Mediocre 2013 but boost expected for APAC enterprise app market: IDC

By Digital News Asia July 10, 2014

Mediocre growth in 2013 due to cautious spending and ad hoc deployments
Shift to strategic implementations expected to bring market back on track for 2014

Mediocre 2013 but boost expected for APAC enterprise app market: IDC

THE Asia Pacific excluding Japan (APeJ) Enterprise Applications (EA) software market posted a mediocre growth of 5.1% in 2013, according to IDC. Unlike 2012, when EA market grew 9%, Asian enterprises were more cautious about their investment in 2013.

Although organizations were keen in upgrading existing back-office applications to embrace third platform technologies – cloud, analytics, mobility, and social – watchful customer spending and ad hoc deployments did not lend itself to sustained growth in 2013.

Sabharinath Bala, research manager of IDC’s Asia Pacific Enterprise Application Software Research said third platform technologies, especially cloud, will be a critical driver for enterprise applications growth in APeJ.

“Enterprises are moving from an ad hoc deployment of cloud-based applications and other third platform technologies, to a phase of strategic implementation.

“This new era of digital transformation and the speed of innovation of Asian businesses is expected to bring the market back on track in 2014 and through the forecast period," he added.

It was the usual suspects – SAP, Oracle, Yonyou, Infor, and Microsoft – that dominated in the region from a market share perspective, but most of these major vendors were challenged strongly by niche new players as well as the established software-as-a-service (SaaS) and cloud-based applications vendors.

Some noteworthy companies include Cornerstone OnDemand, Kronos, NetSuite, Workday, and Xero – all of which posted strong double-digit growth in 2013.

Sabharinath noted that most of the major vendors have been creating new internal intellectual property, acquiring assets and expanding their cloud capability inorganically.

However the challenge of integrating these new resources with their existing portfolio, and convincing clients and prospects to take the cloud path remained critical in attracting newer EA investments.

“But this scenario is slowly changing and vendors that rely primarily on maintenance and upgrade revenue for their existing legacy systems will start losing relevance in the coming days.

“Vendors offering cloud-based systems capable of delivering the agility, flexibility, and scalability of the dynamic Asian businesses, will trump them at their own game,” adds.

IDC expects the overall EA market to grow at a compound annual growth rate (CAGR) of 8.4% and reach US$9.5 billion in 2018.

Double-digit growth is expected from markets such as enterprise asset management, logistics, and procurement; and there will be strong support from mature markets like financial accounting, human capital management, and inventory management.

IDC's Asia Pacific Semiannual Enterprise Applications Tracker provides total market size and vendor share for the 17 segments of the Asia Pacific enterprise applications software market.

It covers close to 200 software vendors across a total of 14 country markets. Historical market size, vendor share, and forecasts are updated on a semiannual basis.

For more information, click here.