European enterprise software market faces 'strong headwind'

The enterprise software market in Western Europe is sailing into a "strong headwind" in the second half of 2011, according to preliminary figures released today by Gartner.

The enterprise software market in western Europe is sailing into a "strong headwind" in the second half of 2011, according to preliminary figures released today by Gartner.

According to research director Fabrizio Biscotti, the pace of growth in the region is slowing due to "recent currency appreciation, fiscal tightening, higher commodity prices and concerns about debt in countries such as Greece, Ireland, Portugal and Spain".

"The result of these additional constraints on growth will exacerbate some country growth trends in the region," said Biscotti.

Overall, the market in western Europe is still set to grow, up from $70.3bn in 2010 to $78.3bn (£48.3bn) in 2011, said Gartner, with the Nordics and Germany offsetting concerns in other countries.

The worldwide market for enterprise software will grow 9.5 per cent this year, surpassing $267bn, said Gartner, with the global recovery well underway and a slight downturn in demand in the second quarter of the year expected to be absorbed by increased sales in the back end of 2011.

Infrastructure software sales are set to grow 9 per cent to $153.3bn, with operating systems accounting for $32.6bn of revenues, and database management for $25.5bn.

Enterprise application software spending is forecast to hit $114.4bn in 2011, up 10.2 per cent year on year, with ERP the largest value segment at $23.2bn, followed by office suites, which will account for around $15.7bn.

"We see short-term currency uplift for US dollar-denominated growth for the period of 2011-2012 and downward adjustments in GDP across all regions," said managing vice president Joanne Correia.

"We have identified a strong correlation between GDP growth and enterprise software spending growth, where software tends to grow four to six per cent above GDP in normal market conditions. However, we do have concerns about the rising cost of commodities, including oil, and its impact on certain regional and country economies," she added.

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