Cost Containment, Cohesive Offerings: Key Drivers In AD Software Market

The worldwide market for application development (AD) software totalled $7.3 billion in 2008, a 4.2 percent increase from 2007 revenue of $7 billion, according to Gartner.

“In 2007, the annual growth rate was 11.2 percent indicating that the worldwide economic crunch has clearly slowed growth in this market,” said Laurie Wurster, research director at Gartner. “However, single-digit growth in a challenging economic climate is good, especially in this relatively mature market overall, with some hot spots remaining within it. Investments are temporarily suspended and deferred but not cancelled. We expect the growth rate to increase from the third quarter of 2009.”

Gartner said that the key drivers in the AD market were cost containment and cohesive offerings. Organisations had an increased focus on ensuring the overall quality of software, especially from a security perspective. In addition, organisations looked to exploit service-oriented architecture (SOA) in their new AD architecture developments and use software-as-a-service (SaaS) and cloud computing for their existing AD advancements.

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The Asia/Pacific region saw the greatest growth at 12.1 percent, followed by Eastern Europe at 9.8 percent and the Middle East and Africa at 7.9 percent. By comparison, the AD market in Western Europe grew 6 percent and North America 1.6 percent in 2008. The fastest growing technology sectors in 2008 were construction software (development environments and suites) at 6.7 percent, quality-testing tools at 5.5 percent and security testing (dynamic application security testing - DAST- and static application security testing - SAST) tools at 39.2 percent.

Fuelled by acquisitions of vendors in the fastest growing AD market segments, the top three vendors – IBM, Microsoft and HP – grew faster than the market average. HP experienced the strongest growth among the top three vendors with an increase of 17.6 percent in 2008.

“For the remainder of 2009, vendors will pull out of some geographies and enter new ones and further high growth should come from Asia/Pacific markets as more offshoring is expected for cost containment measures,” concluded Wurster. “In addition, alternate software delivery models will pick up and vendors will optimise on direct v/s channel sales. However, the bulk of business for advanced developments and advanced usage of AD tools will come from North America and some mature economies in Europe, the Middle East and Africa.”