Enterprise Software Demand to Weaken

The recession and companies’ consequent belt-tightening will see worldwide demand for enterprise software grow more slowly than expected, by 6.6 percent next year to total $244.3 billion, research firm Gartner said.

That is nearly one-third less than Gartner’s previous 2009 projection of $253.1 billion, or 9.5 percent growth from 2008’s expected figure of $229.2 billion.

The recession will lead to a major shift in companies’ IT plans. “The business case for many application and infrastructure initiatives is aligning to cost reduction and risk management as opposed to fostering revenue growth,” Fabrizio Biscotti, research director at Gartner, said in a statement.

Mobile computing, service oriented architecture (SOA), Web services, operating systems, and office suites will be clobbered, but money saving technologies such as virtualization and open source software will gain strength as enterprises pinch pennies.

The realignment of IT strategies, combined with the recession, means enterprise software vendors will not see any relief soon, with the fourth quarter of 2008 kicking off a bad streak for enterprise software vendors that will run through to 2012, Gartner said.

In general, Gartner’s predictions dovetail with those of research firm IDC, made last

Enterprises will reduce their use of mobile devices, including laptops, according to Gartner. This runs counter to the prevailing view, which is that employees will increasingly encourage teleworking,
which will see more workers using mobile devices, including laptops, to work
from home instead of going to the office, in order to cut costs.

SOA, we hardly knew ye

Another area that will be impacted is SOA, in which vendors have invested heavily. Once seen as a way to leverage data locked in back-end corporate databases, break silos of information and leverage application development in the enterprise through code reuse, SOA is losing its luster because of the recession.

SOA projects will be canceled or delayed in the short term, and will be slow to recover over the long term, Gartner said. In this prediction, Gartner is not alone. The slowdown in SOA projects was also noted separately by Evans Research in a survey of application developers.

Packaged applications such as customer relationship (CRM), enterprise
content management (ECM), enterprise resource planning (ERP) and supply
chain management (SCM) will also be affected by the slowdown in SOA and a
related technology, Web services, Gartner said.

The silver lining

Any and all technologies and approaches that help save money will be hot.

Enterprises will increasingly turn to open source software as a possible
alternative to proprietary software, Gartner said. This will see Linux and
open source office suites gaining ground at the expense of proprietary
operating systems and office applications.

PC server and storage virtualization will see healthy growth, and
ancillary technologies such as storage technology, server operating systems
and IT operations management will also benefit from the increased emphasis
on virtualization, Gartner said.

Here, again, Gartner is swimming with the tide. Research firm IDC has
also pegged virtualization as a major growth area for 2009.

Businesses will also increase their use of unified communications,
collaboration technologies and VoIP while cutting travel costs, Gartner
predicted. And they will consolidate their product portfolios and streamline
business processes and become tougher negotiators, Gartner said.

The software industry will shrink, with the weaker players going out of
business or being acquired, best of breed players entering partnerships and
strategic alliances, and the largest ones gaining ground through maintenance

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