Enterprise software spending will recover next year driven by the combined forces of cloud computing, data management, mobile applications and social business, according to new research from Gartner.
The research adds that the nexus of these four forces will result in the biggest disruption to the software market since 2000, but will also result in new opportunities for vendors.
The research, "Market Trends: Monetizing Gartner's Nexus of Forces in the Enterprise Software Markets" by Tom Eid, found more than 26 percent of total software enterprise revenues will be driven by the dovetailing of these areas of software, up from 12 percent in 2012.
What's different now and heading into 2014 is that these four different sets of technologies will have achieved mainstream status. However, the research points out that while there has been a great deal of discussion and innovation at the vendor level, most enterprises still have not caught up yet.
There has been a growing interest, deployment and use of technologies to enable collaboration, data analytics, mobile working, and software as a service (SaaS) deployments, but the level of use of these technologies is nothing compared with their potential usage levels.
In addition, the scope of vendors’ software offerings is widening, existing products are improving, and it will be easier for vendors to demonstrate the return on investment (ROI) of their products. Eid stated:
Starting in 2014, the enterprise software markets will undergo their greatest level of disruptions, growth and new opportunities since the year 2000…While there has been a great deal of excitement from the vendor community regarding cloud, information, mobile, social, and other forces and technologies, adoption in organizations and businesses has yet to catch up with the hype."
In fact, according to Eid, IT buying based around these technologies will drive more than 26 percent of enterprise buying, which by 2017 will be worth more than $ 104 billion globally and far outpace overall enterprise software investments.
1. Cloud Computing
Since 2008, enterprise adoption of cloud computing and SaaS have been increasing in tandem with the need for enterprises to save money by sourcing their IT needs in the cloud.
Even if the cost of cloud computing over a number of years can be considerable, the initial upfront costs are considerably less than on-premises deployments and require less initial capital investment.
Coupled with this are the annual maintenance costs of on-premises systems and technical support fees, as well as the inevitable business disruption during suite upgrades.
SaaS deployments also allow enterprises subscribe to the software they require, rather than all the software that comes as part of on-premises suites, while SaaS enables enterprises scale up, or down depending on needs.
2. Information, Analytics and Content
Even if spending on business intelligence has been a top priority for Chief Information Officers (CIO) for a number of years, spending on these applications has been generally on what Eid describes as a “wait and see” basis in recently.
Current software spending is being directed from outside the IT department, which has resulted in spending on analytics for sales and financial departments, but less so for diagnostic, predictive and prescriptive projects.
However, the emerging data-as-a-service trend is likely to change this and expand the market for all intelligence tools. This expansion will be characterized by investment in industry-specific data services that bundle a narrow set of data with BI and analytic capabilities embedded, something we saw IBM anticipating last week.
Over the new few years, enterprises will focus on providing mobile users with access to data and data applications, which will be the main driver in this space. In particular, Eid says companies will prioritize enterprise mobile management systems (EMMSs), mobile containers, enterprise application stores and mobile collaboration applications and tools.
User will also push this trend as they look or ways to integrate their mobile applications with enterprise systems. The result is that the application software market will take a number of new directions in the coming years, one of which will be mobile application product development. Application developers will have to take note of this trend and follow it.
4. Social and Collaboration
All these elements are dovetailing around collaborating and social software initiatives. For many enterprises, Eid says, first-time use scenarios for social and collaboration software has focused on individual and small-group communication and sharing.
However, this will change in the coming years as organizations push this out to reach all corners of the enterprise through richer and more sophisticated use scenarios that focus on collaboration in the context of work.
This includes enterprise level commitments for collective intelligence, community building, knowledge sharing and virtual team building as key drivers.
The research is interesting or many reasons, not least of which is the fact that only recently, we saw that investment in enterprise servers appears to be falling off, although this may change next years as the new refresh cycle kicks in.
Globally, there are clear signs that the economic crisis that marked the end of “naughties” has dissipated to some degree and that, generally speaking, business across all major verticals is starting to pick-up again.
With that, enterprises will have to invest in the software and new services to make up for the lack of investment since 2008. Clearly, with enterprises depending on their workers to turn a buck, the first place that investment will occur will be in worker-orientated applications.