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Third platform technologies trigger investments in new-age and agile enterprise applications

16th April 2015

The changing face of technology coupled with demanding business requirements are dictating enterprises to revamp their existing enterprise applications with newer versions that are capable of supporting disruptive technologies such as cloud, mobility, and analytics.

According to Kable’s market opportunity forecast model, the enterprise applications market was worth US$104.1 billion in 2013 and is forecasted to reach US$161.4 billion by 2018, growing at a CAGR of 9.2% from 2014 to 2018. As ground-breaking technologies continue to surge and challenge the way businesses function, organisations prefer enterprise applications that are embedded with big data, cloud, social, and mobility features. 

Of the various enterprise applications, Enterprise Resource Planning (ERP) solutions are the most popular among enterprises. The report illustrates that the ERP segment was worth US$27.5 billion in 2013, and is expected to reach a market size of US$42.7 billion by 2018. Kable predicts enterprises will continue to invest in ERP systems over the next five years to improve their business efficiency and be more receptive to evolving business needs. In addition to ERP solutions, enterprises are also investing in CRM and office productivity applications to enhance their customer service and responsiveness and improve their business processes. 

“Enterprises are increasingly opting for customisable open source enterprise applications to reduce capital expenditures and software up-gradation costs. Additionally, open source enterprise applications help eliminate vendor lock-ins and enable the development of value-added capabilities in applications that are best suited for their specific business needs,” comments Piyush Sharma, senior analyst at Kable. “However, lack of internal support and insufficient knowledge on part of the developers regarding these specific business process requirements may hinder their ability to fulfill the enterprises’ needs and hamper the wide-scale adoption of these solutions.” 

SAP leads the pack in the enterprise applications vendor share

Based on Kable’s vendor market share analysis, the top ten vendors own 51% of the worldwide enterprise applications, with SAP emerging as the leader in the enterprise applications market with a 12.4% market share. SAP is followed by Oracle and Microsoft, with market shares of 10% and 9.2% respectively. SAP has strengthened its position in the market by continuously aligning its enterprise applications with social (SAP Jam) and analytics (BusinessObjects 4.0) embellishments. Moreover, following an aggressive growth strategy, SAP has undertaken various mobility and cloud-based initiatives that include acquiring pure-play vendors such as BusinessbyDesign and SuccessFactors. 

“Even though the enterprise applications market is expected to gain significant traction in the next five years, enterprise vendors should address the hurdles relating to complexity and security of cloud and mobility based enterprise applications to maintain their footing in this market,” adds Sharma.

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Editor’s notes

All information used in this text is based on the Kable report 'Strategic Focus Report – Enterprise Applications, Technology and market trends', available to subscribers of the Kable UK service.

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