15 May 2013 - Evolutionary changes in cloud, software-as-a-service (SaaS), IT consumerisation and mobile are fundamentally reshaping how software companies do business, the PwC Global 100 Software Leaders market research report found. Key data and feedback reflect that:
“Cloud computing has enabled SaaS to grow as a new business model. The entire structure of the software industry is fundamentally changing,” said Mark McCaffrey, PwC's Global Software Leader. “In the short term, we expect business models will continue to range from traditional licensing to SaaS, subscriptions. Over time, we see a growing range of services and functions, such as PaaS, IaaS and XaaS, will begin to emerge.”
According to PwC’s recent Future of Software Pricing Excellence report series, the top four companies surveyed earned less than 2 percent of 2011 revenue from SaaS. But, data from the top 100 indicates considerable movement. SaaS revenue accounted for at least 40 percent of software revenue for 10 companies on the Global 1003.
Consolidation in the industry and increasing globalisation are also transforming the software sector. Acquisitions are viewed as an R&D strategy, as well as a key way to acquire talent and build SaaS capabilities more effectively and efficiently.
Currently, North American vendors dominate the Global 100, though the Emerging Markets 100 had $7.9 billion in software revenue combined, with China the leader at over $2.6 bn USD. The Europe, Middle East and Africa markets (EMEA) 100 had more than $50 billion combined, with Germany the leader at $22bn USD.
The effects of burgeoning globalisation and consolidation are reshaping the architecture of the software sector and how companies develop, market, sell, distribute and support their products. Software vendors will continue to grapple with enterprise customers’ changing priorities – they desire the flexibility of cloud, but maintain concerns about security and compliance. The move towards SaaS will continue, but the shape and form of business models in the software industry is evolving.
“Software companies should not underestimate the influence of the ability of SaaS to capture instant feedback from users, to improve existing products, provide better tech support, and develop new products and features,” McCaffrey added. “It is in software companies’ best interest to evaluate and harness the shifts in the sector. The best companies will evaluate and embrace change by adapting their models and practices. The rest will be left in their wake.”
The PwC Software 100 report compiles relevant data for calendar year 2011, the most recent set of complete financials available. In all, software revenues for 294 vendors worldwide, including the top 100 globally, the top 100 in two geographically defined markets – North America, and Europe/Middle East/Africa (EMEA) – and one market defined by maturity, Emerging Markets (China, India, Brazil and others) were included in the survey. For access to the Software 100 study, please visit www.pwc.com/globalsoftware100. For additional analysis and commentary on PwC’s Software Pricing Series, please visit: www.pwc.com/softwarepricing
1 IDC Worldwide Software License Revenue 2012-2016 Forecast
2 IDC Worldwide Software License Revenue 2012-2016 Forecast
3 PwC Global Software 100 Leaders Report
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