Global Enterprise Software Sales to Exceed $232 Billion for 2010

Researcher Gartner points to replacement of aging systems, strong security market, and business needs for 4.5 percent increase in worldwide revenue.

September 24, 2010

D.H. Kass

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Worldwide sales from enterprise software is expected to exceed $232 million, a 4.5 percent increase over last year’s $222.4 billion revenue, and jump to $246.6 billion in 2011 and $297 billion in 2014, according to a report from researcher Gartner Inc.

The researcher credited replacement sales of aging systems, a strong security market, and business requirements for the uptick in enterprise software sales.

"After declining 2.6 percent in 2009, the worldwide market for enterprise software is recovering well with signs of continuing growth on the horizon," said Joanne Correia, Gartner managing vice president.

"Aging systems, as well as greater demand for security and aligning software with business requirements, are key decision factors for end users increasing their spending within the infrastructure software market," she said.

Gartner forecasts that spending on enterprise software in North America will reach $110.8 billion in 2010, an 8.5 percent boost from the $102.1 billion posted in 2009. The researcher said that enterprise software sales will exceed $143.6 billion by 2014.

Gartner analysts said that enterprise software revenue in North America will slow as the year closes.

"These earnings were driven primarily by pent-up software demand, and with that demand having been mostly satisfied, somewhat slower growth is expected for the latter half of 2010," said Colleen Graham, Gartner research director.

"A loss of momentum and general economic weakness will drive some organizations to exercise caution in end-of-year software purchases,” she said. “However, despite these challenges, key markets such as virtualization, operating systems and security are expected to finish the year with double-digit growth."

Gartner said that in other regions of the world the five-year compound annual growth rates (CAGR) to 2014 will range from Western Europe’s 2.7 percent to 11.5 percent in Asia Pacific, a geographic area that, along with Latin America is expected to invest substantially in enterprise software as to construct the IT infrastructures required to conduct business.

EMEA declines in 2010, Asia/Pacific leaps ahead

In Europe, the Middle East and Africa (EMEA), Gartner forecasts that enterprise spending will decline from the $66.8 billion recorded in 2009 to $64.5 billion, a 3.4 percent drop. The researcher said, however, that the region will slowly rebound to reach $76.2 billion in enterprise software sales by 2014.

"The story in Western Europe at the moment is the duality of the situation with Germany leading the rebound, France following behind, and the U.K. and the Nordic countries showing promising prospects, while Ireland, Spain, Portugal and Greece are still struggling with weak performances," said Fabrizio Biscotti, Gartner Europe research director.

In contrast to EMEA, Asia/Pacific, not including Japan, is expected to have the fastest growth in software revenue of all the regions in 2010, springing up by 13 percent from $19.5 billion last year to $22 billion by the close of 2010.

"China and India continue to be the growth engine of the software market in the region and currently represent the largest and the fourth-largest software markets in Asia/Pacific," said Yanna Dharmasthira, Gartner research director.

TAGS: software,enterprise software,Enterprise,Gartner

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