Gartner: Enterprise Software Spending In US Remains Static, CRM, Cloud Main Interest

4 minute read
David Roe avatar

There will be some interesting regional differences in enterprise software spending over this year and next, according to Gartner, but ultimately for the US and Europe things are not looking good. Growth over the next 18 months will be static, or even negative, with cloud computing and customer relationship technologies the areas that will do best.

The figures have been published by Garter as a run-up to the numerous global conferences it will be holding over the next three months, but the findings can be summarized as follows -- growth in the developed world will be none existent, while growth in the (IT) developing world will continue.

IT Spending Middle East

In this respect, IT spending in the Middle East is notable with general growth across the region expected to be around 5.5% or US$ 192.9 billion in 2013, a 5.5 percent increase from 2012 driven largely by spending on mobile devices and telecoms systems.

Gartner IT ME spending.jpg

Gartner: IT spending in the Middle East

Research for the global study was carried out over the third quarter of 2012 and looked at spending plans for 2013 and 2014. It found that there will be, generally speaking, wide adoption of on-premises software as well as SaaS throughout the year, but the regional differences will force vendors to develop strategies that are specific to individual markets.

Results from the survey indicate that software spending will increase modestly worldwide through the 2014 budget year, with new software sales (on-premises) and SaaS driving this increased spending," said Hai Hong Swineheart, research analyst at Gartner.

Enterprise Software

From the results, we see that regions with higher IT development like the US and Europe will record static or negative growth over the period with developing countries where the IT infrastructure is still being developed, including Eastern Europe, Latin America and Asia/Pacific, experiencing the largest budget increases in software spending.

Unlike the US and Western Europe, in developing regions, spending on new software licenses for on-premises applications remain the most important investment with 69 percent of respondents expecting new software license budgets to increase in 2014, compared with 47 percent from mature regions.

What the figures suggest is that developed regions are holding on to the software and applications that they have and are spending what they have on support and maintenance, whereas the under-developed regions with no infrastructure will continue to invest.

SaaS, Cloud Computing

And then there is cloud computing. We have seen already earlier this week that in terms of big data development, human resources and a skills shortage was the biggest problem facing enterprises that are looking at big data deployments.

Learning Opportunities

It seems, however, that this skills shortage spreads wider than big data with difficulties in finding workers with IT skills combined with economic difficulty the major drivers for cloud adoption.

Enterprises, it seems are looking to externalize their IT functions with interest in SaaS in the US increasing.

According to Gartner, 60% of enterprises questioned are increasing their IT budget for investments on public clouds over the next two years. Outside of the US/W. In Europe, however, enterprises are more interested in single tenant hosted applications with 34% in the Asia/Pacific region saying they would be interested in this.

It's very clear that mature regions are focusing on public cloud computing, while emerging regions are focusing on private cloud computing… This could be due in part to an immature telecommunications infrastructure in some emerging countries while data security is a persistent concern related to public cloud services among our clients in developing-region enterprises,” " Swineheart said.

CRM, ERP, Office Productivity

In terms of the applications that enterprises are looking at investing in, customer relationship management has surpassed enterprise resource planning, which underlines a focus on enhancing customer experience with both mature and developing regions interested in this.

Generally speaking then, the top three investment priorities are: CRM, ERP and office and personal productivity tools. Elsewhere, security software was the principal infrastructure investment priority while the mobility of the workforce is considered to be a significant strategic advantage.

Virtualization infrastructure software, ranked as the third-highest priority for increased spending, continues to grow, with most organizations moving toward 70 percent virtualization (especially in North America) within the next few years. In Europe or Asia/Pacific interest was not so pronounced largely as a result ofhigh virtualization rates in those regions.

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