Gartner tempers enterprise software market growth forecast

Businesses to focus on tailored applications and essential upgrades, predicts analyst

The projection for 2012 spending growth on enterprise application software has decreased, according to figures from Gartner.

The analyst's forecasted growth for this year previously stood at five per cent, but has been adjusted to 4.5 per cent. Spending is predicted to total $120.4bn (£76.6bn) this year, an increase on 2011's spending of $115.2bn.

This year's spending will focus on niche products and essential upgrades, according to Tom Eid, research vice president at Gartner.

He said: "Spending in 2012 is anticipated to focus on industry-specific applications; upgrades to established, mission-critical software; integrating and securing established systems and infrastructure; and SaaS deployments representing extensions to, or replacement of, existing applications and new solutions."

Spending is expected to be highest in enterprise resource planning, a market in which revenue is projected to reach $24bn this year. Office suites is forecast to enjoy the second-highest spend with $16.5bn, followed by a projection of $13bn for business intelligence software.

An anticipated increase in companies using software functionality via cloud-based solutions has been noted by the report, leading to an additional emphasis placed on more cost-effective pay-as-you-go options.

"After more than a decade of SaaS and cloud service use, adoption continues to grow and evolve within the enterprise application markets," added Eid.

"This is occurring as tighter capital budgets demand leaner alternatives; popularity and familiarity with the model increase; and interest in SaaS and cloud computing grows."