SMEs fuel AU enterprise applications market - IDC

Small and medium-sized enterprises are pushing the Australian Enterprise applications market up with rising demand for low-cost, integrated and functional application software.In a study released today, IDC estimated the market value for enterprise applications in 2003 at AU$574.

Small and medium-sized enterprises are pushing the Australian Enterprise applications market up with rising demand for low-cost, integrated and functional application software.

In a study released today, IDC estimated the market value for enterprise applications in 2003 at AU$574.9 million. IDC anticipates that improved economic conditions will propel this market to achieve a 9.1 percent rise to AU$632.2 million by the end of this year.

A number of end-user surveys conducted by IDC indicated an uplift in applications spending over the next few years with the projected market reaching AU$840.7 million by 2008.

IDC said some factors promoting continuous growth of the enterprise applications market in Australia include the growing evidence of a global economic rebound, which IDC says will translate into additional enterprise applications spending by corporations that want to bolster productivity and gain competitiveness.

The study also said that the "upgrade and replacement cycles among enterprise applications customers appear to be accelerating as well as a confluence of factors including the explosion of broadband users, relentless drive for better productivity by corporations, demand for customer service improvement through advanced software and also the move to embrace wireless and mobility solutions."

Vendors have responded to the softening of demand from the enterprise market by making available "lite" versions of their applications to attract customers from the mid-market.

IDC predicts this trend will continue into 2004 and is very relevant locally because of the high proportion of mid-market customers in comparison to large enterprises.

"These mid-market customers are looking for easy-to-deploy, low-TCO products that enable them to create an advantage over their closest competitors. This also means that systems integrators and solution partners of independent software vendors (ISVs) will increasingly be seeking ways to develop packaged services for these types of customers," said the report.

Key areas for application vendors and system integrators will be in relation to price, demonstrable return on investment, low total cost of ownership, functionality, the use of open standards and ease of implementation.

"Moving on from these general requirements on the part of the vendor, system integrators alongside ISVs will play an increasingly important role as hosted solutions starts to emerge in Australia. This will change the nature of implementation and integration services in the long term and will allow vendors the opportunity to shield the complexity of systems from customers," Bharati Poorabia, Senior Analyst, Enterprise Applications at IDC Australia said.

She added that end-users will continue to look for a number of things as the market moves forward.

"Gone are the days that companies felt that they needed to deploy best-of-breed standalone applications to remain competitive. Companies now look for integrated, end-to-end solutions that are easily deployed. As such integrated solutions that are aligned to more than one business process will be in demand," says Poorabia.