Businesses across the world will spend $120bn on enterprise application software this year, according to the latest Gartner research.
The software most in demand is enterprise resource planning (ERP) with $24.9bn spent on it; office suites with investments totaling $16.5bn; business intelligence software revenue, forecast to reach $13.0bn; while customer relationship management (CRM) will exceed $13.0bn this year.
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Total spending in 2012 will be 4.5% higher than in 2011.
Tom Eid, research vice-president at Gartner, said: "Spending in 2012 is anticipated to focus on industry-specific applications; upgrades to established, mission-critical software; integrating and securing established systems and infrastructure; and software as a service (SaaS) deployments representing extensions to, or replacement of, existing applications and new solutions."
Gartner analysts said cost optimisation and shifts in spending, from "megasuites" to the automation of processes, will continue to benefit alternative software acquisition models as organisations look for ways to shift spending from capital expenditure to operating expenditure.
Because of this, suppliers offering SaaS, IT asset management and virtualisation capabilities will benefit from organisations looking to shift upfront capital expenses to operational expenditure.
Eid said SaaS continues to see high demand.
“As a result, vendors are offering more technology as subscription-based solutions and pay-as-you-go offerings, positioning them as more cost-effective and as a way to counter the effects of economic belt tightening,” said Eid.
"After more than a decade of SaaS and cloud service use, adoption continues to grow and evolve within the enterprise application markets.
"This is occurring as tighter capital budgets demand leaner alternatives, popularity and familiarity with the model increase, and interest in SaaS and cloud computing grows."