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Thursday, May 08, 2014

Rise of the 'Software-Defined Everything' Ecosystem

Marc Andreessen's 2011 proclamation that "software is eating the world" may be intuitive to some people, while many others will be puzzled by that remark. What does that mean in reality, and why should you care? Software is getting more attention today than hardware, and for good reason.

You're going to hear a lot more about "Software-Defined" everything, because it's a significant trend in the Information and Communications Technology (ICT) sector -- the mainstream business-related impact of virtualization will continue to reach across all sectors of the Global Networked Economy.

A good example; International Data Corporation (IDC) released the latest results from their Worldwide Semiannual Software Tracker. For 2013, the worldwide software market grew 5.5 percent year over year reaching a total market size of $369 billion.

This was higher than the 4.3 percent growth experienced in 2012 -- a result of the Eurozone recovery and continued above-average growth in the United States. IDC now expects this moderately positive scenario to continue for several more years.

"Data provides the edge to companies that can leverage their information for competitive advantage -- with new products and services, and an enriched customer experience. Software for data management, data access, and collaborative information sharing continues to lead the growth in the overall software industry," said Henry D. Morris, senior vice president at IDC.


Three primary segments comprise the total software market in IDC's software taxonomy: Applications; Application Development & Deployment (AD&D); and Systems Infrastructure Software.

The three segments grew between 5.4 percent and 5.6 percent meaning that no individual segment had a standout performance in 2013. Nevertheless, within the primary segments there were several function-specific types of software that experienced high rates of growth.

Among the three primary segments, the AD&D segment, which comprised nearly 23 percent of total software revenues in 2013, was the fastest growing market with a 5.6 percent year-over-year growth rate.

Growth in the AD&D segment was largely driven by the performance of the Structured Data Management and the Data Access, Analysis, and Delivery secondary markets with 7.3 percent and 6.0 percent growth rates, respectively.

Advanced Analytics Software and Database Management Systems (DBMS) solutions are pushing the growing trend for these markets because of widening Big Data and Analytics adoption.

In the Applications primary market segment, which comprised 50 percent of total software revenue, year-over-year growth for 2013 was 5.5 percent, which is similar to the total software market average. Within this market segment, Collaborative Applications and Content Applications stood out with year-over-year growth rates above 10 percent.

While the former is driven by Enterprise Social Networks and Team Collaborative Applications adoption, the latter is driven by the Search and Content Analytics, which grew at 13.2 percent year over year. The Big Data and analytics adoption trend was largely responsible for this market growth.

In the Systems Infrastructure Software primary market segment, which comprised 27 percent of total software revenue and grew 5.5 percent year over year in 2013, the System Software secondary segment grew more than 8 percent year over year -- driven by the launching of Windows 8 and Virtual Machine and Cloud System Software adoption.

"Software-Defined Everything" will be very closely aligned with the emerging demand for Open Hybrid Cloud services. It's the key innovation space to watch in the next 24-36 months, as the market evolves beyond the current early adopters.

IDC provides total market size and vendor share information for the seventy-nine segments of the global software market. They covers more than 800 software vendors across a total of 49 countries markets. Historical market size, vendor share, and forecasts are updated on a semiannual basis.