As global enterprise spending on software surpasses the $1 trillion mark in the coming decade, the growth rate of software spending will slow to 4% per annum from 7% historically. A buyers' market for enterprise software will emerge. More choices, more transparency, and more interoperability will result in the unprecedented choice for enterprise software buyers, who will:
- Purchase cloud-based software that scales and descales to match demand, with costs reflecting the same elasticity.
- Expand the software labor force beyond professional developers, utilizing low-code and other platforms to bring business experts into the game.
- Recognize that their company is inescapably in the software business and create a disciplined, CEO-sanctioned road map for software creation and governance.
- Create a streamlined process for deciding when to build internally, when to outsource, when to assemble, and when to buy and customize packaged software.
The supply side of the industry will face particular challenges as they respond to the slowing growth of software spending. Vendors will need to:
- Pursue the disruptive price-penetration business model, which ushers in elastic prices and "good enough" functionality to what were previously premium-priced market segments.
- Build broad communities of third-party developers who extend, customize, and refine platform capabilities.
- Manage a parallel slowdown in spending on integration and customization, fueled by self-configuring and self-integrating applications.
- Learn to compete with emerging software giants in China and India.
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This post was written by Senior Vice President, Research Director Chris Mines, and originally appeared here.