Software spend in A/NZ surged last year

Software spend in A/NZ surged last year

Last year also saw public cloud deployments for software accelerate.

Credit: Photo by NASA on Unsplash

Software spending across Australia and New Zealand surged by 7 per cent in 2020, year-on-year, to US$13 billion, according to the latest figures by analyst firm IDC. 

Moreover, the second half of 2020 alone saw software spend ramp up by 12 per cent, year-on-year, compared to 3 per cent growth in the first half.  

Breaking the software market down into category segments, spend on customer relationship management (CRM) applications grew by 13 per cent in the second half of 2020, compared to only 4 per cent growth at the beginning of 2020. 

This comes as little surprise, given that the COVID-19 pandemic has made customer experience programs even more important for businesses across A/NZ. As such, customers and customer experience has been a major driver for digital transformation initiatives and software investments in A/NZ. 

“During 2020, we saw increased online customer activities and interactions via digital channels. Current, clean, constant, and compliant customer data paired with AI-enabled technology is key for future-looking organisations to transform customer relationships and enable customer loyalty and trust,” IDC A/NZ senior market analyst Anastasia Antonova said. 

Anastasia Antonova (IDC)Credit: IDC
Anastasia Antonova (IDC)

Another area of entirely unsurprising growth came from the collaborative applications market, which recorded year-on-year growth of 32 per cent in 2020.  

This growth was mainly due to businesses and schools adopting new working or studying from anywhere models, which led to a large-scale shift in operational arrangement.  

Artificial intelligence (AI) platforms, meanwhile, grew by 27 per cent, as companies invested to boost business agility and build a more adaptive operational model to cope with fast-changing market conditions.  

At the same time, integration and orchestration middleware also grew 15 per cent over the 2019 tally, outpacing the broader software market.  

“Businesses are building towards the agile, adaptive operating model,” said John Feng, IDC A/NZ senior market analyst. “Companies need data-driven, AI-enhanced decision-making, and reliable, integrated, cross-department data sources for a solid foundation to then build subsequent processes.  

“Processes also need to be integrated and streamlined to deliver the operational improvement,” he added. 

As the market invested in optimising the delivery and management of IT, system and service management software grew 14 per cent in 2020. Additionally, software quality and life cycle tools grew by 14 per cent over the 2019 figures.  

Likewise, security software also grew, increasing by 12 per cent in 2020, as companies spent on securing a more spread out and diverse IT environment as a result of adjusting to pandemic restrictions. 

IDC said that IT was increasingly forming the backbone of business operations with digital channels becoming the primary mode of engaging with customers and ecosystem partners.  

This means enterprises are refreshing their emphasis on software quality and deployment efficiency.  

Last year also saw public cloud deployments for software accelerate, with the market portion of revenue from public cloud deployment rising from 35 per cent in 2019 to 41 per cent in 2020 – an unsurprising trend, given the uptake in cloud-based solutions in the wake of the pandemic. 

Indeed, IDC suggested that scalability and the fast deployment of cloud-based solutions has been crucial for A/NZ businesses to pivot their operations in the face of the pandemic disruptions and restrictions. 

This is all good news for partners, with Antonova pointing out that the trend suggested much more work in this area was yet to come.  

“This is a strong indicator that A/NZ organisations are going ahead with their digital transformation initiatives to address weak spots uncovered by the COVID-19 pandemic, building business resiliency and investing in the next normal,” she said.  

Looking forward, IDC expects businesses to continue to build towards an “intelligent future enterprise vision” in the coming 18-24 months. 

For the record, an “intelligent future enterprise vision” means, in IDC’s words, a scenario in which the company functions as an integrated whole, and processes are tightly knit with data flowing across the organisation.  

IDC said it also sees the A/NZ market starting a refreshed effort to work on unlocking the power of data in running businesses, with business decision-making increasingly guided by fact-based data, with the aid of advanced analytics and artificial intelligence.  

"The support to businesses that IT provided in the outbreak of pandemic has given companies more confidence in IT investment. The expectation on that return of investment is high,” Feng said.  

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