Digital transformation projects will propel some $149.9 billion in enterprise application spending this year — and much of that money will be spent on disruptive vendors, according to new estimates from Gartner.
“To fulfill digital business initiatives, organizations are increasingly turning to disruptors — specialized local providers, startups and open source software. Organizations value the latest skills in web and mobile development and UX design as well as new cloud-based applications. The business model of established vendors is being challenged,” Bianca Granetto, research director at Gartner told CMSWire.
By 2020, enterprise application spend is likely to grow to about $201 billion, driven by goals like modernization, functional expansion and — once again — digital transformation projects. Gartner's analysis also shows organizations are moving at least partially to the cloud.
Embracing the Cloud
Companies are primarily buying marketing, e-commerce and advanced analytics software. Many of them are replacing long-standing business and office applications with cloud-based Software-as-a-Service (SaaS) offerings.
From about 15 percent today, Gartner expects at least partial use of the cloud to grow to 60 percent by 2020. The research suggests that 45 percent of organizations rate modernization of applications a priority, with the extension of core applications especially critical for 41 percent.
Other trends include:
New consumption models: More than 50 percent of organization have already moved to SaaS, hosted license, on-premises subscriptions and open source models and the percentage is expected to grow over the next five years
Digital business objectives: The drive to become digital businesses is the foundation of strategic decisions
SaaS-based human resource software: By 2019, 28 percent of human capital management systems globally will be SaaS-based, up from 13 percent last year. However, there will be massive geographic differences here, with penetration in 2020 ranging from 34 percent in North America to 4 percent in the Middle East and Africa.
Advanced analytics: By 2020, more than 75 percent of organizations will deploy advanced analytics as part of a platform or analytics application to improve business decision-making.
“Data is being generated through the adoption and use of 'things' and consequently analyzed to improve operations, innovate pricing and services to the customer, and change the way technicians and engineers work on remote sites,” Granetto said. Analytics spend is also been driven "by the need to study your digital customer behavior, to execute on your new digitalized business operations and to implement a new digital business model," he added.
Cloud CRM: In North America, adoption of CRM via the cloud has become common, with organizations increasingly using a hybrid model of on-premises and cloud products. SaaS adoption in some emerging regions is restrained by infrastructure problems.