eCommerce digital transformation causes boom in enterprise application market

Worldwide enterprise application spending will grow 7.5% this year to $149.9 billion, according to the latest forecasts from Gartner.

The market will increase to over $201 billion in 2019, due to transformation projects in eCommerce, marketing and advanced analytics software.

Gartner analysts said the spending growth will be driven by modernisation, functional expansion and digital transformation projects, such as those being carried out by retailers upgrading their infrastructure to cope with online demand.

"The majority of spending is going towards modernising, functionally expanding or substituting long-standing business and office applications with cloud-based software-as-a-service (SaaS)," said Bianca Granetto, research director at Gartner. "Projects have been approved and budgeted for, often over a multiyear period, meaning the pace of spending and adoption isn't subject to any impending urgency."

A recent Gartner survey discovered that alternative consumption models to traditional on-premise licenses are accounting for more than 50% of new software integrations, including SaaS, hosted licence, on-premises subscriptions and open source.

Gartner also forecasts that by 2020, 75% of application purchases supporting digital business will be "build", not "buy", as businesses favour a combination of bespoke applications to make their online presence innovative and competitive. Gartner said these solutions are increasingly being sourced from startups, disrupters or specialised local providers.

One such retailer who is embarking on a cloud SaaS approach to its digital transformation is Saltrock. The retailer recently launched a new eCommerce website which used multiple vendors to update the retailer's IT infrastructure.

Saltrock partnered with over eight SME vendors in order to source a bespoke combination of services which include one-to-one customer personalisation, click & collect and endless aisle technologies.

Head of digital and marketing at Saltrock, Richie Jones, told Essential eCommerce he prefers to use multiple vendors than outsourcing to one systems integrator (SI).

He said: "I'm just not seeing a good SI SaaS approach from one provider which is really nailing it."

"We're also getting better value by mixing them up as well as companies like Oracle have massive margins and often take percentage of sales – you're just signing your life away for a couple of years," he added.

Another retailer which is constantly transforming its business is Asos. The retailer's CFO Nick Beighton told Essential eCommerce earlier this summer that IT replatforming is a continual process, "a bit like painting the Forth Bridge".

"So we should never stop enhancing our technology," added Beighton.

Gartner also predicts that by 2020, over 75% of business will deploy advanced analytics as part of a platform or analytics application to improve business decision-making.