ERP, BI, SaaS to Lead Way for CIOs: Gartner

by CXOtoday Staff    Jun 28, 2012

According to a recent report by analyst firm Gartner, the global spending on enterprise application software is estimated at $120.4 billion in 2012, a 4.5 percent increase from 2011 spending of $115.2 billion. Earlier this year, Gartner predicted a 5 percent increase in enterprise application spending for 2012. Gartner stated that the current growth projection foresees “limited signs” of economic improvement in the near term.

According to the report, the largest area of spends in the enterprise application software segment will be enterprise resource planning (ERP), with revenue projected to touch $24.9 billion in 2012, followed by office suites that is pegged at $16.5 billion. BI revenue is forecast to reach $13.0 billion. Not too far behind is CRM, the expected revenue is likely to touch $13.0 billion this year. The other areas of enterprise software spending include digital content creation (DCC), project and portfolio management (PPM) and supply chain management (SCM).

“The global marketplace is still experiencing a series of conflicting and contrasting economic views and the full impact of the economic uncertainty on the enterprise software markets may not be readily assessable until the end of the first half of 2012,” said Tom Eid, Research VP at Gartner.

According to him, this year, CIOs are likely to focus on industry-specific applications. They are expected to upgrade or deploy mission-critical software as well as focus on integrating and securing established systems and infrastructure.

Gartner has also indicated that CIOs will prioritise process automation and look to shift upfront capital expenses to operational expenses. As a result of this, many of them will look for alternative software acquisition models like software as a service (SaaS), IT asset management and virtualisation capabilities in their organisation.

Gartner analysts believe that with more and more companies today demanding software functionality as a service or through cloud-based services rather than on-premises, vendors are expanding their revenue growth by offering SaaS and other cloud-based services. As a result of its high demand, the analyst firm believes that SaaS revenues are expected to account for 16 percent of application revenue in 2015, compared to 11 percent in 2010.

Eid believes that CIOs across verticals will have to evaluate their options when making business related decisions as they show interest in SaaS and cloud computing applications in the coming months.

Tags: ERP, BI, SaaS, Gartner