December 12, 2008 By News Report
The fourth quarter of 2008 will mark the first of several challenging quarters for the enterprise software markets, according to Gartner. A combination of economic, technical and regional forces has caused Gartner to revise downward its enterprise software spending forecast for 2008 through 2012.
Worldwide enterprise software is on pace to total $229.2 billion in 2008, a 13.9 percent increase from 2007. These projections are slightly down from the September forecast of $231.2 billion in 2008, a 14.9 percent increase. The market is forecast to reach $244.3 billion in 2009, a 6.6 increase from 2008 revenue. This is down from Gartner's September projection of 2009 revenue totaling $253.1 billion, 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," said 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."
Mr. Biscotti said 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. Many mature countries will feel the greatest impact while emerging regions will experience slower growth rates. All markets and vendors are expected to be impacted across the board.
"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," said 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:
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