Rising Focus by Businesses to Increase Customer Satisfaction and Optimize Supply Chain Will Significantly Propel the Growth of Enterprise Software Market: IndustryARC

By PRNewswire On Jun 24, 2019

Enterprise software is witnessing huge demand from across a spectrum of applications like enterprise content management (ECM), IT service management (ISM), customer relationship management (CRM), enterprise resource planning (ERP), and business intelligence. Adoption of these Enterprise software increases efficiency and accelerates the overall productivity of an organization; thus, witnessing driving adoption of Enterprise software. The ERP enterprise software segment is projected to grow at a CAGR of 7.53% during forecast period 2019-2025 driven by retail segment in particular. The marketing and CRM segment of the enterprise software market is witnessing high demand and it is expected to grow at a CAGR of 7.21%. Small organizations are largely integrating cloud-based technology into their businesses to lower upfront costs and access business-critical applications conveniently. Companies are widely adopting cloud-based enterprise software to scale up the businesses with minimum CAPEX investment. By 2019, approximately 75-80% of enterprises will deploy at least one enterprise computing application on the cloud. IT spending on enterprise software was increased at a rate of 9% during 2017-18, where most of these spending were specific to cloud-based enterprise technology.

According to the US Small Business Administration, there are 30.2 billion small and medium sized businesses in the country, many of whom use enterprise software to reduce costs and complexity involved in internal technological systems. In 2019, the U.S. holds more than 60% of global cloud spending. The large presence of hyper scale data centers in the U.S. is the key factor to hold dominant market share for cloud-based technology. This leads to rising demand for cloud-based enterprise software in the U.S. and hence, the region contributes nearly 25% market share in the global enterprise software market.

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The enterprise software market is poised to grow at a rapid pace owing to wide range of applications in supply chain and maintaining customer relationship. The global supply chain management market grew by 13.9% in 2017 and reached $12.2 Billion. Organizations are adopting cloud-based Supply Chain Management (SCM) solutions to enable new digitally-based business models to optimize their supply chain, reduce operation cost and increase profitability at rapid pace. Cloud-based SCM applications are designed to flex and scale according to the needs of globally distributed supplier networks, thus enabling organizations to be more responsive to market demands. The growth in these supply chain management Enterprise Software is driving the total Enterprise Software Market is forecast to reach $545m by 2025 and is estimated to grow at a CAGR of 6.15% during the forecast period 2019-2025.

Enterprise Software Market Growth Drivers:

Rise in the need for good customer experience: Enterprise software helps in easing the customer relationship management processes, which enhances the customer experience and increases customer retention rate. According to the annual report by Facebook Inc., monthly active users (MAUs) of Facebook were 2.32 billion in December 31, 2018, an increase of 9% year-over-year and also the company recorded 37% increase in revenue during 2017-2018 showcasing the prolific rise in social media websites. The rise in digitization and emergence of social media marketing platforms have increased the need for enterprise software in recording and managing huge amounts of customer data for businesses. Moreover, for businesses, enterprise software eases the creation of personalized marketing content for customers.
Emergence of E-Commerce across Sectors: E-commerce websites minimize the lead time, and establish direct business relationship with end customers across various sectors. According to the report published by Walmart, the Flipkart group is showing a significant growth, with its growth merchandise value increasing by 12 times from 2014 to 2018, reaching $7.5 Billion. Organizations require customized enterprise software to manage and analyze customer data, which further widens the scope for opportunities in the global enterprise software market.

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R&D Investment and Initiative, Funding:

In 2018, Cohesity, a hyperconverged secondary storage company, announced that it had raised $250m in an oversubscribed Series D funding round led by the SoftBank Vision Fund with strong participation from strategic investors like Cisco Investments, Hewlett Packard Enterprise (HPE), and Morgan Stanley Expansion Capital, along with Sequoia Capital and others. This investment is anticipated to increase the enterprise software development activities towards achieving increased operational efficiency and cost reduction, which in turn will drive revenue growth for end users. Additionally, there has been a significant growth in R&D investments into enterprise software in the European region. For instance, in 2018, Dassault Systèmes SE recorded a total expenditure of $337.72m into R&D, which corresponds to 24.6% of their software revenue. This is anticipated to continue in the future, increasing the likeliness of development of effective enterprise software products which can store, analyze, and visualize large amount of data faster and more securely.

The Major Players in this Market Include:

The major players in this market are SAP AG, Oracle Corporation, Microsoft Corporation, Infor Inc., Kronos Incorporated and IBM Corporation. These companies have been continuously focusing on R&D for enterprise software, both towards addressing security concerns and integration of cloud services for quick processing and analysis of data.

In 2018, IBM Corporation partnered with Salesforce in order to integrate their artificial intelligence (AI) platform and deliver an enhanced customer service experience. Salesforce’s in-house AI platform called Einstein and IBM’s cognitive computing technology platform Watson will collaborate to deliver AI-driven recommendations for future actions by companies.

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