Revenue for enterprise applications is set to reach a staggering $483.1 billion in 2027. This growth will be driven by a five-year compound annual growth rate (CAGR) of 9.6 percent, according to a new forecast by the International Data Corporation (IDC). The key driver behind this substantial expansion is the ongoing investments in public cloud software, which is anticipated to represent more than two-thirds of all enterprise applications revenue by 2027.
The report also highlighted the top 10 enterprise applications leaders in 2022, which included familiar names such as SAP, Salesforce, Oracle, Microsoft, Intuit, Workday, Constellation Software, Siemens, Dassault Systems, and Autodesk. However, despite their prominence, the combined revenue share of these top 10 leaders amounted to only 30.8 percent in 2022. This figure indicated a slight decline of 0.9 percent from the previous year, showcasing the competitive landscape within the industry.
Furthermore, the IDC’s 2023 SaaSPath Survey revealed intriguing insights into organizational strategies regarding their application systems. Across 23 applications and 2,875 respondents, the survey found that 51 percent of organizations on average are currently maintaining their existing applications, while 46 percent on average are planning to replace their current systems within the next three years. The increasing shift to cloud-based solutions and the desire to upgrade existing systems reflect the continuous competitiveness within the enterprise applications software market.
In line with the trends, organizations are investing in new tools and technologies to stay relevant in the digital era. Automation, leveraging innovative technologies like machine learning and artificial intelligence, and utilizing advanced predictive analytics are becoming the norm for a more creative and resilient company. Notably, the survey found that many organizations are willing to pay a premium for cloud-native architecture featuring microservices and containers, which enable greater agility and scalability.
Mickey North Rizza, group vice president of Enterprise Software at IDC, emphasized the opportunities brought forth by the digital era for enterprise application vendors to deliver improved products rich in features, functionality, and innovation. As the market continues to evolve, enterprise application providers will be under constant pressure to meet the demands of businesses striving for growth and adaptability in an increasingly competitive environment.
