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For being the master key that unlocks a competitive edge and turns day-to-day operations, companies’ budgets for software will not suffer any “hard stop in growth.” Delivering this upbeat-sounding forecast, analysts said the recession will not hit the UK market because software is too ubiquitous in public, private and voluntary outfits. But tempering the optimism, the forecasters said that, for the software market, 2008 proved worse than expected; 2009 would be worse still, and the future was “mixed”. Spending on software in the troubled financial sector, the principal trigger and victim of this recession, will shrink this year and next year by about 7%, according to Ovum. It will not bounce back into the black until 2010, when a modest 2% is expected, before more familiar growth spurts of 7.5% and 9.2% in 2011 and 2012 respectively. The firm added the main drivers for the sector to invest in software, excluding custom applications, were governance, risk and compliance and portfolio analysis. The need for financers to consolidate their systems as a result of mergers and acquisitions would provide further incentive for software investment, Ovum said. Contrasting the shrinking budgets at financers, spending on software at information management companies between 2008 and 2012 will grow by 6.9%. This trumps the 5.4% growth expected for the software market as a whole, as will systems infrastructure firms, while applications firms will notch up budgets by 4.7%. Front-office applications will emerge more unscathed by the thinning budgets than back-office ones, as will specialised non-financial vendors of vertical applications. Uniting all software vendors, however, is the bid to make their revenues less dependent on up-front licensing fees – a visible target for belt-tightening users. As a result, more vendors are expected to explore maintenance revenues and how to expand into software as a service, where costs are often spread out over a contract. This year, the unappealing prospect of advance fees helps explain why public, private and voluntary sectors slowed their spending growth to 4.9%, down from 9.4% in 2007. Ovum analyst Laurent Lachal said the dip was steeper than most predicted at the start of 2008 as a result of the UK being one of the worst hit western economies by the recession. “The UK was one of the top three countries with the most planned IT budget decreases and the fewest IT budget increases,” she explained. “Growth should shrink further in 2009 to 4% then bounce back slightly in 2010 before strengthening in 2011 and 2012 (but at a much slower pace than in 2006–07). “We expect private sector growth to bounce back in 2011–12 just as the public sector starts to stall. This good timing will ensure a minimum momentum for overall software spend during the next five years.” Dec 22, 2008 Email this article Printer friendly page Previous Page
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