Companies not cutting back on software investments

Most user organizations in Asia-Pacific excluding Japan region will not reduce their spending on software in next 18 months, says IDC.
Written by Konrad Foo, Contributor

A majority of companies in the Asia-Pacific (APAC) region, excluding Japan, will not be cutting down on their software investment budgets, a recent study revealed.

In a statement released Thursday, IDC said 30 percent of companies in the region have intentions to increase their spending on software. Furthermore, a majority of companies reported being keen to maintain their investment budget on software.

Only 6.1 percent planned to reduce their software budget over the next 18 months.

The study was conducted by IDC in the first quarter of 2009, when more than 1, 600 IT decision-makers in end-user companies were polled in 14 countries in the region.

Wilvin Chee, research director, Asia-Pacific Software Research at IDC, said: "Many companies whom we interviewed were particularly interested in solutions that can play an integral role in improving performance and automation efficiency within the infrastructure environment."

The increase in infrastructure management and database software spending will relocate budget away from business applications and middleware, he said in the press statement.

"However, countries such as India, China, Indonesia and Vietnam are expected to see a continued surge in investments for customer relationship management (CRM) and enterprise resource management (ERM) applications."

While on-premise subscription model remains the dominant option due to the better control over reliability and security, companies are beginning to accept alternate models such as software-as-a-service (SaaS) or open source.

Among respondents, 16.2 percent were interested to adopt the SaaS model for their new, or increased, deployment in the next 18 months, as compared to 2.6 percent in a similar survey last year.

Better product values and offerings, coupled with the current economic conditions are major factors driving more companies to consider this pay-per-use option, according to Chee.

Open source, with benefits such as low upfront investments, no lock-in period and access to code modification, is gaining traction particularly in Australia and China.

Although companies regard cost as the prime factor in decisions on software investments, the study revealed that companies were not "tolerant" of poor support services or complex product features.

Ridhi Sawhney, market analyst, Asia-Pacific enterprise applications research at IDC, said "turbulent times" like now call for emphasis on more-for-less campaigns. Software vendors should, therefore, take initiatives to improve their partner delivery and support model.

"Focusing on other important factors outside cost will enable these vendors to differentiate themselves from the competition," said Sawhney in the press statement.

Based in Singapore, Konrad Foo is an intern with ZDNet Asia.

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