Table Of ContentJanuary1991
MAPVol.II,No.2
APublicationfromINPUTSMarketAnalysisProgram
U.S. Application Solutions Market
Forecast, 1990-1995
Note:ThisResearchBulletinispublishedaspartof expendituresonapplicationssoftware
taIhnNanPtuUaTfl'olslUao.swSss.eisMssadmrrekanetwtnAonffarltoyhmseiCsahPparppoltgiercraamtI.iVoTnhosfemsIaoNtfPetUrwTia'arSle pfirgoudruecstsarweilslhroewanchin$3E4x.h7ibbiitlli1.on. These
productsmarketandturnkeysystemsmarketwithin
theUnitedStates. Thefullreport,U.S.Application Themarketforturnkeysystemsisabout
SolutionsMarket, 1990-1995, willbeavailablein halfofthemarketforapplications
FIeNbPrUuaTryh,as19p9u1b.lisPhleedasietsnfootreectahstastoifnapprpiloircayteiaornss osonfttwuarrnek.eyInsy1s9t8e9m,s.$9.T5hebilmlaironkewtasgrsepwent
brseeopfiotnrwgtasar.dedpSrrteoasdrsutecitdnsgtaionngde1tt9hu9er0rntbkheeecyatsuwyssoetmeoamfrstkihenettswsioemcidtlioafrrfsietraierenest oonnllyy89%%icnom1p99o0u,nadneddiasnnfuoarelclays,tteodrteoagcrhow
ofthefactorsandtrendsthatimpacttheirgrowth. $15.4billionin1995,asshowninExhibit
2.
ApplicationSolutionsMarket
Overview Thesemoderate-to-lowCAGRscompareto
thepreviousfive-year(1985-1989)CAGRs
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ifurprhtssoorhsoomeerleoefwpmmeudtreaaanctuwvciiaeieacetsnnoxxrtrtntpegs,hsseprlecppnewmuoaoorrdiaglwuroiligrtptltodtihkldhiuusycee,ochr;ootn.teognf.tssfortTthfiyowhhfeBneiwtoeeyalurhutlreoarhattsvpprniuh,eoiptkderrfslcwewaniikmalysaklcipllulreaipsdpteydalnyd.eipiesl.scopcgteynolGaaessimtrtomctipifossaoeovowttnmnefwhitssleiteohlynwnwltaiir,lnle ygmhwmet3cihexoiori0lepamwnonl%erpeiwi1bcuvctcga0etteohornee%rmmomddri,ppwontsutuwtgdo.touotheren1reirorFie5knrawstoxsc%tt,rpurtsehneearhwtirataotoihtisoifnrepeeokgsmhsnnsnehoelacet/ionnrerxaPwlptddatt.CymswtipefhogaarMionenbrrvefatrseooveims,iuwtyanopttehaiuflahaanns3arrrnldfte%wasyrif,-mtp.loahe5elrmer%mebass2seonp5,ndei%arn-l
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©1991byINPUT.Reproductionprohibited.
Exhibit1
U.S.ApplicationsSoftwareProductsMarket
1989-1995
Exhibit2
U.S.TurnkeySystemsMarket
1989-1995
35r-
30-
_ 25-
I 20-
2 ©1991byINPUT.Reproductionprohibited.
•Slowe—reconomicgrowthoverthenextfive short-term,unitshipmentsarecurtailed,
years Theeconomicassumptionsused butoverthelongtermtheirpresence
byINPUTinits1990forecastsreflect willhaveasignificantpositiveimpacton
significantlyreducedoveralleconomic applicationssoftwareexpenditures. A
growthinthenearterm,followedby fewyearsago,onlythebiggest
modeststeadygrowththrough1995. companiescouldaffordthiscapacity.
