Enterprise Software Spending Will Increase Globally by 2014: Gartner

Research firm Gartner predicts that worldwide enterprise software spending will increase through 2014. Despite that increase, though, North American spending is expected to slow by the end of 2010.

The worldwide market for enterprise software will increase over the next year, as businesses begin to refresh their hardware and software in the wake of the massive global recession. That prediction, in a Sept. 20 research note from Gartner, also suggests that enterprise-software spending in North America will lose momentum in the second half of 2010-yet another sign that the economic recovery could be a drawn-out affair.

"After declining 2.6 percent in 2009, the worldwide market for enterprise software is recovering well with signs of continuing growth on the horizon," Joanne Correia, managing vice president for Gartner, wrote in a Sept. 20 statement. "Aging systems, as well as greater demand for security and aligning software with business requirements, are key decision factors for end users increasing their spending within the infrastructure software market."

Enterprise software spending in North America will hit $110.8 billion this year, Gartner estimated, on its way to reaching $143.6 billion in 2014. That represents a significant increase from 2009, when enterprise software sales totaled $102.1 billion.

However, the firm also predicted that growth would slow through the end of this year.

"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," Colleen Graham, research director at Gartner, wrote in a Sept. 20 statement. "A loss of momentum and general economic weakness will drive some organizations to exercise caution in end-of-year software purchases. However, despite these challenges, key markets such as virtualization, operating systems and security are expected to finish the year with double-digit growth."

Gartner's research note predicts that Western Europe will experience a slow-motion rebound in enterprise-software spending, while Asia/Pacific enjoys "the fastest growth in software revenue of all the regions in 2010." Overall, the firm predicts 2011 revenues for the enterprise-software market at $246.6 billion, climbing to $297 billion by 2014.

Those numbers seem to fit with predictions from both Gartner and Forrester that worldwide IT spending, after suffering steep declines in 2009, would rebound in 2010. During the recession, all segments of the IT industry experienced declines, with the hardware segment being hit particularly hard. Software, IT services and telecommunications also experienced significant, if somewhat shallower, dips in spending.

In another positive sign for the IT industry, trade organization TechAmerica reported 30,200 technology jobs added to the economy in the first six months of the year. TechAmerica's report used data provided by the U.S. Department of Labor's Bureau of Labor Statistics. Those areas adding jobs included software services (14,200), technology services (29,700), and technology manufacturers (9,100).

"We have weathered the storm better than most," TechAmerica president and CEO Phil Bond wrote in a statement. "From its position embedded in every other industry, technology remains the best hope for driving robust recovery across the economy. America can only realize the full promise of an innovation recovery with smarter public policies focused on developing and attracting the best talent, investing in research and development, and growing and securing our information infrastructure."