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Gartner predicts China to lead enterprise software market growth till 2013 |
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Research firm Gartner has said that it expects China to lead the growth in the Enterprise Software market through 2013, with manufacturing, financial services, telecommunications and government being the top spending sectors. Gartner forecasts China’s enterprise software market to maintain its performance with an estimated compound annual growth rate (CAGR) of 14.6 per cent from 2008 to 2013 – the highest growth rate in the world. The research firm says that despite prevailing global economic conditions, the software market in China is expected to rebound to an annual growth rate of 14.8 per cent in 2010. Gartner's analysts said the increasing globalization of the Chinese economy is leading to a growing need for modern software with the latest features and improved functionality.  Gartner research analyst Hai Hong Swinehart opines that software vendors have strong growth potential in China even as they face challenges in terms of “operating in a commercial environment that is still developing.” She says Chinese enterprises have historically preferred to develop applications using their own labor because on account of cost advantages, though this tendency has resulted in legacy and obsolescence issues as well as sustainability and business IT continuity challenges. “Growth will mainly be driven by replacing immature infrastructure with standardized systems and the large vendors stand to benefit,” she said. Gartner's latest forecast predicts that 2010 will see China surpass $6 billion in software revenue for the first time. China is the largest software market in Asia Pacific (APAC), notching up around 27 per cent of the region’s revenue in 2010, which is equivalent to 2.7 per cent of the total worldwide software market share. By 2013, Gartner says, China’s share of the software market in APAC is expected to reach 30 per cent, representing $9.4 billion in revenue or 3.3 per cent of total worldwide software market revenue. Gartner points out that compared to mature countries in the APAC region like Australia, which has a 21 per cent share of regional spending in 2010, the software market in China is still relatively young and evolving. It says the top four major vertical industries in terms of software spending are manufacturing, financial services, communications and government, and estimates that in total these industries account for 60 per cent of total software spending in China. A Gartner survey in 2009 found that 46 per cent of respondents in China planned to increase their software spending in 2010, far higher than other countries surveyed in Europe, the Middle East and Africa (MESA), North America and Latin America. The same survey found that organizations in China in 2010 are expected to spend approximately 23 per cent of their IT budgets on software compared with 33 per cent on hardware. Swinehart said China remains a hardware-centric country and Gartner expects this trend to continue through the forecast period till 2013. It also expects increases in spending across the infrastructure and application software segments in 2010. However, the infrastructure software market's size is forecast to be nearly double that of application software through 2013, with a CAGR of 15.1 per cent, while application software has an expected CAGR of 13.7 per cent. Priority areas of software spending include enterprise resource planning (ERP), office suites, operating systems and database management systems. In the next five years, the fastest-growing segment will be data integration and data quality tools, with a CAGR of 32.4 per cent, although it is growing from a small base. According to Gartner, Chinese enterprises are lagging behind in terms of adoption of these tools, resulting in the fast growth of this market. |
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