Giga Report: Enterprise Software Market Matures

The $62 billion market for enterprise software applications — including customer relationship management software — is maturing with license revenue projected to grow at a moderate 9 percent for 2002 through 2005, according to a study by Giga Information Group Inc., Cambridge, MA.

The report, “Market Overview: E-Business/Enterprise Software Applications in 2001 to 2005,” states that the growth represents a partial recovery from 2001, when license revenue growth fell to 4 percent from 39 percent growth in 2000.

“The hockey-stick growth patterns for enterprise applications are clearly over,” Giga vice president Andrew Bartels said. “Looking to the future, we expect the enterprise application market to grow slowly in 2002 as companies digest their existing investments.”

E-commerce applications, like commerce servers, and e-market platforms, which saw sky-rocketing demand in 2000, have cooled, Bartels said.

CRM and supply chain management had down years as well in 2001 after strong growth the prior year. On the other hand, efficiency-enhancing applications like human resource management, e-procurement/e-sourcing, financial management, business intelligence and collaborative product development have done well in the past year, as have vertical applications like healthcare systems and retail management.

“Applications that help companies cut costs will continue to do well in the first part of 2002 as they did in 2001, but applications that help grow revenues — such as CRM and commerce servers — will come back into favor as the economic recovery strengthens later in 2002,” Bartels said. “While integrated suites continue to find great appeal, demand for these suites will be greatest among mid-tier companies and for comprehensive solutions tailored to vertical industries.”

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