SaaS, CRM to Drive IT Software Spending Through 2014: Gartner

By Nathan Eddy  |  Posted 2013-03-06

As economic pressures increase and other factors come into play, organizations have also expressed interest in cloud computing.

Greater adoption of on-premises software licenses and software as a service (SaaS) will drive a modest increase in worldwide software spending through 2014, according to a survey by IT research firm Gartner. However, the report also noted that regions with higher IT maturity, such as North America and Western Europe, expect lower or no budget increases over the next two years.

Developing countries with immature IT infrastructure, such as Eastern Europe, Latin America and the Asia-Pacific region, will experience the largest budget increases in software spending, and survey respondents indicated that their top three application software investment initiatives for 2013 are CRM, ERP and office and personal productivity tools.

"Results from the survey indicate that software spending will increase modestly worldwide through the 2014 budget year, with new software sales (on-premises) and SaaS driving this increased spending," Hai Hong Swineheart, a research analyst at Gartner, said in a statement. "However, significant regional differences in priorities and drivers will require vendors to pursue market-specific strategies."

Virtualization infrastructure software, ranked as the third-highest priority for increased spending, continued to grow, with most organizations moving toward 70 percent virtualization (especially in North America) within the next several years. The survey also revealed that CRM has edged past ERP as the top application

Survey results indicated that while companies increasingly perceive the mobility of their workforce and trends like bring your own device (BYOD) adoption as a strategic advantage, there is growing awareness of the damage security breaches cause. As a result, security software tops the list of infrastructure software investment priorities, which are also being driven by the evolution of new threats and changes in working practices.

Assessing third-party security and defining how to securely communicate are also becoming critical factors for businesses. The survey indicated that more and more organizations are accepting the need to have more open connectivity with business third parties.

Organizations have expressed overwhelming interest in cloud computing and other options that externalize IT as economic pressures increase and other factors come into play, such as resource limits and skill shortages. The survey found that interest in software as a service/public cloud is significantly higher in North America than in other regions, with more than 60 percent of respondents increasing their budget in SaaS/public cloud within the next two years.

"It's very clear that mature regions are focusing on public cloud computing, while emerging regions are focusing on private cloud computing," Swineheart said. "This could be due in part to an immature telecommunications infrastructure in some emerging countries while data security is a persistent concern related to public cloud services among our clients in developing-region enterprises."