2008 Pretty Good for Application Software; 2009, Not So Much

Published: July 13, 2009

by Timothy Prickett Morgan

The analysts at AMR Research have finished calculating how much application software the top independent software vendors were able to sell in 2008, and believe it or not, despite the economic meltdown that hit last summer, 2008 was a pretty good year.

However, according to the analysts at AMR, 2009 is shaping up to be a disappointment. But not a disaster, so don't get carried away.

As you can see from the teaser executive summary that AMR put out for its Global Enterprise Application Market Sizing Report, 2008-2013, the company is being deliberately vague about precisely how the six different parts of the enterprise software racket did in 2008. Those parts are: enterprise resource planning (ERP), supply chain management (SCM), supply management (which wasn't given an abbreviation), product lifecycle management (PLM), human capital management (HCM), and customer relationship management (CRM). The teaser did reveal that the PLM segment declined by 2 percent and that sales for the other five areas had revenue growth last year of between 4 and 9 percent.

For 2009, AMR says that the ERP, SCM, supply management (again, no abbreviation, so I guess we won't get confused with S&M or something. . .), HCM, and CRM segments "are not insulated from the overall downturn" and expects declines ranging from 2 to 6 percent because of " budget lockdowns and the general reluctance by corporations to spend," with new license sales will being "especially challenging."

AMR says that software as a service and cloud computing are growing at a faster rate than traditional software license sales, although from a very tiny base, and says that the small and medium business market will be a battleground that software companies large and small are going to focus on and fight like crazy over.

One interesting bit of that executive summary is that AMR gave out rankings of the top 50 enterprise software makers, ranked by total application revenues and by subscription revenue. SAP was ranked number one on the 2008 ranking, with $15.8 billion in application sales and $5.68 billion in license and subscription revenues. Oracle ranked number two on the lists, with $8.56 billion in application sales and $3.54 billion in licenses and subscriptions. SAP has a relatively small Power Systems i business, and Oracle has a pretty decent sized on thanks to its JD Edwards suites.

Infor, which has the largest installed base of i-related application software, ranked fourth with $2.21 billion in application sales, but eighth in terms of license and subscription sales, with $486 million in revenues. Look at the SaaS effect, though. Salesforce.com's online CRM software gave the eponymous company a number 10 ranking, with $1.02 billion in application sales in 2008, but Salesforce.com is now the number three vendor when ranking license and subscription fees in 2008, with $930 million in sales. Salesforce.com, in fact, is ranked ahead of Lawson Software, which also has a big i-related business and 7 posted $843 million in application sales in 2008 (a number 11 rank) but only $127 million in license and subscription sales (giving it a rank of 23 on that list).

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