DBMS Software Market Forecast, (Executive Summary) Executive Summary

Transcription

1 DBMS Software Market Forecast, (Executive Summary) Executive Summary Publication Date: 4 September 2003

2 Author Colleen Graham This document has been published to the following Marketplace codes: SOFT-WW-EX-0126 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 DBMS Software Market Forecast, (Executive Summary) Forecast Reflects Lower Growth Expectations Over a period of a little less than a year, Gartner Dataquest had to significantly adjust its prior database management systems (DBMS) software forecast. In an economy reeling from war, disease and disclosures of accounting fraud, enterprises sought to simply weather the storm and survive until the business environment improved. While worldwide IT spending hit record levels in 1999 and 2000, the peak of excess clearly occurred in The biggest booster to IT spending during this period was unsustainable enthusiasm from business about the positive prospects for new technology deployments. However, no such technological incentive for growth is on the horizon, and as shown by Figure 1, generally slower recovery is now being predicted than was expected in October (Note: Data for 2000 and 2001 has been reviewed and updated to reflect better information, mergers, acquisitions and restatements.) Figure 1 Comparison of New 2003 Through 2007 Forecast With Previous 2002 Through 2006 DBMS Software Market Forecast Millions of Dollars 12,000 10,000 8,000 6,000 4,000 2,000 October 2002 August Source: Gartner Dataquest (August 2003) The total DBMS software market saw single-digit decline for For 2003, this trend is expected to improve slightly with growth back into positive numbers. However, overall, the forecast has been greatly lowered from our previous forecast because of a continued sluggishness in the economic outlook. Regardless of the precise "turning point" for the economy, whether mid- or late 2003, or even early 2004, the pattern of recovery is expected to follow a gradual, barely perceptible improvement. Gartner Dataquest believes that, as of mid-2003, we have entered the "trough" of the downturn, and while IT spending is not likely to decline further, given the expected gradual recovery, it is also not likely to increase quickly Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

4 2 DBMS Software Market Forecast, (Executive Summary) Forecast Drivers Forecast Inhibitors Our most likely scenario, and the one used for this forecast, assumes that enterpriseshaveworkedthroughthebulkoftheirexcesscapacityandare expecting to begin returning to normal purchasing patterns again, after the hard stop in all new purchases in Generally, more than 60 percent of software spending occurs between the end of the third quarter and through the fourth quarter. The likely impact on this market is a normal burst of growth around the end of 2003 as some discretionary funds are released. However, as stated earlier, this seasonal "pop" is expected to be somewhat weak in comparison to previous years. Overall, this new forecast sees a five-year compound annual growth rate (CAGR) of 4.3 percent. The market for new license sales of DBMS software was $8.4 billion in 2002 and is forecast to reach $10.3 billion in The drivers for growth in the DBMS software market include: Short Term The need to reduce total cost of ownership (TCO) will drive the purchase of tools that increase operational efficiency and enable better use of data management resources After the hard stop in new DBMS software purchases in 2002, enterprises have worked through the bulk of their excess capacity and will begin returning to normal purchasing patterns again in late 2003 and early Most CIOs are expecting to be able to spend the totality of their 2003 IT budgets (as opposed to returning a portion as was called for in 2002.) This will result in a small seasonal pop in spending. Long Term Potential cost-savings associated with running databases on low-cost "Lintel" servers (Linux running on Intel-based hardware) will drive an upgrade cycle, bringing in additional new software license revenue to vendors supporting the new architecture. Increased funding of business intelligence projects will drive growth in supporting technologies, such as DBMS and integration software. Increased regulations, such as Sarbannes-Oxley and Health Insurance Portability and Accountability Act (HIPAA) dealing with data capture, access, analysis and storage, will drive additional IT spending in these areas. The inhibitors to growth in the DBMS software market include: Short Term Enterprises will be hyper-cautious in terms of IT spending and investment in response to a stalled economy, impacted by war, disease and continued disclosures of accounting fraud. Lack of funding for new technologies because of the economic issues of 2002 will delay time-to-market for many new companies, slowing the rate of implementation of new product ideas. Staff reductions will delay product development at software companies and reduce customer experimentation with new technologies. Vendor ability to execute will continue to inhibit market growth. Key issues are timely delivery, quality product and support, effective marketing, referenceable customers, and well-trained distribution channels Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4 September 2003

5 DBMS Software Market Forecast, (Executive Summary) 3 Increasingly more vendors will use deferred revenue recognition accounting practices, which will cause the market to appear to be growing more slowly. Over time however, this action will result in a "smoothing" of vendor revenue streams. Flat or weak spending in key verticals, such as telecommunications and high tech, will continue to negatively impact growth of data management and infrastructure software through the end of 2003 and into 2004 Long Term Price competition among vendors dramatically reduces prices for infrastructure and data management software, a trend that will not be reversed when the economy improves. Outsourcing of database management will reduce the revenue per unit of DBMS software when sold indirect through service providers. In 2004 and beyond, the U.S. Government, both state and federal, is likely to reduce overall spending from levels, impacting all IT segments, including data management software. For the full report, see "DBMS Software Market Forecast, ," SWSI-WW-MS Gartner, Inc. and/or its Affiliates. All Rights Reserved. 4 September 2003