Dear olliemagro,
Thanks for your question. First, let me request that if any of the
following is unclear or if you require any further research – please
don’t hesitate to ask me for a clarification.
You requested information concerning the size of the application
software market as well as that of the custom application software
market. I’m glad to report that I have uncovered some excellent data
for you in this regard. What you must keep in mind, however, is that
no census is taken and therefore all numbers are estimates based on
surveys conducted by various analysis firms such as Gartner and AMR.
Hence, the considerable differences among the various reports.
According to the Gartner Group, the European enterprise application
software market generated over $4 billion in revenues during 2000,
according to the following country breakdown –
Germany 23%
United Kingdom 22%
Rest of Western Europe 12%
France 12%
Netherlands 8%
Sweden 5%
Italy 5%
Central and Eastern Europe 4%
Switzerland 4%
Spain 3%
Belgium 2%
In the US in 2000 total enterprise application software market sales
totaled over $7 billion according to the same report.
Leading vendors in the US market in 2000 were SAP with 21% market
share, Siebel with 11% and Oracle with 10%. Other leading vendors
include i2, J.D. Edwards, Peoplesoft, Sage, Broadvision and Vignette.
Source: European tech overview, Adweek Magazine's Technology
Marketing, 21 (10): 24(2), November 2001
According to AMR Research, on the other hand, the size of the
Enterprise Application Market in 1999 was already $27 billion; in
2000, AMR expected the market to grow to $78 billion by 2004.
Percentage market share by application type in 1999 was as follows:
e-Commerce 6%
Enterprise Relationship Management 16%
Supply Chain Management 14%
Enterprise Resource Planning (ERP) 64%
This data was extracted from a report titled “ERP software sales
expected to plummet,” published in Logistics Management & Distribution
Report, 39 (7): 18, July 2000
Since estimates from 1999/2000 were done in the shadow of the dot.com
boom, more recent data is necessary if one is to gain a solid
perspective on the application server market – the following presents
a more recent as well as a GLOBAL picture -
“The application software market is forecast to be worth USDlr70
billion by 2006, up two-fold from USDlr38 billion in 2001, according
to AMR Research”
And some projections for where growth is anticipated -
+ “The CRM software segment is forecast to have 25-30% growth in
sales, representing one of the fastest-expanding segments.”
+ “The supply chain management segment is forecast to have USDlr13.6
billion sales, up nearly three-fold.”
+ “The enterprise resource planning (ERP) segment is forecast to have
USDlr31 billion sales, up by slightly over 10%” (annually).”
All of the above has been extracted from:
“CRM spending will soar over next five years,” Computing: 16, June 13,
2002
What about custom application software?
---------------------------------------------------
The following quote is from an article in Food Logistics –
“Custom software will continue to diminish, except for only the very
largest of companies in this segment Those that base their entire
software strategy on custom software will be able to claim: "I fell
behind, but I did it my way" This solution is not practical if you
want to be able to grow your company beyond its present state. The
effort you expend to try to get ahead will most likely slow you down
and put you further behind.”
Source: Selecting the right technology strategy: making sense out the
many deployment options available on the market today, Food Logistics:
46(2), June 15, 2002
I have not been able to locate exact numbers for the custom market – I
will be glad to continue trying to do so on your behalf – please let
me know what you think about the information I have provided you with
here and whether this response adequately addresses your request.
Thanks,
ragingacademic-ga
Search Strategy:
"custom application software" sales market global
"custom application software"
"size of custom application software" |
Clarification of Answer by
ragingacademic-ga
on
29 May 2003 15:06 PDT
Dear olliemagro,
Thanks for your request for clarification.
Here are some answers -
+ AMR does NOT include operating systems or any other kind of system
software in their statistics; in the software "stack" applications sit
above such programs and are always considered separately. Therefore,
you may rest assured that the numbers relate only to application
software - since the survey methodologies differ, the results differ
as well. You would probably be safest with a "middle of the road"
approach, which is what I have done in the past - not too liberal, not
too conservative...
+ "Enterprise" means B2B, business-to-business - sales of software to
organizations, corporations and institutions, but not to the private
consumer, which I believe is what you refer to as the domestic user.
+ There are basically three types of application software -
shrink-wrap, customized and custom. Shrink-wrap are applications such
as Microsoft Office - you pop the CD in the drive and install - also
called "off-the-shelf"; any customization is typically at the
interface level and will be done by the user or by his IT department.
Customized encompasses most application software that we had been
looking at here - a SAP or Peoplesoft installation is never done
without some level of customization, but the core product is the same
product wherever it is installed. Finally, custom software is
software written specifically for a customer "from scratch."
As for the custom, or bespoke, software market - I found a number, but
it doesn't make sense!
"India in 2000 accounted for about 20 per cent of the world
custom–software market (estimated at about $500 billion)."
Source:
http://www.adb.org/Documents/Conference/Technology_Poverty_AP/adb6.pdf
Sales of custom software in China are estimated at 12% of total
software related revenues, estimated at $3.6 billion for 2001 - so, a
little over $400 million in China.
http://www.bsa.org/usa/globallib/econ/china_study98.pdf
The following report covers the Japanese market, where a 1993 estimate
approximates the custom software market at 3.75 times the packaged
software market. Also reports that in Germany 50% of the market is
packaged (shrink-wrapped) while in Japan only 8% is. However, I
believe they are "bundling" custom and customized software together.
In any event, here it is -
http://www.schilke.net/j10n/diplom.pdf
Here is one more quote -
"It's true that the custom software market has historically been an
illiquid one, with few customers and few providers. "
This, from a company that writes such software - so an objective
opinion if anything... (given its tone, of course!)
http://www.internet-security-corp.com/custom-soft/
I did locate a report that includes an exhibit on the size of the
German custom software market; however, I believe this is limited to
consumer applications, and in any event you would have to purchase the
full report -
http://www.info-edge.com/toc_new/GI-SBR-0056TOC.pdf
I hope this satisifies your research request.
Please let me know if I can be of additional assistance.
thanks,
ragingacademic-ga
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