Enterprise Software Sales Gaining Strength, ReportBy Leah Gabriel Nurik | Print
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Pent up demand drove stronger enterprise software growth in the first half of 2010, but front-loaded budgets mean that growth will likely taper off in the second half.
The enterprise software market is back in growth-mode in North America according to a new report from Gartner which forecasts varying growth rates dependent on region, but paint a rosy picture for VARs, SIs and ISVs pitching certain types of enterprise software.
Gartner predicts that enterprise software revenue in North America will grow 8.5 percent from 2009 to reach $110.8 billion this year. The firm says growth in North America will continue through 2014 when it will hit $143 billion.
If your business is not seeing the growth, you may be in one of the flat markets or perhaps you’ve already reaped the benefits at the first half of the year. Many companies looking to make a purchase this year front-loaded their budgets, says Gartner.
"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. A loss of momentum and general economic weakness will drive some organizations to exercise caution in end-of-year software purchases," said Colleen Graham, research director at Gartner.
Key growth markets are expected to finish the year with double-digit growth, however. These include the markets of virtualization, operating systems and security software spaces.
Worldwide, software revenue is expected to grow a total of 4.5 percent to reach $232 billion, up from 2009 revenue of $222.4 billion this year. Growth is expected to continue globally through 2014, when it is forecasted to reach $297 billion, with a five-year compound annual growth rate of 6 percent. 2011 numbers are forecasted to come in globally at $246.6 billion.
Other big geographies for growth are emerging markets like Asia Pacific and Latin America—areas less-harder hit by the economic downturn. These markets are expected to invest heavily as their economies grow and they need to make enterprise software purchase to support their businesses.
Europe, the Middle East and Africa (EMEA) will see a 2010 decline in enterprise software revenue of 3.4 percent, to about $64.5 billion compared to 2009’s $66.8 billion. One segment of that area, Western Europe, will rebound slowly, posting mild growth rates through 2010 and 2011.