July 09, 2014

Enterprise software used to be an engine of growth for the entire IT market, but with the move to cloud computing and hosting, those days are gone. That's one of the key findings of a just-released IT spending forecast from Gartner.

Gartner's Worldwide IT Spending Forecast, released in late June, has spending on pace to total $3.7 trillion in 2014 and $3.8 trillion in 2015 -- 2.1% and 3.8% increases, respectively. Enterprise software is leading all categories, with 6.9% and 7.3% spending increases forecast for 2014 and 2015, but with little trickle-down value for other categories, such as data center systems or telecom services (see chart below).

"It used to be that, if you saw growth in enterprise software, you'd see corresponding growth in all of the other categories, but on-premises deployments are slowly going away or headed toward an equilibrium point," John Lovelock, a Gartner research vice president, told InformationWeek in a phone interview.

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Where multi-tenant services used to be viewed as "true cloud" and hosting or single-tenant a form of cloud washing, many enterprises are now choosing hosting as their preferred route away from on-premises deployments, Lovelock said.

"Hosting gives organizations more control over version changes than multi-tenancy, and there's also more customization possible in a hosted offering that's not [available] in the cloud," he said. "Security is also raised in industries where they prefer to know where their data and servers are located."

CRM is among the hottest categories in enterprise software, and Gartner is seeing cloud-based CRM as a disruptive force, beating on-premises options in competitive deals, replacing on-premises CRM deployments earlier than usual, and even winning in deals where companies weren't even looking for CRM.

[ Read the rest of this article on InformationWeek. ]