IT research company Gartner has predicted that worldwide enterprise software revenue will grow 9.5% to cross $267bn in 2011 compared with 2010 revenue of $244bn.
The enterprise software market is projected for continued growth in 2012, with revenue forecast to reach $288bn, said the company in its report, ‘Forecast: Enterprise Software Markets, Worldwide, 2008-2015, 2Q11 Update.’
The North American and Western Europe markets are expected to surpass $200bn together.
The report said that growth of enterprise infrastructure software spending is also set to be robust at 9%. It will reach $153.3bn total in 2011, compared with 2010 revenue of $140.6bn, said Gartner.
The market is led by the operating systems (OS) segment in which revenue is projected to reach $32.6bn in 2011, followed by database management systems (DBMSs) revenue at $25.5bn.
Gartner managing vice-president Joanne Correia said the market for enterprise software continues to recover well following the 2009 downturn, with signs of ongoing growth on the horizon.
Correia said, "Economic recovery is evident across all regions, although concerns have arisen in some countries in Europe and Asia. The earthquake and tsunami in Japan has created additional marketplace uncertainty with a multiplicity of effects that are beginning to be determined. GDP results and other research have pointed to a 2Q11 slowdown in demand with some recovery later in the year."
Worldwide enterprise application software spending is forecast to total $114.4bn in 2011, a 10.2% increase from 2010 spending of $103.8bn, according to the report.
Enterprise resource planning (ERP) is the largest segment within the enterprise application software market. ERP revenue is expected to reach $23.3bn, followed by office suites with $15.7bn.
"With this latest research, we see short-term currency uplift for US dollar-denominated growth for the period of 2011-2012 and downward adjustments in GDP across all regions," Correia said.
"We have identified a strong correlation between GDP growth and enterprise software spending growth, where software tends to grow 4 to 6 per cent above GDP in normal market conditions. However, we do have concerns about the rising cost of commodities, including oil, and its impact on certain regional and country economies."
Enterprise software spending in Western Europe is forecast to reach $78.3bn in 2011, up from 2010 revenue of $70.3bn. The market will experience growth on a par with North America through 2015, said Gartner.
Gartner research director Fabrizio Biscotti said, "In Western Europe, enterprise software spending could see slightly stronger growth in the latter half of 2011, but the headwinds are getting stronger. The pace of growth in Europe is slowing, mostly because of recent currency appreciation, fiscal tightening, higher commodity prices and concerns about debt in countries such as Greece, Ireland, Portugal and Spain."
"The result of these additional constraints on growth will exacerbate some country growth trends in the region. However, countries on the upside of this trend are Denmark, Finland, Germany, Norway, and Sweden," Biscotti said.
Gartner said that enterprise software spending in North America will reach $121.2bn in 2011, up from 2010 revenue of $112.9bn. The market is expected to experience consistent growth through 2015, when spending in North America will surpass $158.1bn.
The research firm has said that the largest threats to economic stability in North America are oil prices and the outcome of the federal budget deliberations.
Emerging countries such as Poland, India, China and Brazil, which were less affected by the latest economic downturn than the US and Europe, are expected to continue to invest heavily in enterprise software initiatives in the next few years.
Gartner said Asia-Pacific (excluding Japan) will have the second fastest growth, after Latin America, in enterprise software revenue of all the regions in 2011.
Spending is forecast to reach $26.4bn in 2011, up from 2010 revenue of $23.6bn. The market will experience strong growth through 2015, said the report, when spending in Asia-Pacific will surpass $40bn.
Gartner research director Yanna Dharmasthira said, "Overall, emerging markets’ growth will slow over the forecast period, but will continue to be faster than those of the developed world. However, economic growth in almost all the emerging countries is also likely to be affected by the slowing trends in Europe and Japan."
"Among the largest emerging markets, China and Brazil will see the most pronounced slowing trends, while growth rates in India and Russia will be less affected.
