Business Software and Services Market

Market Overview

The global business software and services market size was valued at USD 535.37 billion in 2022. It is estimated to reach USD 1,357.49 billion by 2031, growing at a CAGR of 10.9% during the forecast period (2023–2031).

Software specifically created for analyzing business data to comprehend an organization's strengths and weaknesses is called business software. This program analyzes a business's needs and assesses the effectiveness of its current policies to increase revenue. Business services are different tasks and operations that support the operation of a company even while no physical goods are produced. Information technology, which supports many other company services, including shipping, banking, and procurement, is an example of a business service.

Business software and services are widely used by businesses to streamline operations. These tools and services make it easy to access and work with unstructured data gleaned from analytics, which helps meet privacy and security requirements. These business applications boost output, gauge output, and precisely carry out various other company tasks.

Market Dynamics

Global Market Drivers

Growing Need for Operational Efficiency and Improved Transparency in Business Operations

Business software and services are increasingly used in end-user industries as they help streamline business processes. Numerous businesses are turning to business software and services to increase operational efficiency by integrating administrative systems into a single program. Business software modules link departmental information and data together with real-time updates. This also provides better transparency in business operations. Businesses can choose relevant business software modules per their requirements.

Additionally, business software allows managers access to a complete database of critical data, which covers invoices, client information, and orders. This software is widely adopted as the information is accurately stored and will not get lost across other spreadsheets and applications. Business software merges all aspects of the business into a single central system, thereby driving better transparency in business operations. This will propel the demand for business software and services over the forecast period.

Advantages Offered by Business Software

Growing enterprise data volumes and business process automation in retail, manufacturing, and healthcare sectors propel market expansion. The rapid adoption of corporate software and services across IT infrastructure to enhance profitability, lower inventory costs, and better decision-making is another factor fueling the expansion of the market. The increasing use of business software in various enterprises and government sectors stimulates the global market.

Greater profits, lower inventory costs, and the ability to make strategic decisions to fortify the market position and fuel market expansion are just a few of its many advantages. Furthermore, as demand for such software increases in the commercial sector, the global market is experiencing substantial potential opportunities. Business software offers a plethora of benefits. It has made it possible for business owners to make precise and accurate decisions. It has also contributed to lower inventory costs. Therefore, these factors are contributing to the expansion of the market.

Global Market Restraint

High Cost of Licensing and Support 

The price of licensing software is not entirely based on software development costs. The market conditions largely influence it at the time of purchase. Software vendors offer numerous licensing types and deployment or pricing models. The licenses associated with most business software products include user, network, enterprise, access, and volume. The type of license chosen impacts both the initial and overall license fees over the product's life because frequent updates are required.

Deployment or pricing models, such as rental or subscription, are complex and range from operating pricing models to outright purchase capital models. In addition, high complexity and high maintenance costs further contribute to the maintenance and support cost of the software. Software license agreements are also extremely complex, resulting in a high time and cost investment, thereby restraining market growth.

Global Market Opportunities

Increasing Shift Toward Cloud Computing 

Numerous businesses are shifting toward cloud computing owing to its various benefits, such as mobility, security, reduced total cost of ownership, scalability, optimized business processes, and customization. Cloud computing offers scalability in which businesses can modify their computing needs by increasing or decreasing them based on market demand. In addition, cloud computing is creating growth opportunities for virtual teams and mobile executives. The versatility of the cloud means that employees can stay connected to businesses from anywhere and from any device. It also allows employees to collaborate more easily from other locations. Many enterprises are shifting their focus toward cloud computing owing to the security of the data, thereby creating opportunities for market growth.

Regional Analysis

North America Dominates the Global Market

Based on region, the global business software and services market is bifurcated into North America, Europe, Asia-Pacific, Latin America, and the Middle East and Africa. 

North America is the most significant global business software and services market shareholder and is anticipated to exhibit a CAGR of 10.3% during the forecast period. The expansion of the North American market is brought on by the region's abundance of software vendors and the rising demand for high-speed data networks. Moreover, software and analytics-based initiatives are given priority by North American firms. The market for business software and services may increase over the forecast period because of the rising demand for high-speed data networks and the considerable presence of software vendors in the area.

In addition, companies in North America are placing greater emphasis on developing original analytics and intelligence solutions than businesses in other regions and deploying software and analytics-based initiatives. Canada has a large population of data analysts, computer scientists, and software engineers who work with corporate solutions and services because of the country's highly educated workforce. Similarly, the increased demand for cloud-based business management software among SMBs due to affordability issues over the forecast period is also anticipated to boost regional expansion.

