Gartner: Cloud, CRM To Drive Software Spend Through 2014


Economic pressures and limited resources are continuing to push customers toward the public cloud and software as a service, according to market researcher Gartner Inc. in a recent report, which found that more than 60 percent of survey respondents in North America are increasing their budgets for SaaS and cloud over the next two years. Meanwhile, companies in other regions are currently more focused on single tenant hosted applications.

"It's very clear that mature regions are focusing on public cloud computing, while emerging regions are focusing on private cloud computing," said Gartner analyst Hai Hong Swineheart, in a prepared statement. "This could be due in part to an immature telecommunications infrastructure in some emerging countries while data security is a persistent concern related to public cloud services among our clients in developing-region enterprises."

By some accounts, the willingness to adopt cloud services and software as a service is highly variable, based on specific customers, the regulatory requirements they face, the financial implications, and their willingness to try something new.

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"It really depends on what the customers are comfortable with," said James Stull, president of Turkey Systems, an Indianapolis-based MSP. "I have some customers among financial institutions who are very reluctant to embrace the cloud because they don't have complete control over their data, and they have concerns about how auditors will react. At the same time, they don't necessarily mind hosting arrangements. They might have their email hosted, for example. The nice part about the cloud is that you don't have the upfront costs associated with the conversion. So those two aspects counter one another, and the reaction has been very mixed. But by and large, I haven't seen a cloud conversion that wasn't pushed primarily by management as a means of reducing their upfront costs."

Overall, Gartner is predicting modest increases in the worldwide software spend between now and the end of 2014. The budgets are expected to be the most flat in North America and Western Europe, where the IT deployment is much more mature. Meanwhile, Eastern Europe, Latin America and Asia Pacific are expected to post the highest increases.

CRM software, security software and virtualization software were identified as three of the top priorities identified by the respondents. However virtualization was not listed among the top three priorities in either Europe or Asia Pacific. The report suggests that this is due to extensive legacy deployment.

PUBLISHED MARCH 7, 2013