Although the economy is experiencing a downturn, the software enterprise market will increase, says Gartner.
Revenue is projected to increase from $176.3 billion from last year to $190.7 billion for this year, making it an 8.2% rise.
According to Joanne Correia, managing VP for Gartner: "Software vendors that have a balanced mix in channel, new licence, and maintenance revenue streams and flexibility in contractual terms such as software as a service, open source and outsourcing, have the strongest options for continued growth and to even out their risk."
Correia also explains that shrinking discretionary spending budgets will heighten competition for new maintenance and licence revenue streams, and place a renewed emphasis on vendor performance and viability.
Gartner says the current situation cannot be compared to 2001, when there was a brief downturn in sales due to the boom in the industry in the 1990s. The same conditions are not present and the analyst is confident the downslide will not occur again.
"Although software investment is not likely to decline, extended macroeconomic weakness will mean slower growth in the industry," said Tom Eid, research VP at Gartner. "No market is inherently immune to a softening in demand. However, the magnitude of a downturn will vary, affecting software markets and vendors differently."
According to Gartner, companies will feel the effects for the first time in the second quarter of 2008. Companies are advised to properly control their IT budgets.
"The enterprise software market is undergoing major technology and business model transitions that will last through 2012," Eid said. "For the near-term, software vendors will continue to face tough product life cycle decisions and short-term pressure on price and margins, which will put the ability to be innovative at risk. The fundamental changes that are occurring in how software technology is deployed and used means no software market or vendor will remain untouched."
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