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Enterprise mkt to witness on-premise, Cloud fights

In CRM, incumbent on-premises vendors could be discounting their cloud offerings heavily to try and maintain their customer base

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Pratima Harigunani
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MUMBAI, INDIA: The enterprise software market spending is slated to be on pace to total $335 billion, a 5.5 per cent increase from 2014.

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Latest Gartner estimates hint at more price erosion and vendor consolidation to be expected in 2015 because of fierce competition between cloud and on-premises software providers. In particular, in the customer relationship management (CRM) market, a key cloud battleground, seat prices for segments such as sales force automation (SFA) are expected to decline by 25 per cent through 2018. This will be caused by incumbent on-premises vendors discounting their cloud offerings heavily to try and maintain their customer base. There will also be increased price competition from cloud offerings in other areas (such as database management system (DBMS) and application infrastructure and middleware, albeit at a somewhat slower and weaker pace than for CRM.

The outlook for IT services in 2015 has been reduced to 2.5 per cent growth, down from the 4.1 per cent growth forecast in the previous quarter. Globally, reductions to software support services contributed disproportionately to a lower outlook through 2018, because of lower growth rates expected for enterprise software. Regionally, short-term growth rates were lowered slightly in Russia and Brazil, due to declining economic conditions and political uncertainty in both countries.

Telecom services spending, as Gartner added, is projected to grow 0.7 per cent in 2015, with spending reaching $1,638 trillion. A multitude of factors have affected each national market — some positive, others negative — with the primary driver for growth being a reduction in expectations for mobile voice revenue across several markets in Western and Eastern Europe (such as Austria and Italy) as a consequence of the declining growth of new devices sold in the region over the forecast period.

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