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Cloud, CRM To Drive Enterprise Software Spend

Look for greater adoption of on-premises and software as a service (SaaS) over the next two years, modestly boosting worldwide software spending through 2014. That’s according to a recent Gartner survey.

"However, significant regional differences in priorities and drivers will require vendors to pursue market-specific strategies," said Hai Hong Swineheart, research analyst at Gartner.

Regions with higher IT maturity, such as North America and Western Europe, expect lower or no budget increases over the next two years, while developing regions with immature IT infrastructure, such as Eastern Europe, Latin America and Asia/Pacific, will experience the largest budget increases in software spending, the research firm said.

More than two-thirds (69 percent) of respondents in emerging countries expect new software-license budgets to increase in 2014, compared with 47 percent from mature regions. The regional differences relate to the amount of mature systems with maintenance and technical support fees. Less mature regions, with little or no infrastructure, will typically spend more on new software licenses (on-premises, including applications), while more mature regions with mature infrastructure tend to spend more on software maintenance and support (including license updates and/or technical support).

As economic pressures increase and other factors come into play, such as resource limits and skill shortages, organizations have expressed overwhelming interest in cloud computing and other options that externalize IT. In North America, interest in SaaS/public cloud is significantly higher than in other regions, with more than 60 percent of respondents increasing their budget in SaaS/public cloud within the next two years. Organizations in other regions show more interest in hosted applications (single tenant), with Asia/Pacific the highest, with 34 percent of respondents increasing their budget on hosted applications.

The survey also revealed that customer relationship management (CRM) has edged past enterprise resource planning (ERP) as the top application software investment priority. This further validates a business focus on enhancing customer experience, Gartner said, with both mature and emerging regions emphasizing investments in CRM. Survey respondents indicate that their top three application software investment initiatives for 2013 are CRM, ERP, and office and personal productivity tools.

Security software topped infrastructure software investment priorities, driven by the evolution of new threats, as well as by changes in working practices. While companies increasingly perceive the mobility of their workforce as a strategic advantage, there is growing awareness of the damage caused by security breaches. More and more organizations are accepting the need to have more-open connectivity with business third parties and assessing third-party security and defining how to securely communicate are becoming critical factors.

Virtualization infrastructure software, ranked as the third-highest priority for increased spending, continues to grow, with most organizations moving toward 70 percent virtualization (especially in North America) within the next several years; however, virtualization is not among the top three priorities in Europe or Asia/Pacific, mainly due to the already high virtualization rates in those regions.

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