Cloud Software To Drive Enterprise Application Growth
February 6, 2023 Timothy Prickett Morgan
Even with something on the order of 242,100 layoffs at the top 40 tech companies in 2022 and another 106,950 layoffs in January alone, according to the analysts at Jefferies, it is still very difficult to find talent to update and extend application software. And that is one reason why the market researchers at IDC think that enterprise software sales will continue to grow in the coming years.
To be specific, IDC reckons that worldwide revenue for enterprise applications – meaning real applications, not systems software that underpins applications – accounted for $279.6 billion in sales in 2022, and will grow at a compound annual growth rate of 8 percent between 2022 and 2026 (inclusive) to reach $385.2 billion. Of that incremental $265 billion or so revenue (that’s our estimate) that will come from growth over the forecast period, nearly all of that growth will come from the adoption of ready-made, cloud-based software. And by the end of the forecast period in 2026, nearly two thirds of enterprise application software sold will be for “cloud software.”
This can be either software born in the cloud and running only in the cloud, and it can also be software that was designed for on-premises systems that has been tweaked to run on a cloud utility. (I really hate saying public cloud anymore because the commercial clouds are most certainly not regulated public utilities. They are not public in any way, shape, or form.)
“It’s no longer enough for businesses to sit back and rely on their technological debt of software and hardware assets to keep the company running. In the digital world, enterprise software needs to constantly innovate to keep up with demand for speed, scale, and a resilient business,” explained Heather Hershey, research director of worldwide digital commerce at IDC, explained in a statement accompanying the forecast. “Organizations must invest in new tools to keep their application portfolio up to date as they move into the digital era, automating all processes while also leveraging innovation and a wealth of data to become a more creative and resilient company in the digital realm.”
Well, that has never been more true of the IBM i market, too, as its base of programmers, architects, and system administrators continues to age. SaaS and cloud hosted applications are moving from “nice to have” to “essential for business” status, according to Hershey, and companies are also adopting low-cost and no-code methodologies to create new applications and relying more and more on APIs to glue applications and systems software together. We expect a mix of these technologies and techniques to be used in the IBM i base as well as in the IT sector at large.
For all intents and purposes, even homegrown code will be treated like third party software that will have to be integrated with SaaS and hosted applications, and what we find interesting is that the revenue figures above do not take into account the substantial investment that millions of companies the world over make in developing some or all of their applications. The numbers above, we think, radically undercount the value of software being created from all kinds of sources and methods.
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