Software Support and Integration Becomes Increasingly Strategic, IDC Says

FRAMINGHAM, MASS., AUGUST 23, 2000 – Software support and integration is changing from a necessary evil to a strategic initiative in vendors’ eyes. According to IDC, vendors are now looking to software support and integration services as a way to get closer to their customers and as a revenue generator.

 

“As margins in both the hardware and software markets shrink and product differentiation diminishes at an increasing rate, vendors are looking to their service offerings to provide greater margins as well as a basis of differentiation,” said Ana Volpi, senior analyst for IDC’s Software Support and Integration Services research. “As a result, the services provided around software, specifically integration and support services, have taken on a more strategic role than in the past.”

As the nature of software support and integration shifts, the market’s worldwide revenues will ride a growth wave that will bring them from $35.2 billion in 1999 to almost $71 billion in 2004. “This growth reflects vendors’ realization that support is a vital ingredient in establishing deeper and stronger customer loyalty,” Volpi said.

The United States represents the largest opportunity for software support and integration services. In 1999, it accounted for 51% of worldwide revenues with $18 billion. Its share will remain at 51% through 2004 when revenues exceed $36 billion.

In terms of service activities, predictive/preventive maintenance is growing the fastest, with a 1999-2004 compound annual growth rate of 33%, compared with a CAGR of 15% for the overall market. Electronic support, remote diagnostics, and software update management are also growing quickly, with CAGRs of 32%, 27%, and 15%, respectively.

“These fast-growing services reflect the importance of support technologies that enable a proactive, self-service support model and highlight the movement in the support industry to transform the support organization from a reactive cost center to a valuable, important, and revenue-generating business model,” Volpi said.

Information like the above can be found in IDC’s report Software Support and Integration Services Forecast, 1999-2004 (IDC #B22454). The report analyzes the software support and integration market. It discusses key trends affecting the market and forecasts worldwide revenue growth through 2004 by region, service category, and product segment. The report also includes recommendations about how vendors should react to market trends to best position themselves and highlights examples of best practices. To purchase the report, contact Jim Nagle at 1-800-343-4952 at extension 4549 or at jnagle@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 600 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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