Gartner Identified Modernization & Digital Transformation Projects as Key Trends in the Application Software Market

Bengaluru: The worldwide Enterprise Application software market climbs to 7.5 percent to $149.9 billion in 2015 which will prompt to increase over $201 billion in 2019, predicts Gartner. As per the latest forecast, Modernization and Digital Transformation Projects are behind the growth in Enterprise Application Software Market. Gartner also illustrates that long-term growth in spending will be driven primarily by modernization, functional expansion and digital transformation projects.

Speaking about the research, Bianca Granetto, Research Director, Gartner says, “The majority of spending is going towards modernizing, functionally expanding or substituting long-standing business and office applications with cloud-based software-as-a-service. Projects have been approved and budgeted for, often over a multiyear period, meaning the pace of spending and adoption isn’t subject to any impending urgency”.

Concerning the study, Gartner has identified a number of key trends in the application software market that influence the spending forecast.

Modernization of Core Enterprise Applications

In the recent Gartner survey, 45 percent of respondents with knowledge of their organization's software strategy indicated that one of the current top five IT project priorities is ‘application modernization of installed on-premises core enterprise applications’ and a further 41 percent indicated that ‘extending capabilities of core enterprise applications’ is a top five priority. 

Transitioning to New Consumption Models

The survey also demonstrates that alternative consumption models to traditional on-premises licenses are representing more than 50 percent of new software usage; these include SaaS, hosted license, on-premises subscriptions and open source. 

The Rise of Digital-Business-Related Market Dynamics

Competing successfully in the digital industrial economy is rapidly becoming a leading strategic imperative for businesses all around the world. This shift in business priority and focus brings a new perspective regarding applications.

Organizations Will Extend or Replace Human Capital Management Systems with SaaS

Gartner predicts that by 2019, roughly 28 percent of installed human capital management systems globally will be SaaS-based, up from 13 percent in 2014. The inflection point globally will occur over the next five years as organizations replace their current systems or extend their current systems with SaaS-based solutions. However, there are wide variations beneath the global average penetration rates, with early adopting regions such as North America while the Middle East and North Africa are still at the very early stages of SaaS penetration.

Application Purchases Will Increasingly Be ‘Build’, Not ‘Buy’

Gartner predicts that by 2020, 75 percent of application purchases supporting digital business will be ‘build’ not ‘buy’. Gartner's research shows that many organizations already favor a new kind of ‘build’ that does not include out-of-the-box solutions, but instead is a combination of application components that are differentiated, innovative and not standard software or software with professional services.

Reaching the Cloud Office Tipping Point

Gartner estimates that, 15 percent of business users are provisioned, in whole or in part, with office system capabilities from the cloud. Gartner expects this percentage to grow to around 60 percent by 2020.

Advanced Analytics Adoption to Grow

Over 75 percent of organizations will deploy advanced analytics as part of a platform or analytics application to improve business decision-making by 2020. Companies are shifting their focus of investments from measurement to analysis, forecasting and optimization. Deployment of advanced analytics technologies will become critical to achieving those aims, predicts Gartner.

Customer Relationship Management Continues Shifting to the Cloud

In the country like North America, adoption of CRM via the cloud has become ordinary which lead organizations to utilize a hybrid model of on-premises and cloud products. However, SaaS adoption in some emerging regions is heavily constrained by network and some other data center infrastructure. Gartner predicts that by 2020, about a quarter of organizations in emerging regions will run their core CRM systems in the cloud, up from around 10 percent in 2012.

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