if you come to what we’re seeing in the market, right? So always best to hear from what’s going on in the ground.
Last week, I was very busy and I was with about 20 different CEOs and they had three messages, right? Tech is super important, that’s number one. Number two, they already have major programs underway and they know they need to do a lot more. But number three is they’re feeling cautious about the macro and we’ve already seen that in the small deals. But they’re asking us to help them save money and be more focused right now, even on the bigger programs. And so what I would say is and that’s reflected in our guidance is that, the macro is having an effect on the pace of spending right now. Now, again, plays into our strengths in terms of being able to be the reinvention partner, being able to really think about the journey and positions us super well as they navigate that macro.
But that is — the reality is that there is this sense of caution and it’s bleeding over to kind of overall, overall demands.
KC McClure: Right. And Lisa, maybe I’ll just add, bookings can be lumpy, particularly in managed services. And we look at bookings — book to bill over rolling four quarters and our goal in managed services is to be 1.2 or above. And that’s exactly where we are on a four-quarter basis.
Lisa Ellis: Great. Thank you. Thanks a lot.
Operator: We’ll go next to the line of Keith Bachman with BMO.
Keith Bachman: Hi, thank you very much. I wanted to ask — go back to M&A if I could start with you, Julie. You’re guiding to 2 points of M&A contribution to your full-year guidance which is consistent with sort of the past years, but the number here much bigger. 2 points is meaningfully than what it was even three or four years ago in terms of, A, the capital required to do those deals; and B, the integration therefore of the head count? And I just wanted to hear your, kind of, philosophically, it doesn’t seem like 2 points can continue on for perpetuity, but just how do you think about any, kind of, balance sheet constraints or also the integration required to make sure the people side of the business — because again, implicitly the deals are getting larger.
And then as part of that, could you just speak to — do you look at the same size deals or do you need to kind of flex up a little bit in terms of looking at larger opportunities? And then I have a follow up. Sorry about the background noise.
