Monday, February 7, 2011

Five Long-Term, Overarching, and Interdependent Trends Affecting the Enterprise Software Industry

Business intelligence (BI), collaboration, content management, social software and supply chain management will be the top application software growth segments in 2011, according to Gartner, Inc. This year, the focus will be on modernizing packaged application systems, enabling diverse user access through software as a service (SaaS) and cloud services, and driving revenue and innovation.

Worldwide enterprise software revenue is forecast to surpass $253.7 billion in 2011, a 7.5 percent increase from 2010 revenue of $235.9 billion.
The market-disrupting influences of SaaS, cloud-based services, open-source software, consumerization and Web 2.0 technologies will expand, while developing countries, including Brazil, Russia, India and China (BRIC), will prove themselves to be pivotal innovation and growth engines.

Gartner has identified the five long-term, overarching, and interdependent trends affecting the enterprise software markets as globalization, implementation, modernization, socialization and verticalization.

Globalization: This encompasses market consolidation and technology convergence trends, as well as the connected society, vendor mergers, and acquisitions. Gartner predicts significant technology and vendor consolidation during the next several years will reshape the current landscape. During this period of market disruption, highly fragmented software markets will become more structured and marked by an extensive reduction of vendors. Even though organizations compete globally, localization requirements -- including languages, cultures and laws -- must be supported.

Implementation: How organizations procure and deliver software is being challenged with cloud-computing, platform as a service (PaaS) and SaaS, coupled with pervasive and mobile access. The demand for cloud-based solutions will continue throughout the next several years. Mobile solutions have led to the opening of many new industry-based market opportunities, such as mobile banking, mobile commerce and remote healthcare diagnostics.

Modernization: Enterprises continue to migrate to open-source software (OSS) and SOA as older applications and systems become more costly to upgrade and maintain. Aligned with the modernization trend, automating business processes and streamlining workflows continue to gain traction. Enterprises are expecting to provide significant resources in 2011 to upgrade all types of systems and software, ranging from personal productivity tools, to build-run-manage infrastructure software, to user-driven applications. Virtualization is a key modernization factor.

Socialization: Use of social media and networking continues to gain traction. In the trend of socialization, which includes personalization, collaboration and content in the context of user-defined activities, Gartner predicts that unified communications and collaboration will see increased adoption in 2012, and context-aware and presence-based computing will gain more traction in 2013.

Verticalization: This trend involves a cycle of horizontal software applications becoming more customized and catered toward specific industries. In deploying new software technologies, it is common for vendors to initially provide generalized technology that, over time, can then give rise to more industry-specific and line-of-business features. Examples are communications-enabled business processes and composite content applications.

Gartner analysts said that worldwide economic and financial uncertainty, although somewhat improved in 2010, will continue to impact the technology industry through 2011 as end users maintain reduced-cost and controlled-spending strategies. Although the crisis has weakened, new technologies, delivery models, user demands and a combination of economic and business forces persist in the ability to rapidly change the environment for software vendors and service providers. Most segments of the enterprise software marketplace will continue to grow, but there will be fewer new purchases as enterprises align spending to augmentation, integration and modernization programs.

More information on enterprise software can be found at www.SupportIndustry.com.

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