IDC: 2020 spend shows software becoming the backbone of business

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IDC: 2020 spend shows software becoming the backbone of business

Software spending across ANZ rose 7 percent from 2019 to 2020 reaching US$13 billion, according to a new report from IDC.

The Worldwide Semiannual Software Tracker for H2 2020 showed that while spending on software only grew 3 percent year over year in the first half of last year, it sped up significantly to see 12 percent year over year growth in the second half.

“This is a strong indicator that ANZ 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,” said IDC ANZ senior market analyst Anastasia Antonova. 

Public cloud deployments for software accelerated to 41 percent of the market in 2020, up from 35 percent in 2019.

Scalability and the fast deployment of cloud-based solutions were crucial for ANZ businesses to pivot their operations in the face of the pandemic disruptions and restrictions, the company said.

Customer experience (CX) played a large role in digital transformation initiatives and software investment across the region, as the pandemic drove up the importance of CX programs. The CRM application market grew 13 percent in the final quarter of 2020, up from just 4 percent at the start of the year.

“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,” Anatova said. 

Unsurprisingly, the need for employees and students to go remote saw the collaboration software market rise 32 percent year over year in 2020.

In terms of growth, the collaborative applications market stands out within the software market, as it recorded YoY growth of 32 percent in 2020. 

AI platforms and integration and orchestration middleware also surpassed the general market growth rate, rising 27 percent and 15 percent, respectively, over 2019.

“Businesses are building towards the agile, adaptive operating model. 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”, IDC ANZ senior market analyst John Feng said. 

IDC noted that the rise of digital as a way to engage with customers and partners has led to enterprises refocusing their efforts on software, which has led to a 14 percent growth for software quality and lifecycle tools.

To keep these spreading systems safe, compliant and optimised, managed IT software grew 14 percent while security software grew 12 percent.

IDC predicts further growth for AI data analytics and insights as organisations focus on leveraging increasingly gathered information to inform decisions and integrate processes to enable intra-organisational data flow.

"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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