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Software market grows as new Cloud players threaten vendor dominance

Software market grows as new Cloud players threaten vendor dominance

"As the cloud value proposition becomes more clear, many platform as a service (PaaS) providers like Google, Engine Yard, Informatica and Dell Boomi are a threat to established players."

The worldwide application infrastructure and middleware (AIM) software market revenue totalled $US23.8 billion in 2014, an 8.8 per cent increase from 2013, according to Gartner.

This performance helped the AIM market outperform — in revenue terms — the overall enterprise software market which grew 5.7 percent from $US405.5 billion in 2013 to $US428.6 billion in 2014.

“The largest AIM vendors are increasingly being challenged by providers like Salesforce and SAP," says Fabrizio Biscotti, research director, Gartner.

"At the same time, and as the Cloud value proposition becomes more clear, many Platform-as-a-Service [PaaS] providers like Google, Engine Yard, Informatica and Dell Boomi are a threat to established players.”

Open source software (OSS) and open core providers like MuleSoft, Talend and Liferay added further pressure to incumbent vendors in the marketplace.

Meanwhile, specific point solution vendors that specialise in niche but fast-growing technology areas (in-memory data grids and low-latency messaging, for example) also had a similar impact on the market.

In terms of vendor dynamics, the rankings of the top five vendors have changed after a decade of stability. In 2014, Salesforce moved up to the fourth spot and exhibited the strongest revenue growth with a 55 percent increase in 2014.

“Throughout 2014, the top five vendors showed mixed performance due to the pressure from specialised vendors, in particular PaaS providers and open source software suppliers," Biscotti adds.

"The role of AIM as an enabler of service-oriented architecture is well established, and it is increasingly emerging as a foundational technology for mobile, big data and analytics, in-memory computing, and cloud computing initiatives.

“It is also becoming a foundational element for businesses when adopting the Internet of Things, with the goal of universal integration in mind.”

Rather than replacing existing AIM technology, Biscotti says organisations are focusing new spending on extending integration capabilities, through the use of PaaS offerings.

Legacy and foundational AIM will be replaced at a normal end-of-life pace. Furthermore, specialised vendors have introduced cloud-based alternatives to mobile middleware.

"As organisations grow, they will need to add capacity to their existing AIM software, and the average organisation will need to add licenses to run the software on additional servers and add additional cores to handle the load,” he adds.

Consequently, Gartner believes this trend is a natural reflection of the increasing demands being placed on an organisation's IT infrastructure.

“A growing number of organisations want to become digital businesses, but this puts pressure on their established application infrastructure middleware strategies," adds Massimo Pezzini, vice president and Gartner Fellow.

"They are realising that their application infrastructures, which was designed — in some cases — over 10 years ago, cannot support the demand for the real-time analytics, development agility, deployment flexibility and fast reconfiguration of business networks required to successfully compete in the digital era."

To support these requirements, Gartner believes IT departments need to refresh their application infrastructures.

This could be the addition of capabilities needed to rapidly scale their systems, inject real-time operational intelligence into business processes, support advanced analytics and target do-it-yourself approaches to integration.


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