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Worldwide IT spending forecast January 2015. Source: Gartner
With overall global spending on IT set to climb steadily this year to $3.83tr, enterprise software remains the biggest growth area. But its 5.5 percent projected increase over 2014 conceals considerable upheaval.
Because of intense competition between cloud and traditional on-premise firms, more price cutting and vendor consolidation are expected in 2015 in the enterprise-software segment, which is on course to total $335bn by year end, according to analyst firm Gartner.
"What we're seeing now is a - I don't know if it's a tipping point but certainly an acceleration away from the licence and maintenance model towards more of a cloud- and SaaS-based model," Gartner research vice president Richard Gordon said.
"What that's doing is really increasing competition. It's having an impact on pricing and also both within the traditional software space itself and among the cloud providers as well. We're seeing a little bit of that impact of price competition affecting the growth figure there."
The major software categories of customer-relationship management, enterprise resource planning, supply-chain management and databases are all being marked by the shift towards the cloud model.
"If you look at something like CRM, on a global basis, we think that by 2020 all the new spending on CRM - so in other words people who are buying CRM for the first time so it's not existing spend but new spend in the market - will be using a SaaS-based model. That's quite a dramatic shift in buying behaviour," Gordon said.
That underlying change is also having an impact on spending in the related sector of IT services, which is projected to grow 2.5 percent in 2015, accounting for spending of $981bn.
"As you move from a new licence software model to a cloud model, there's less opportunity for IT services in terms of things like implementation and system integration and also software support," Gordon said.
"Spending there gets impacted because obviously if you move to a cloud model, you don't have a need for those things. So there is some kind of knock-on effect in services."
The Gartner figure for services growth in 2014 was slightly higher than this year's projection, at 2.7 percent as opposed to 2.5 percent.
Datacentre systems spending is due to rise marginally from last year, from 0.8 percent growth and $141bn spending in 2014 to 1.8 percent and $143bn this year. However, it's another area where the cloud is making its presence felt
"We're seeing this shift towards the hyperscale datacentre, so away from your traditional enterprise datacentre spending that individual companies would do, towards this service-provider model. We've got these large companies providing datacentre services or capability in a cloud-based model," Gordon said.
"The x86 server is pretty much commoditised and these large Googles and Amazons are moving towards this model where they're buying white-box servers or doing an OEM model where they're actually building their own. Obviously that's impacting the market for the branded servers. Across the market as a whole we've got this consolidation of server capability and larger hyperscale datacentres."
Gartner has increased its projections for growth in enterprise communications apps and network equipment over its previous forecast but downgraded server and external controller-based storage figures.
In the devices market Gordon said mid-range smartphones are being squeezed out, with demand for low-end handsets and very high-end devices driving growth of 5.1 percent, up from 3.8 percent in 2014.
"There is this bifurcation in cell phones where we're getting a shift towards very low-end handsets and very high-end smartphones. But in devices overall the thing to look at is the tablet, which is actually seeing a bit of a slowdown," he said.
"The tablet filled a gap in the market between the laptop and the mobile phone. Nowadays, with notebooks being lighter, thinner and more portable, and also with smartphones having larger screens - the phablet market - there's less need for the traditional tablet."
Gordon pointed out that the present strength of the US dollar has led Gartner to revise its projections for IT spending downwards. Last year the analyst firm was forecasting overall growth for 2015 of 3.9 percent, as opposed to the new figure 2.4 percent.
"If we take away the exchange rate impact, [this year's growth is] around 3.8 percent. So we're losing one and a half points of growth because of exchange rate at the top level," he said.