China’s software market is expected to grow to US$13.1 billion by 2017, at a Compound Annual Growth Rate (CAGR) of 11.3%, according to research firm International Data Corporation (IDC). According to the PRC data from the IDC Asia/Pacific Semi-Annual Software Tracker 2H2012, the market reached US$7.64 billion in 2012.
IDC analysts expect the entire enterprise application software market to grow at a CAGR of 12.5% in the next five years, on the back of fast-growing software submarkets including human resource management (5-year CAGR of 18.9%), performance management and risk control (5-year CAGR of 15.2%), customer relationship management (5-year CAGR of 14.2%) and supply chain management (5-year CAGR of 13.8%).
The advent of the “Third Platform Era” introduces a new dimension of vitality to China’s software industry. IDC sees the four pillars of the Third Platform (big data, cloud computing, mobility and social networks) being gradually integrated into the development of software.
Informatization, one of the “New Four Modernizations” proposed by the Chinese government, is the driving force behind enterprise transformation in China.
Despite economic uncertainties, large-scaled companies and SMEs continue to steadily increase their software investments, so as to respond in a timely manner to the changing market and enhance their core competitiveness. Domestic and foreign software vendors also launched products or solutions which are integrated with the Third Platform.
Kathy Pan, Research Manager, Enterprise System and Software Research, IDC China says, “Integrating features of the Third Platform into the software market introduce a new driving force to software innovation and development.”
“In the next five years, users and vendors need to focus on the development trends of the Third Platform, with cloud computing transforming software models; Big Data driving the development of business analytical software and database; mobile applications creating better customer experience; and social features becoming increasingly integrated with enterprise applications.”
IDC finds that cloud computing, social network and mobility are currently being integrated into all levels of software, including System Infrastructure Software (SIS), Application Development & Deployment (AD&D) and applications.
IDC expects that of all the software submarkets, the Business Intelligence (BI) software-based Data Access, Analysis and Distribution (DAAD) software market will maintain a rapid growth of up to 16.5% CAGR in the next five years.
This growth is attributed to the advent of the “Big Data era”, which has led to increasing user focus on the investment in business analytical applications; strong demands from large-scaled companies in industries such as finance and telecom for advanced analytical applications; and the focus of SMEs on easy-to-use business analytical applications.
The demand for business analytical applications, especially for real-time ones, reinforces the application and popularization of database all-in-one machine products.
With the increasing popularity of e-commerce, internal and external enterprise applications targeting finance, human power, market, sales, supply chain, purchase, production and services are gradually being integrated. Many application software vendors prioritize industrial penetration and geographical expansion, as they seek to broaden their income sources. They see industry-specific solution providers as potential key partners.
“IT consumerization” brings about new business opportunities for vendors while triggering demands in security and governance. As such, IDC believes multiple equipment support, refinement of customer experience and an innovative ecosystem will introduce more opportunities.
On the other hand, the adoption of cloud computing and BYOD will result in the increase in management demands of users for cloud infrastructure and mobile devices.
IDC predicts that the future system and network management software will evolve into an integrated system management software that is capable of managing both front and back ends.