ThenominalGNPconsideredinthe1990 Nowthe$50-million-and-undercompany
forecastsisformuchlowergrowthin canaffordlarge-scaleautomation,which
1990(5.4%versusapreviouslyprojected opensupnewuntappedmarketsfor
7.7%inINPUT'S1989reports)andno applicationssolutions.
gainin1991(5.4%versus7.8%). These —
economicassumptionswerepublishedby •Continuingdeclineinhardwareprices
INPUTinOctober. Sincethattime,the Turnkeysystemsvendorshavebeen
economymayhaveworsened. plaguedwithdeclininghardwareprices
andprofitmarginsforyears. As
Theimpactofaslowedeconomyon personalcomputersbecameavailableat
applicationssoftwareproductswillbe lowerpricesandthroughalternative
modest;prepackagedsolutionsare distributionchannels,theadvantagesof
favoredasthetrendtooutsourceallbut aturnkeysolutionwereeroded.
key"crownjewel"ISprojectscontinues. Turnkeyvendorshavehistoricallysold
Ontheotherhand,userexpenditureson minicomputersystems,whoseprices
turnkeysystemsarecurtailedbecausein remainedhighandrelativelystableuntil
paunrecchoansoemsi—cbduonwdnlteudrno,rulanrbguenhdalreddw—aarree PwoCrsksetraotdieodnsthaenirdpUopNuIlaXriitnyc.omTmheercuisaelof
delayed. Additionally,significant andbusinessareasisspreading;butas
turnkeyactivityisinthemanufacturing usespreads,workstationpricingwill
industrysectorswhich,whenhitby erodealso,againleavingtheturnkey
recession,restrictcapitalexpenditures. vendorwithlowmargins. Manyturnkey
— vendorsandVARsaretherefore
•Morepowerfuldesktopsystems minimizingorexitingtheturnkey
Growthinthelow-endPCmarkethas businessinfavorofapplicationssoftware
slowed;thegreatestgrowthisinmore- productsandrelatedservices,thereby
powerful386-and486-basedproducts joiningtheapplicationssoftwareand/or
andworkstations. Salesofhigher-end professionalservicesdeliverymode.
personalcomputersandworkstations —
willdriveahigherinvestmentin •Architecturesandstandards Initially,
applicationssoftwareproductsper themovementtowardclient-—server
computer. Theimpactshouldbegintobe architecturesandstandards including
felttoagreaterdegreeby1992. vIeBnMd'osrSsAtAan—dawirldlsdsiumcihniasshUtNhIeXneaenddfor
PositionimpactsofOS/2andmore- newapplicationssoftwareproductsand
powerfulPCshadpreviouslybeen turnkeysystems. Thereasonsarethat
anticipatedby1990. Thehardware newplatformsandsystemssoftware
trendispresent,buttheexpected productsarestillinthedevelopment
systemsandapplicationssoftware stagesandafullmigrationfromtheuser
productssectorgainsarelagging. standpointwilltakeaminimumof
severalyearstoreachfullswing.These
Thecurrenteconomicdownturnis platformsneedtobeinplacebefore
causinghardwarecuts,especiallyatthe applicationssoftwareproductscanbe
PCandworkstationlevel. Thus,inthe purchased. Intheearlypartofthe
©1991byINPUT.Reproductionprohibited. 3
——
forecastperiod,adifficultselling havealsomadeUNIXeasiertouse,and
environmentwillexistuntilthenew moredevelopmentworkisunderwayon
technologiesaremoreentrenched. UNIX-basedapplicationsolutions.
— —
•Customerindigestion Becauseofthe •Globalization Applicationssoftware
transitorynatureofarchitecturesand productsthatdealwiththeincreasingly
standards,customersaredevelopinga integratedworldwidemarketsforlarger
temporarilycautiousattitude. Inthe corporationscreateawholenewsector
meantime,vendorsneedtoprovidewell- forapplicationsolutionvendors.
informedsalesforces,extensive Applicationsaddressingcustomsissues,
educationandtrainingcapabilities,and currencytranslationandotherneeds
anall-encompassingsalesapproach. offerproductopportunitiesonan
SaleswillnotbemadetotechnicalIS internationalscale.
msoalnuatgioenrssbaelcoonem;enionwt,egarsataepdp,ltichaetsiaolne ApplicationsSoftwareProductsby
alsoencompassesoperatingexecutives PlatformSize
andend-userdepartments. AsshowninExhibit3,moreisspenton
wOinlltohfefebrringehwteorppsiodret,unaintiuemsbfeorrgofroawrteahs wsoofrtkwsatraetiporno/dPuCc-tbsatsheadnapopnlimcaaitnifonrsameand
nowaswellasinthefuture. Several minicomputer-basedproductsand,as
opportunitiesarediscussedbelow. expected,userexpendituresforthis
— platformsizeareexpectedtogrowtwiceas
•Customizationandintegrationservices fastasfortheothertwoplatformsizes.
