Price Pressure and Solution Consolidation to Fuel the Packaged Software Market

IDC': Packaged software market, the Asia/Pacific (excluding Japan) region is expected to grow by 11.1% for year 2006 amidst sustained price pressure, increasingly integrated selling strategies, and continuing market consolidation. Market consolidation activities as great opportunities for vendors to upsell their integrated technologies . We also expect vendors to make greater efforts to improve their penetration rates by reaching the corporate boardroom in order to better persuade the criticality of IT investment within business operations. Major Predictions for the Software Market in APEJ for 2006:

• Product Supply Chain Applications to Lead the Industry Applications Market. The vast industry applications market (more than US$1 billion by 2006 in the region alone) will draw a lot of attention from global vendors who will pursue the acquisition of successful local vendors in order to establish firmer footprints in the region. Product supply chain applications are expected to lead the strong growth in this market segment with an annual growth of 13.6%.

• Content Management Applications Market to be a Hot Button. IDC expects the content management applications market to be a hot button due to the expansion of information management and forecast this market to grow at 14.4%. Organizations are increasingly adopting greater integration of their resources, both internally and externally. Hence, it is critical to have proper deployment of content management application in order to facilitate dissemination of information rightfully and meaningfully.

• A Higher Degree of ‘Batteries Included’ Philosophy Towards Security,

  Moving into the year, IDC predicts a higher degree of 'batteries included' approach amongst the larger vendors towards security. Whether one purchases an email management solution, an enterprise infrastructure management solution or a service subscription with a service provider, security (or batteries) will built-in. The security may be in the form of hardware, software or services, and the fulfillment may either be carried out by the same vendor or its partners. One implication of this trend for niche security vendors is that their partnering strategy will become increasingly significant to growing their shipment revenue.

• Identity & Access Management to Experience Highest Growth in Security Software Market.

  Identity and access management is expected to experience the highest growth in the security software market. Underpinning this growth (19.8%) will be the increased concerns around large-scale identity thefts, data control and compliance issues, and the business plus legal consequences that may ensue following unauthorized access of data.

• Corporate Users Continue to Influence Vendors’ Product Packaging. Corporate users are increasingly influencing how vendors should package their product offerings. This was so evident particularly in the area of enterprise applications where the dynamics are shifting heavily towards verticalization. IDC forecasts this aggressive trend to continue well into 2006 and beyond, as vendors seek to expand their market base with proven vertical offerings. Software Vendors will embark on an acquisition and partnerships strategy to fill current gaps, and some will also repackage existing solutions in order to have industry-specific appeal. It will also be important to improve visibility by producing more customer references of successful installations.

• End-users to Increase ITIL Adoption Paving Way for Greater Benefits.

  End-Users in the region are increasingly well placed for ITIL (Information Technology Infrastructure Library) adoption. 2006 will prove to be a significant seeding year for reaping ITIL benefits amidst a sustained cautious approach on IT investments and continued market education. This market is expected to close at US$544 million in the Asia/Pacific (excluding Japan) region this year.

• Local -Providers to Improve their ITIL Management Services Delivery. Consolidation activities in the end-user industries will also drive more investment in integration, and infrastructure management. Business service management, Information Technology Infrastructure Library (ITIL) management, and virtualization will be strongly touted by vendors. Here, IDC expects local service providers to be keen to jump into the bandwagon, but their skill levels will be found wanting. Hence, it will be an opportunity for them to collaborate with global software vendors in order to gain access to technology skill transfer.

• Enterprise Applications as Entry Point in Adopting ‘Software-as-a-Service’ Mode of Subscription.

  Software usage will be significantly addressed with the introduction of 'software-as-a-service' mode of subscription. The enterprise applications will be among the first entry points for companies to consider such mode of subscription, especially those within the SME segment. IDC believes the SME will contribute 28.4% of the US$13.4 billion packaged software market in the region this year.

• Analytics Applications Adoption Rate to Improve.

  Simplification of business intelligence (BI) functions, consolidation of features into an integrated suite, and bundling of tools within the database management software segment in order to help companies save adoption cost, will improve analytics applications adoption rate in the region. IDC predicts the BI tools and business performance management (BPM) analytics market to grow 10.6% this year.

• More Open Source Derivatives in Market

Asia/Pacific (excluding Japan) 2006 Software Market Major Predictions Publ 20060123