Worldwide Enterprise Software Revenue to Grow 9.5 Percent in 2011
SOFT / SOFTWARE / Gartner Group / Tuesday, 21 June 2011 13:29
Worldwide Enterprise Software Revenue to Grow 9.5 Percent in 2011

Analysts to Reveal Latest Global IT Spending Forecast on June 30

STAMFORD, Conn., June 21, 2011— 

Worldwide enterprise software revenue is on pace to surpass $267 billion in 2011, a 9.5 percent increase from 2010 revenue of $244 billion, according to Gartner, Inc. The enterprise software market is projected for continued growth in 2012, with revenue forecast to reach $288 billion.

Gartner analysts will announce the latest overall worldwide IT spending forecast on June 30. The findings will be available on the Gartner Quarterly IT Spending Forecast site at www.gartner.com/quarterly-it-forecast. The forecast will include a breakout of IT spending by hardware, software, services, and telecom.

"The market for enterprise software continues to recover well following the 2009 downturn, with signs of ongoing growth on the horizon," said Joanne Correia, managing vice president at Gartner. "Economic recovery is evident across all regions, although concerns have arisen in some countries in Europe and Asia. The earthquake and tsunami in Japan has created additional marketplace uncertainty with a multiplicity of effects that are beginning to be determined. GDP results and other research have pointed to a 2Q11 slowdown in demand with some recovery later in the year."

Enterprise infrastructure software spending is on pace to a $153.3 billion total in 2011, a 9 percent increase from 2010 revenue of $140.6 billion. The market is led by the operating systems (OS) segment in which revenue is projected to reach $32.6 billion in 2011, followed by database management systems (DBMSs) revenue at $25.5 billion.

Worldwide enterprise application software spending is forecast to total $114.4 billion in 2011, a 10.2 percent increase from 2010 spending of $103.8 billion. Enterprise resource planning (ERP) is the largest segment within the enterprise application software market. ERP revenue is expected to reach $23.3 billion, followed by office suites with $15.7 billion.

"With this latest research, we see short-term currency uplift for U.S. dollar-denominated growth for the period of 2011-2012 and downward adjustments in GDP across all regions," Ms. Correia said. "We have identified a strong correlation between GDP growth and enterprise software spending growth, where software tends to grow 4 to 6 percent above GDP in normal market conditions. However, we do have concerns about the rising cost of commodities, including oil, and its impact on certain regional and country economies."

Emerging countries such as Poland, India, China and Brazil, which were less affected by the latest economic downturn than the U.S. and Europe, are expected to continue to invest heavily in enterprise software initiatives in the next few years as they build the IT infrastructures necessary to do business on a global basis.

Enterprise software spending in North America is forecast to reach $121.2 billion in 2011, up from 2010 revenue of $112.9 billion. The market will experience consistent growth through 2015, when spending in North America will surpass $158.1 billion.

Gartner believes that oil prices and the outcome of the federal budget deliberations are the largest threats to economic stability in North America. However, current indicators are positive with consumer and business spending on both equipment and software holding up. With the extension of federal tax cuts —including the tax relief on capital equipment depreciation —due to expire at the end of the year, additional stimulus revenue could further boost enterprise spending on technology and other capital goods.

Enterprise software spending in Western Europe is forecast to reach $78.3 billion in 2011, up from 2010 revenue of $70.3 billion. The market will experience growth on a par with North America through 2015.

"In Western Europe, enterprise software spending could see slightly stronger growth in the latter half of 2011, but the headwinds are getting stronger. The pace of growth in Europe is slowing, mostly because of recent currency appreciation, fiscal tightening, higher commodity prices and concerns about debt in countries such as Greece, Ireland, Portugal and Spain," said Fabrizio Biscotti, research director at Gartner. "The result of these additional constraints on growth will exacerbate some country growth trends in the region. However, countries on the upside of this trend are Denmark, Finland, Germany, Norway, and Sweden."

Asia/Pacific (excluding Japan) will have the second fastest growth, after Latin America, in enterprise software revenue of all the regions in 2011. Spending is forecast to reach $26.4 billion in 2011, up from 2010 revenue of $23.6 billion. The market will experience strong growth through 2015, when spending in Asia/Pacific will surpass $40 billion.

"Overall, emerging markets' growth will slow over the forecast period, but will continue to be faster than those of the developed world. However, economic growth in almost all the emerging countries is also likely to be affected by the slowing trends in Europe and Japan," said Yanna Dharmasthira, research director at Gartner. "Among the largest emerging markets, China and Brazil will see the most pronounced slowing trends, while growth rates in India and Russia will be less affected.

Additional information is available in the Gartner report "Forecast: Enterprise Software Markets, Worldwide, 2008-2015, 2Q11 Update." The report is available on Gartner's website at http://www.gartner.com/resId=1724639.

Gartner analysts will provide more detailed analysis regarding the overall IT market during the Gartner webinar "IT Spending Forecast, 2Q11 Update" on July 5 at 11 a.m. EDT. To register for this complimentary webinar, please visit http://my.gartner.com/portal/server.pt?open=512&objID=202&mode=2&PageID=5553&resId=1713715&ref=Webinar-Calendar.

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