OVUM VIEW

Summary

Research published this week by Ovum shows that the size of the software market in 2011, covering applications, systems infrastructure, information management, and security software, was measured at $304bn worldwide. Ovum forecasts that the total market will increase by a compound annual growth rate (CAGR) of 8.7% to 2016, with a resultant software market of $461bn worldwide.

Applications is the biggest of the four software areas covered by Ovum in this market-sizing and forecast, accounting for $141bn, and forecast to rise to $215bn in 2016, a CAGR of 8.9%. Systems infrastructure is next largest area, with $121bn of the software market in 2011 and forecast to rise to $174bn in 2016, a CAGR of 7.4%. The area of biggest percentage growth is information management, with this element of the market currently standing at $29bn worldwide, and forecast to rise to $50bn in 2016, a CAGR of 11.9%. The security software market currently stands at $13bn and is forecast to increase to $21bn by 2016, a CAGR of 11%.

Applications and systems infrastructure continue to drive the software market

Driven by consumer technology, citizens and customers have greater expectations of the organizations they interact with than ever before, and one way of differentiating is via the applications that enterprises deploy. As such, spending on applications software, including finance and accounting applications, HR, enterprise resource planning (ERP), and customer relationship management (CRM) software, is forecast to increase to $215bn during the next four years. Looking at Ovum’s corresponding Technology Trends data, the drive for further investment in the next six to 24 months is across the range of applications, but leading the way is CRM, with over 29% of survey respondents planning to make investments in this area to fulfill the expectations that customers have of the organizations they engage with. ERP (with 28%) and financials applications (27%) follow closely behind for investment plans.

However, Ovum expects the investment to be strategic, rather than point-driven, because any advantage can only be gained through a “winning” combination of applications, not just addressing individual problems in an enterprise.

From a systems infrastructure perspective, including operating systems, databases, middleware, development tools, and network and systems management software, the global market is forecast to rise to $174bn in 2016 at a CAGR of 7.4%. Of particular interest when considered alongside Ovum’s Technology Trends data is the fact that of just over 9,000 respondents in this semi-annual survey, 59% currently have server management technology, but in six months’ time this figure will have risen to 73%, and in two-years’ time to 85%, showing significant growth in this category. This is driven by both increased use of virtualization and the need to manage energy usage in the data center. Of course, cost plays a significant part, because with increased server management and automation there is the opportunity for server administrators to extend their role.

Information management growth will be driven by the demand for all knowledge workers to have access to data

With information management software forecast to grow by nearly 12% up to the end of 2016, operational analytics software is showing a rise in adoption, from 37% of survey respondents using the software now, to 75% within 24 months. This is driven by the pace of business and the need for realtime decisions to enable all workers to make the right decisions in a given business situation. Until now, BI and analytics have struggled to be accessible to at best between 30% and 35% of enterprise IT users, typically an elite group of analysts, power users, and senior executives. However, these statistics are expected to rise over the next year and beyond, driven by a new generation of solutions hitting the market that will target a wider constituency of business users with different skillsets.

The enterprise security software market will be driven by organizations favoring integrated security solutions

The enterprise security software market currently stands at $13bn and is forecast to increase to $21bn by 2016, a CAGR of 11%. Understandably, the security software market is already well established. Ovum’s Technology Trends survey shows that from more than 9,000 respondents there are no areas of security (covering network security, information protection, intrusion detection and prevention, security/vulnerability management, identity and access management, endpoint security, application security, and content and web filtering) with less than 60% adoption today, and in 24 months’ time the lowest level of adoption will be intrusion detection and prevention, at 76%.

However, security software for enterprises needs to be maintained to protect the organization, and driving this market we are expecting to see a smaller number of integrated security solutions favored by enterprises, cutting down on the management overhead, and removing the short-term fix approach that we have seen so often in the past.

Recommendations for enterprise and public sector IT

Technology trend surveys and market forecasts can help CIOs and IT managers compare their strategies and IT operations with those of their peer group, and can provide supporting evidence when developing investment plans. For example, if your organization is looking to increase its use of analytics, a detailed analysis of market and peer group trends by business function, vertical industry, and geography can help to inform the business case for investment.

APPENDIX

Author

Maxine Holt, Software Manager and Enterprise Solutions Practice Leader, Ovum Software

maxine.holt@ovum.com

Further reading

• Global Market Trends 2011: Business software forecasts, data pack (October 2012)
• 2013 Trends to Watch: Customer Relationship Management (October 2012)
• 2013 Trends to Watch: Security (October 2012)
• 2013 Trends to Watch: BI and Analytics (October 2012)
• 2013 Trends to Watch: Data Center Technology (October 2012)
• 2013 Trends to Watch: IT Service Management (September 2012)
• 2013 Trends to Watch: SOA and Integration (September 2013)

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