June 22, 2012 – Global economic uncertainty may lead to curtailed enterprise application software spending through the rest of 2012, according to a revised industry outlook from Gartner Inc.

The research firm cut back its expected increase in overall enterprise application spending for this year to 4.5 percent, down half a percentage point from its outlook for the year in Q1 2012. That near-term reduction still amounts to $120.4 billion spent in the business software and solutions marketplace, up from 2011’s total of $115.2 billion in 2011, Gartner stated.

Gartner Research VP Tom Eid said even that outlook is a bit unclear, as current contrasting economic reports make predictions on enterprise software markets “not readily assessable” until the end of the first half of 2012.

"Spending in 2012 is anticipated to focus on industry-specific applications; upgrades to established, mission-critical software; integrating and securing established systems and infrastructure; and software as a service deployments representing extensions to, or replacement of, existing applications and new solutions," Eid said in a statement on the revised outlook.

While not singling out one area contributing to the decline, Gartner anticipates continued growth in key application software segments. ERP revenue is projected to hit $24.9 billion by the end of the year, and other high-revenue marks are expected for office suites ($16.5 billion), business intelligence ($13 billion) and CRM ($13 billion).

In addition, Gartner stated gathering interest in as-a-service and cloud functionality – some of it enabling an enterprise budgetary switch from capital expenses on infrastructure in the past to operating expenses – benefits vendors offering SaaS, PaaS and IaaS for enterprise software upgrades and add-ons. SaaS and cloud-based services are expected to take up 16 percent of enterprise application spending by 2015, an increase of 5 percent since 2010, Gartner reported.

Gartner will roll out its overall IT spending vision for 2012 in a Web seminar July 10, available here.

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