Looks like the IT market has finally shrugged off the recession and enterprises are looking to spend again. At least that’s the finding of a new Forrester report, which shows that, while spending is on the rise, it’s considerably better for some segments than for others, with new software and upgrades dominating company concerns.
According to the Software Market in Transformation, 2011 And Beyond report’s author, Holger Kisker, the software market and sales will fuel much of the growth in the coming year, with the majority of companies planning to spend more on new software initiatives and projects than on the upkeep and mantainence of existing environments.
Software Market 2011
So, generally speaking, what is happening? While 2009 was a tough year for the IT market in general, 2010 saw growth in market volumes of 7.2%, and is expected to grow again overall by 7.1% this year.
And in terms of segments, the software market is expected to exceed even this optimistic prediction with growth forecasts worldwide of US$ 432.4 billion in 2011 and US$ 481.9 billion in 2012, being a growth of 11.5% in just 12 months.
With better management of software and software maintenance, it seems that there is now money to spend on new projects, so much so, Forrester says, that in 2011 new initiatives and projects will make up 50% of the total software budget -- the rest of it going on ongoing projects and maintenance.
Asked where they would spend the money, 66% said the update of legacy systems was their priority in the next 12 months, with 63% looking to spend on packaged applications. In this respect, Forrester identified three principal trends:
- Firms are looking to upgrade standard software packages to newer releases, with 63% citing it as their top priority for 2011, as opposed to 52% in 2008.
- Use of SaaS looks set to rise, with 34% citing this as a priority, up from 22% in 2008.
- Search for software supplier consolidation has decreased, with only 21% looking for single suppliers, as opposed to 36% in 2008. Forrester says that this is mainly because consolidation has already taken place and more enterprises are increasingly comfortable with SaaS adoption.
Forrester: predicted software spending
It probably comes as no surprise that, given the level of activity among vendors in the business intelligence market, the use of business intelligence across enterprises is set to jump. Based on research carried out by Forrester in Q4 of 2010, 38% of all respondents across enterprises and SMBs in 2,403 companies in the US, Canada, and Europe will implement or expand their deployments over the course of this year.
In terms of importance, BI is closely followed by collaboration software at 37%, customer relationship management (CRM) at 35%, and industry-specific software at 33%. Compared with previous years, it means:
- Enterprises are now looking for business-relevant applications, which is now the principal priority, as opposed to the fifth priority in 2009.
- Within the BI space, the most desired applications are those that provide data visualization with 45% looking to implement reporting, and 43% looking for dashboards
- Advanced analytics is also making ground, with 22% looking to predictive analytics, and 22% looking to deploy business performance plans (it is not clear whether there is a cross-over here).
Cloud Computing, SaaS
The research also looked at how cloud computing was moving from providing complementary technologies to providing business-critical processes. The research shows that:
- SaaS is the clear leader in the field, with 25% of enterprises already using it by the beginning of this year, and 14% using IaaS, 8% using PaaS and 6% using business-process-as-a-service. While current usage levels may appear small, Forrester says, many companies are looking to deploy them: 37% this year, rising to 50% in 2012.
- Front-office applications are moving to SaaS and already have the highest market adoption, requiring less process integration and involving less sensitive data compared with back-office applications.
- SaaS and on-premise applications will co-exist, despite a strong growth of SaaS adoption, with only 20% to 30% of companies looking to replace on-premise software with public cloud SaaS services within the next two years. The majority will complement their existing application investments.
Deployments will take place across enterprises of all sizes even though many initially thought that cloud computing was for SMBs that could not afford the IT or software costs. However, ease of deployment, implementation speed, remote user access, scalability and a flexible financial business model are appealing to enterprises of all sizes.
There are many other areas that the report looked at, but one last area of interest, again given the level of activity in the area, is mobilizing the enterprise.
Until relatively recently, industry-specific application development has accounted for most of the development work in this area. However, the rise of business intelligence software and the increased use of mobile devices are forcing changes in the market. The research showed that:
- Given the lack of solutions from standard vendors, 47% of companies have either developed, or have plans to develop, their own mobile applications for functions such as mobile commerce or mobile marketing.
- The demand is driven by the availability of better smartphones and computers, as well as a growing acceptance of them in the enterprise. This represents a considerable business opportunity for developers of mobile middleware for enterprises that are struggling to find off-the shelf solutions for their business.
There is a lot more in this report for anyone interested in the way the market is heading. If you are interested in having a look, you can buy it on the Forrester website.