2009 Enterprise Spending and Virtualization

By Stephanie Jordan
in

A combination of economic, technical and regional forces has caused Gartner to revise downward its enterprise software spending forecast for 2008 through 2012. The analyst firm noted in its December release that worldwide enterprise software is on pace to total $229.2 billion USD in 2008, a 13.9 percent increase from 2007. These projections are slightly down from Gartner’s September forecast of $231.2 billion USD in 2008, a 14.9 percent increase. In 2009 the market is forecast to reach $244.3 billion USD, a 6.6 increase from 2008 revenue. This is down from Gartner’s September projection of 2009 revenue totaling $253.1 billion USD, up 9.5 percent from 2008.

“The business case for many application and infrastructure initiatives are now aligning to cost reduction and risk management as opposed to fostering revenue growth,” explains Fabrizio Biscotti, research director at Gartner. “This important shift, coupled with the recent financial and credit markets crisis has led us to reduce our software spending forecasts through 2012.” Biscotti notes that this revised forecast takes into account a number of factors that have emerged in recent months, including: confirmed recessions in several key countries; new revised GDP predictions released in November; early warnings from vendors in October and November on their sales expectations for the fourth quarter of 2008 and 2009, and fluctuations in currency exchange rates which are causing British sterling and the Euro to lose value against the dollar. According to Gartner, all geographies will feel the impact of the slowdown in software spending by some degree in the fourth quarter of 2008 through 2009.

“For the near term, software vendors will continue to face tough product life cycle decisions and short-term pressure on price and margins, which will put the ability to be innovative at risk,” observes Joanne Correia, managing vice president at Gartner. “The fundamental changes that are occurring in how software technology is deployed and used mean that no software market or vendor will remain untouched.” Gartner analysts cited eight major technology forces that are being shaped by current market conditions. In the area of virtualization, Gartner analysts believe that PC, server and storage virtualization is growing in use and will be fostered by the tough economy where organizations will try to make the most of the spare capacity they have in-house. Storage technology, server operating systems and ITOM will be among the segments that will benefit from the virtualization fever.

Also of interest to Messaging News readers, Gartner analysts noted for collaboration, unified communications and Voice-over-IP that the economic downturn will hit business travel in the midterm and therefore analysts expect unified communications and collaboration to thrive. Unified messaging (voice mail, email and fax integration) to include alternative collaboration services, such as instant messaging, teamware and voice/Web/videoconferencing, Gartner states will assume more importance. Additional information is available in the Gartner report Forecast: Enterprise Software Markets, Worldwide, 2007-2012, 4Q08 Update. The report is available on Gartner’s Web site.

Published December 23, 2008