Gartner predicts that the global market will top $246 million in 2011 and grow at an five-year annual compound growth rate of 6 percent.
The numbers are a welcome rebound from 2009's 2.6 percent decline. Gartner analysts say that aging systems, higher demand for security products and alignment of software with business requirements are driving user spending in the infrastructure software market.
Enterprise software spending in North America is forecast at $110.8 billion for 2010, representing an 8.5 percent increase over 2009 revenues of $102 billion.
"Spending is not up to 2008 levels in terms of raw dollars," says Joanne Correia, managing vice president at Gartner, "but software took the lightest hit during the crisis, and a lot of people thought it would be worse." While new applications and projects placed on hold were reflected in numbers from SAP and Oracle, Correia says maintenance and software automation work in progress continued.
"One thing we were surprised by was that the operating system numbers that came in from Microsoft were higher than we expected in new licenses and the leap from XP Pro to Windows 7," she said.
Gartner analysts say strong enterprise software vendor earning reports indicate the growth in North America was responding to pent-up demand, was "significantly" loaded to the first half of the year and will taper in the last months of 2010.
Despite the loss of momentum, Correia says that key markets, such as virtualization, collaboration technology and security are expected to finish the year with double-digit growth.
"Virtualization brings more CPU power to the consolidations they're already going through, collaboration technologies are an obvious win when there are travel cost controls and enterprises will always spend money on security because they can't afford the data breaches."
The Asia/Pacific region is predicted to see the greatest increase in 2010 spending at 13 percent, while Western Europe will lag with a five-year growth rate of just 2.7 percent.
Gartner analysts say the slow rebound in Western Europe is in stark contrast to Eastern Europe and the Middle East/Africa regions that bring huge gains to companies that invest in good years, but bring boom-and-bust cycles when recession arrives.