SAP, Salesforce lead $356 billion enterprise applications market: IDC

The market for enterprise applications grew 12% in 2023, to $356 billion, with the top 5 vendors — SAP, Salesforce, Oracle, Microsoft and Intuit — commanding a 21.2% market share between them, according to International Data Corp.

“With just 0.2% of market share separating SAP and Salesforce, IDC regards these two companies as statistically tied for the number 1 position in the worldwide enterprise applications market for 2023,” it said in a new study, Worldwide Enterprise Applications Software Forecast, 2024–2028.

IDC attributed the market growth to the adoption of AI and generative AI integrated into enterprise applications.

“SaaS and cloud-enabled applications continue their growth across the enterprise applications market,” said the study’s author, Mickey North Rizza, group vice president of Enterprise Software at IDC. “With new innovation such as generative AI and its plethora of use cases, the opportunity to reshape businesses with intelligent technology using cloud applications brings greater competitive advantage.”

Experience orchestration

IDC has identified a move among adopters of generative AI to what it calls “experience orchestration,” where enterprises orchestrate “a meaningful value exchange between the organization and their key stakeholders.”

When it comes to software purchases, “Experience-orchestrated businesses are leveraging more modern, innovative, and intelligent enterprise applications, improving their decision velocity with smarter business decisions and ultimately bringing greater differentiation for organizations globally,” the study said.

AI will drive continued growth in application spend

IDC forecasts the market will surpass $600 billion by 2028, as organizations further integrate “traditional AI, machine learning, and gen AI into workflows,” creating faster and more intelligent insights and decisions.

Organizations will have to invest in new tools to keep their application portfolio up to date as they move further into the digital era, IDC warned.

And on-premises applications will continue to wane: “Public cloud will become the foundational deployment model for enterprise applications software, accounting for more than 70% of new enterprise applications spending in 2028,” the study said.

Public cloud spending on enterprise applications is projected to grow at a compound annual growth rate (CAGR) of 16.5%, outpacing the overall market CAGR of 11.1%.

IDC’s definition of enterprise applications encompasses several secondary markets, including enterprise resource management (ERM), customer relationship management (CRM), engineering applications, supply chain management (SCM), and production applications.

These sectors, each comprising multiple functional markets, are expected to continue evolving as businesses adapt to new AI-driven capabilities, the study said.

As AI and gen AI continue to reshape the enterprise applications landscape, organizations that embrace these technologies will likely see enhanced decision-making capabilities and competitive differentiation.