Australian spending on enterprise apps is set to reach $9.4 billion this year driven by modernisation, expansion and digital transformation projects according to Gartner.
Gartner research director Bianca Granetto said the majority of spending is going towards modernising, expanding or substituting business and office applications with cloud-based software-as-a-service (SaaS).
“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," she said.
As subscription-based alternatives and particularly SaaS are being adopted by organisations, a more predictable revenue pattern will emerge.
According to Gartner, consumption models to traditional on-premises licenses are accounting for more than 50 per cent of new software implementations. These include SaaS, hosted license, on-premises subscriptions and open source.
Gartner predicts that by 2019, approximately 28 per cent of installed human capital management systems globally will be SaaS-based, up from 13 per cent in 2014.
The inflection point globally will occur over the next five years as organisations replace their current systems or extend their current systems with SaaS-based solutions.
The analyst firm predicts that by 2020, 75 per cent of application purchases supporting digital business will be build, not buy. This will be a combination of application components that are differentiated, innovative and not standard software.
Granetto estimates that this year, 15 per cent of business users are provisioned, in whole or in part, with office system capabilities from the cloud. This percentage is expected to grow to around 60 per cent by 2020.
By 2020, more than 75 per cent 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 the analyst firm.
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