Thesetwoareascontinuetooffer
increasinglylucrativeopportunitiesfor Severalmarketsprovideparticularly
applicationsolutionsvendors. As stronggrowthopportunities,includingthe
purchasesofprepackagedsolutions telecommunicationsandeducationand
hcoonutsienudeevteolgorpmoewnitn,ftahveosreotfwcoompletein- tirnadiunsitnrgysaepcptloircsa.tiToenlsehcaovmemutnriacdiattiioonnaslly
professionalservicesareaswill beendevelopedinternally,butsince
experiencehealthygrowth. deregulation,thisindustryislooking
— increasinglytooutsideproviders. Another
Applicationsdevelopmenttechnology strongareaforapplicationssoftware
Expendituresgrowthforapplications productsandturnkeysystemsisthe
softwareproductsandturnkeysystems educationandtrainingcross-industry
willbeenhancedbycurrenttrendsin sector. Therelativelysmallexpenditures
applicationsdevelopmenttools. 4GL, inthisareaandthefactthattechnology-
CASE,andRDBMStoolsnotonly basededucationandtrainingareless
enhancevendors'internalsoftware expensiveand moreconvenientthan
developmentefforts,butalsoprovide instructor-ledtrainingaredrivingforcesin
addedcustomizationcapabilitiesfor favorofitsmorewidespreaduse.
increasedrevenues. TurnkeySystemsbySubmode
Anotherapplicationdevelopmenttool
tphreomgortaepheixcpaelnudsietruriensteorffaacpepl(iGcUaIt)iownill Rexaptehnedrittuhraensabnyalpylzaetftourrmnksiezye,syIsNtPeUmsT
solutions. Thedevelopmentoffriendlier, analyzesexpendituresbyequipment,
graphics-baseduserinterfaces,including software,andprofessionalservices,as
multitaskingcapability,tothemore showninExhibit4.
gwielnlereaxlpaenndd-tuhseernucmombpeurtiofngapepnlivciartoinomnesnt Esqubumiopdmee,ntfoirstthheerselaoswoensstcgirtoewdianbgove.
utilizedperdesktopplatform. GUIs
4 ©1991byINPUT.Reproductionprohibited.
—
Eventhoughnew
Exhibit3 technologiessuchasvoice
ApplicationsSoftwareProducts processing,imaging,and
UserExpendituresbyPlatformSize,1990-1995 CDROMaregrowth
opportunitiesforturnkey
CAGR vendors,theadded
(Percent) expendituresonthese
Mainframe 8 productswillnotbe
realizeduntil1995and
beyond.
Userexpenditureson
softwareandprofessional
Minicomputer 88 1990 10 s1e0r%vicceosmwpiolulnbdoetdhganrnouwaaltly
1995 through1995. By1995,
softwarewillalmostequal
expenditureson
Workstation/PC 20 equipment. Ofthe
18.6 softwaretotal,application
softwarewillaccountfor
5 10 15 thebulkofexpenditures.
$Billions Systemssoftwaresalesare
limitedtooperating
systemsand,toamuch
lesserextent,bundled
applicationdevelopment
Exhibit4 toolssuchasRDBMSs.
UserExpTeunrdnikteuyreSsysbyteSmusbmProoddeu,ct1s990-1995 By1995,professional
serviceswillstillrepresent
arelativelymodest$2.7
CAGR billionmarketforturnkey
4.8 (Percent) systemsvendors. Itwill
Equipment \^ 6.5 6 rmeamnayintusrmnaklelybveecnaduosresand
23 VARswillopttoform
allianceswithprofessional
3.8 servicesfirmsandsystems
Software 10 integratorsandtofocuson
6.2 whattheydobest
S 1990 sspoefctiwaalriezepdroadpuplcitcsa—tioanssthe
1.7 keydifferentiatingvalue
Professional Z 1995 10 theyprovidetothe
Services 2.7 marketplace.
L Foracompleteanalysis,
10 15 20 lookforINPUT'Supcoming
$Billions report,U.S.Application
SolutionsMarket,1990-
1995.
©1991byINPUT.Reproductionprohibited. 5