Europe is estimated to exhibit a CAGR of 10.5% over the forecast period. Adopting new technologies across industries and large investments in software and services made by big businesses have helped the regional market grow favorably. In addition, the need for enterprise solutions is anticipated to increase due to the region's rising emphasis on cloud-based services and initiatives to develop business intelligence solutions. For instance, the European Commission and European tech companies in computing worked in December 2021. The European Commission officially unveiled its new cloud, edge, and industrial data alliance. EU technologies that process data in an energy-efficient, highly secure, and interoperable manner help businesses and government agencies compete more effectively, driving market growth.

Asia-Pacific is projected to emerge as the quickest-growing regional market over the forecast period. The Asia-Pacific regional market includes Japan, China, India, Taiwan, South Korea, Australia, and other Southeast Asian countries. The growing number of small and medium enterprises in the region and their increasing investment toward implementing business software solutions to strengthen their positions in the market and compete against other market participants is foreseen to boost the Asia-Pacific regional market over the forecast period.

Segmental Analysis

The global business software and services market is segmented by software, service, deployment, enterprise size, and end-user.

Based on software, the global market is bifurcated into finance, human resource, sales and marketing, supply chain, and others. 

The finance segment is the highest contributor to the market share and is anticipated to exhibit a CAGR of 9.91% over the forecast period. Financial software is specifically used to store, assist, and automate financial information of a business, such as a company's financial reports and cash flow statements. It handles processing, managing, analyzing, and storing a business's financial records, transactions, and processes. In addition, financial management software offers businesses a full suite of accounting functions to track their financial operations and generate annual and quarterly financial statements. In addition, financial management software solutions provide tools for planning, budgeting, analysis, and reporting. This is expected to drive the growth of the finance segment over the forecast period.

Based on service, the global market is bifurcated into consulting, managed services, and support and maintenance. 

The support and maintenance segment owns the highest market share and is expected to exhibit a CAGR of 11.1% over the forecast period. Support and maintenance services offered under the business software and services umbrella include infrastructure maintenance services for data centers and migrating and upgrading software. These services also help in deploying and configuring software on cloud platforms. Deploying predictive maintenance services in the increasingly popularizing supply chain management information-as-a-service business models can help detect and fix issues related to product quality in the supply chain, thereby driving the growth of the support and maintenance segment over the forecast period.

Based on deployment, the global market is segmented into cloud and on-premise. 

The on-premise segment is the highest contributor to the market and is projected to exhibit a CAGR of 10.6% over the forecast period. On-premise deployment of solutions and services ensures larger control over systems, infrastructure, and confidential business data. This deployment model helps analyze or simulate business processes more efficiently and securely. Several businesses are switching from manual to automated systems to perform various tasks. This has led to the increasing demand for on-premise software.

In addition, several organizations stick to on-premise deployment of various business software and services as it does not require internet and allows easy software customization per the client's business requirements. Owing to these aspects, the on-premise segment is expected to witness steady growth opportunities over the forecast period.

Based on enterprise size, the global market is divided into large enterprises and small and medium enterprises. 

The large enterprise segment dominates the global market and is expected to grow at a CAGR of 10.5% over the forecast period. A large enterprise is a commercial company with an employee strength of 500 or more people. Many large enterprises are expected to increasingly utilize business software and services owing to the growing trend of cloud computing, the Internet of Things (IoT), and big data. Associated processes and operations require various high-tech tools, including advanced analytical engines, process blueprints, and real-time data compilation tools, thereby driving the adoption of business software solutions in large enterprises owing to vast volumes of data.

Based on end-user, the global market is segmented into aerospace and defense, BFSI, government, healthcare, IT and telecom, manufacturing, retail, transportation, and others. 

The BFSI segment owns the highest market share and is projected to exhibit a CAGR of 6.5% during the forecast period. Changes in the economic environment, such as income level, economic resources, and trade cycles, have significantly affected the BFSI industry over the years. Business software and services enable financial firms to improve revenue and margin while bringing excellence in operations, risk management, and regulatory compliance. In addition, banking and financial institutions widely use business software as it provides enhanced client experience. It also offers various advantages, such as secure transactions, live tracking of operating transactions, and continuous access to the client database.

Recent Developments

• March 2023- Rimini Street, Inc. (Nasdaq: RMNI), a leading supplier of end-to-end enterprise software support, products, and services, the pioneering third-party support provider for Oracle and SAP software, and a partner of Salesforce and AWS, reported the formal launch of Rimini ONETM, its outsourcing service program intended to provide a comprehensive set of unified, integrated services to run, manage, support, customize, configure, connect, protect, monitor, and optimize enterprise software.
• April 2023- G2, the world's biggest and most reliable software marketplace, introduced Monty, the first business software advisor enabled by artificial intelligence. G2's chatbot assistant, named after the company's mascot, Monty, the mongoose, utilizes the power of OpenAI to revolutionize how businesses discover software.