"Complexity crisis may prove to be an obstacle in the Boom growth rates for the worldwide software industry."
worldwide software industry may be continuing its recovery, but the
"complexity crisis" that has been plaguing the industry will keep it
from reaching the booming double-digit growth rates achieved before the
recent recession, according to a new report.
"The recession knocked the wind out of software sales," said Dr.
Anthony Picardi, IDC's senior vice president of software, in an
interview Friday. While software sales began dropping in 2000, and were
down to just one-half of one percentage point of growth in 2001,
worldwide software revenue increased 5.1 percent, to $178 billion, in
2003, he said.
In the new IDC report, released Thursday, Picardi projects that
software revenue will rise at an annual rate of 6.9 percent through
2008, when it will reach $189 billion in sales.
"Issues of complexity, security, and software quality, as well as a
myriad of changing macroeconomic factors, all pose continuing
challenges to industry growth," Picardi said, calling the complexity
issue the real villain holding back software sales from returning to
double-digit pre-recession growth rates. He foresees the complexity
crisis continuing for five to ten years.
"The problem is--there's a lot of redundant data out there," he said.
"And IT people want to automate it all." He noted that enterprise
resource planning (ERP) and supply-chain applications need to be
simplified, integrated, and automated. And that will take time.
In addition, security issues will work to drag out the
software-complexity predicament. "Everybody needs security," Picardi
said. "But there is no one standard for security." Because virtually
each software product has its own security feature, and there is a
dearth of software-security standards, Picardi said security issues
will continue to fuel the software-complexity crisis.
Picardi predicts that the North American software market will remain
the largest single market in the world, accounting for just over
one-half of all packaged-software consumption.
"Emerging markets in Asia and Central Europe will represent the fastest
growing opportunity," he said. However, he cautioned that they will
also be the most "demanding, in terms of piracy, price, and political
IDC found that more than one-third of 2003 global-software revenue was
accounted for by--in order--Microsoft, IBM, Oracle, SAP, and Computer
Associates. Going forward, software growth will be driven by many
smaller initiatives, according to the IDC report. "Successful vendors
will follow one or more strategies that include the implementation of
usage-based software business modes, the enablement of
software-as-service processes, the exploitation of niche cluster, and
the formation of solution coalitions," IDC added.
And what about Linux? IDC expects the open-source operating system to
continue its robust growth trajectory, climbing from its current place
as the seventh most popular software platform to fourth place by 2008.
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