Egham, U.K., April 14, 2016 View All Press Releases

Strong Dollar Weighing on the Wider Software Market

iPaaS and aPaaS Markets Grew 55 Percent and 40 Percent Respectively

Worldwide application infrastructure and middleware (AIM) software revenue totaled $23.9 billion in 2015, a 0.1 percent increase from 2014, according to Gartner, Inc. The considerable appreciation of the U.S. dollar in 2015 masked growth in the market. In constant currency terms the market grew 7.8 percent, driven by rapid growth in the platform as a service (PaaS) segment.

"The PaaS segment showed the most impressive growth, not just in the AIM market but across the entire enterprise software market," said Fabrizio Biscotti, research director at Gartner. "Integration PaaS (iPaaS) grew 55 percent in U.S dollars, while application PaaS (aPaaS) grew 40 percent, despite headwinds from the appreciating U.S. dollar."

While older technology remains the first choice for the most demanding application scenarios, the evolving maturity of cloud application infrastructure now offers greater agility, scalability and efficiency than traditional on-premises technologies. This ongoing transition to cloud services and the emerging wave of innovation surrounding the Internet of Things (IoT) further pushes application infrastructure spending away from older models toward event-driven analysis and processes.

"Market concentration among the largest vendors is diminishing under pressure from specialists, and open source and cloud providers," said Mr. Biscotti. "The growth of iPaaS and aPaaS has, largely, not worked out to the benefit of the market incumbents."

In 2015, the largest vendors retained their market positions, but market leader IBM suffered a revenue decline of nearly 13 percent, falling to 25 percent of the total AIM software market (see Table 1). Oracle's revenue also dropped, by nearly 4 percent, capturing 13 percent of the total market. Microsoft's 5 percent revenue growth meant it was the only one of the top three players to grow its revenue. Salesforce retained the fourth spot, while Software AG dropped out of the top five — switching places with TIBCO Software.

"Salesforce continues to disrupt the AIM market, with its revenue growing more than 36 percent to just over a billion dollars," said Mr. Biscotti. "Salesforce's strong performance, as well as steady growth in the ‘Others’ category, underlines the trend of cloud-only firms and smaller specialists picking up market share at the expense of traditional vendors in this space."

Table 1 Worldwide Vendor Revenue Estimates for Total AIM Software, 2015 (Millions of U.S. Dollars)

**

Company

2015 Revenue

2015 Market

Share (%)

2014 Revenue

2014-2015

Growth (%) **

IBM

6,043.2

25.2

6,926.5

-12.8

Oracle

3,173.1

13.3

3,298.2

-3.8

Microsoft

1,114.8

4.7

1,058.8

5.3

Salesforce

1,010.2

4.2

740.4

36.4

TIBCO Software

593.0

2.5

640.9

-7.5

Others

12,006.6

51.1

11,260.4

6.6 **

Total

23,941

100.0

23,925

0.1 **

Source: Gartner (April 2016)

This trend is consistent with AIM buyers' pursuit of innovation — not necessarily from a technology perspective, but most of all from go-to-market, business model and delivery channel perspectives.

"2015 was the year that iPaaS became a serious alternative to traditional software-based integration approaches," said Keith Guttridge, research director at Gartner. "Buyers are choosing iPaaS due to its lower entry costs, reduced operational demands and improved productivity. Vendor interest in this space is also growing rapidly, with the number of offerings doubling in the past 12 months."

More data is available in the report "Market Share: All Software Markets, Worldwide, 2015."

Gartner analysts will further examine application architecture and development trends at the Gartner Application Architecture, Development & Integration Summits 2016, May 23-24 in London and July 25-26 in Sydney, and the Gartner Application Strategies & Solutions Summit 2016, December 6-8 in Las Vegas.

Contacts

• Viveca Woods

- Gartner

• viveca.woods@gartner.com

• Rob van der Meulen

- Gartner

• rob.vandermeulen@gartner.com

About Gartner

Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. The company delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is the valuable partner to clients in approximately 10,000 distinct enterprises worldwide. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 7,900 associates, including more than 1,700 research analysts and consultants, and clients in more than 90 countries. For more information, visit www.gartner.com.

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