Arik Hesseldahl

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Enterprise Apps Worth $120 Billion This Year, Gartner Reckons

Spending by companies on enterprise software applications will amount to more than $120 billion, according to a forecast by the market research firm Gartner, which amounts to growth of about 4 percent over last year.

Bowing a bit to uncertainties brought on by the world economy, especially given the turmoil in Europe, Gartner revised the forecast downward a bit from its previous estimate.

Within that big bucket of spending are several classes of applications; the biggest by far is ERP, or enterprise resource allocation, which is the bread and butter of companies like SAP, Oracle and, in the cloud, Netsuite. Gartner says that’s going to be a $25 billion business this year.

After that is Office Suites, which is dominated by Microsoft Office, at $16.5 billion.

Business intelligence, a sector where there’s been a lot of start-up activity — companies like Domo, Birst and Good Data come to mind — is a $13 billion business.

That’s tied with CRM (customer relationship management) at $13 billion as well, most of it split among Oracle, SAP and Salesforce.com.

And speaking of Salesforce, Gartner notes that more companies are demanding applications as a service, which most people describe simply as “in the cloud,” which is why we’re seeing traditional on-premise players like Oracle and SAP shifting toward cloud-based offerings and buying up younger cloud software companies.

Even with all the hype the cloud companies get, they make up a relatively small portion of overall software spending. Gartner says cloud and software-as-a-service offerings will account for only 16 percent of the enterprise software business by 2015.

Gartner’s Tom Eid said that the increase reflects overall market demand, with more buyers evaluating their options during the current technology refresh cycle, and returning buyer confidence for enterprise software as the market slowly recovers and organizations resume investing in technology. SaaS and cloud-based services are forecast to grow in usage, expanding from 11 percent of enterprise application spending in 2010 to 16 percent in 2015.


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