Worldwide revenue for enterprise software applications will grow from $279.6 billion in 2022 to reach $385.2 billion in 2026 with a five-year CAGR of 8 percent, according to the latest global market study by International Data Corporation (IDC).
Nearly all the upside growth will come from investments in public cloud software applications, which are expected to represent nearly two-thirds of all enterprise applications revenue in 2026.
While the process of migrating from legacy on-premises apps to cloud services can take years, senior executives will drive a transition to the public cloud as an essential part of their digital transformation.
Application Software Market Development
Companies that don't pursue this approach may sustain losses due to their competitors adopting cloud services, and their use of application programming interfaces (APIs) to gain momentum.
"It's no longer enough for businesses to sit back and rely on their technological debt of software and hardware assets to keep the company running. In the digital world, enterprise software needs to constantly innovate to keep up with demand for speed, scale, and a resilient business," said Heather Hershey, research director at IDC.
Enterprise CIOs and CTOs must now invest in new tools to keep their Software-as-a-Service (SaaS) applications up to date, automating all processes while also leveraging innovation and a wealth of data to become a more creative and resilient organization.
In addition to the ongoing public cloud migration, IDC has identified a number of other significant market developments that are driving growth in the enterprise software applications market.
The ongoing development and deployment of SaaS apps are essential for digital business growth. Forward-thinking leaders will apply AI-driven software that is cloud-enabled, modular, and intelligent.
According to the IDC assessment, API technology will continue to be the backbone of the enterprise software applications market. Software APIs are a sound investment for companies that understand the pivotal role they play in connecting all the disparate code bases.
Ongoing migration to the cloud with TaskApps augmentation will continue, particularly in B2B enterprises. TaskApps and low-code development tools are being used to close gaps, extend processes, or evolve the business at a faster pace in the transition to Digital-First strategies.
New global regulations around data privacy and ethics have changed the way organizations collect and use data, pushing governance to the forefront of the conversation. Compliance has become a differentiating factor for enterprises that prioritize online trust.
Organizations are expanding their visions from filling technology gaps to optimizing processes globally to going the last mile with complete differentiators for their clients. Market leaders are starting to leverage the upside growth opportunity that software-based innovation creates.
The enterprise applications market is a competitive market that includes software specific to certain industries as well as software that can handle fundamental requirements for multiple industries.
Outlook for SaaS Applications Growth
Enterprise software applications can be delivered as a pre-integrated suite of apps, or as standalone applications that automate specific functional business processes -- such as accounting, human capital management, or supply chain execution.
The enterprise applications market consists of the following secondary markets: enterprise resource management, customer relationship management, engineering applications, supply chain management applications, and production applications.
That said, I foresee changes in the way that software applications are developed and promoted. Savvy business technologists (outside the traditional IT organization) will drive the creation of many new apps. SaaS product marketers will work closely with developers to ensure alignment with user needs.