Modernising core business applications is among the top five priorities for IT departments, a recent study from Gartner has found.
The analyst reported that modernisation and digital transformation projects would help fuel a 7.5% growth in enterprise application spending.
"The majority of spending is going towards modernising, functionally expanding or substituting long-standing business and office applications with cloud-based software-as-a-service," said Bianca Granetto, research director at Gartner. "Projects have been approved and budgeted for, often over a multi-year period, meaning the pace of spending and adoption isn't subject to any impending urgency."
With the growth of subscription-based software, Gartner found that alternative consumption models to traditional on-premises licences are accounting for more than 50% of new software implementations. These include SaaS, hosted licence, on-premises subscriptions and open source.
In particular, by 2019, about 28% of installed human capital management systems globally will be SaaS-based, up from 13% in 2014, according to Gartner’s forecast.
The analyst predicted that cloud provisioning of office systems would grow from 15% in 2015 to about 60% by 2020. From a revenue growth perspective, the widespread move from on-premises to cloud office will disrupt the traditional revenue flow as more organisations pay smaller increments over a longer period, Gartner noted.
Gartner estimated that 75% of organisations will deploy advanced analytics as part of a platform or analytics application to improve business decision-making. Companies are accelerating the shift in focus of their investments from measurement to analysis, forecasting and optimisation. Deployment of advanced analytics technologies will become critical to achieving those aims, said Gartner.
It also predicted that IT buyers will shift from buying applications to building to drive digitisation projects.
Maintaining legacy IT is seen as a major drain on resources for many IT departments. A recent survey of more than 100 IT professionals conducted by Hitachi Data Systems found that 28% of respondents said they wanted to rip out legacy business intelligence and analytics systems and start again; 26% said the same for customer databases; and 25% for workflow and document management systems.