Speaking to BizIT, Gartner's Yanna Dharmasthira noted that this year's expected growth is significantly lower than 2008's 11.3 per cent, showing the effects of the global slowdown.

Ms Dharmasthira, who is Gartner's research director for software markets, added that the overall market outlook in Singapore and the Asia Pacific region as a whole is more positive in 2010.

'However, end-user organisations will continue to be cautious in their spending and will continue to look for ways to achieve faster ROI (return on investment), reduce cost and enhance effectiveness,' she added.

Enterprise software, also known as enterprise application software (EAS), is software intended to cater to enterprise-wide needs, rather than for particular departments.

As business enterprises have similar departments and systems, enterprise software is often available as a suite of programs that have attached enterprise development tools to customise the programs for specific enterprise needs.

The Gartner analyst noted that Singapore's growth rate in enterprise software would be slower than that of the Asia Pacific region as a whole. 'However, this is not surprising, because Singapore is one of the more developed markets in the region.'

Asia Pacific's enterprise software market revenue is forecast to reach US$22.1 billion in 2010, posting 10.2 per cent growth. This represents a rise from the expected 6.6 per cent growth this year, which is a notable slowdown compared to 2008 growth of 13.8 per cent.

'Within the region, the volatile economy is having an impact on the application software segment more than the infrastructure software segment,' Ms Dharmasthira noted.

She added that, both in Singapore and the Asia Pacific market, the major growth will come from infrastructure software, which is a sub-set of the enterprise software market.

Infrastructure software refers to software which helps connect various pieces of hardware that make up the IT systems of a company, such as computers, servers and routers. It is a subsection within enterprise software.

Within each of the infrastructure software markets and application software markets, growth will vary, the Gartner analyst noted. However, generally, in a challenging economic situation, end-user organisations are not very inclined to add new applications.

'Instead, they are more inclined to enhance or maintain their infrastructure software to improve the effectiveness of their IT operations,' she said.

Infrastructure software represents 64.4 per cent of enterprise software spending in Asia Pacific in 2010. The bulk of infrastructure software spending is made up of operating systems, database and security software segments. Data integration tools and virtualisation software will have the fastest CAGRs (compound annual growth rates) in the next five years, Ms Dharmasthira said.

'Although application software spending will have a slower growth rate than infrastructure software spending, during the next five years it is projected to grow at a solid 9.9 per cent,' she added.

ERP (enterprise resource planning) and office suites will remain the largest segments throughout the forecast period, while Web conferencing and project and portfolio management (PPM) will have the fastest CAGRs, the Gartner analyst added.

In Singapore, Ms Dharmasthira noted, the highest growth potential for the next five years, in terms of CAGR, will come from:

• Within application software: Web conferencing and team collaboration, project portfolio management. These same segments will have the highest growth for the whole Asia Pacific region.
• Within infrastructure software: Data integration and virtualisation. These same segments will have the highest growth for the whole Asia Pacific.

• The Gartner analyst noted that, despite the slowdown, Asia Pacific still has a positive outlook over the five-year forecast period from 2008 through to 2013, achieving a CAGR of 10.8 per cent, the highest of any region worldwide.

'For the next five years, China, India and Vietnam will continue to register the highest CAGRs (14.6 per cent, 12.4 per cent and 10.7 per cent, respectively). Mature markets Australia and Singapore will also have attractive CAGRs, of 9.5 per cent and 9.4 per cent respectively,' Ms Dharmasthira noted.

She added that China and India will continue to benefit from a large domestic customer base and government stimulus packages, as well as relatively low market penetration.

'Australia and Singapore's revenue is supported by a consistent maintenance revenue stream and a strong vendor channel and service infrastructure, as well as positive expectations for end-user software budget increases in 2010,' she added.

Ms Dharmasthira observed that Asia Pacific will have a more positive outlook compared with other regions such as Europe and North America and as a result, major vendors will continue to target higher-growth markets in the region.

'However, business customers continue to have strong bargaining power in the region. Some Asia Pacific markets have been traditionally more price-sensitive - a situation that is even more pronounced in the downturn. We expect to see more intense vendor competition in Asia Pacific, from multinational vendors as well as prominent local country vendors.'