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Publication date: 09 Dec 2022

Cloud Platform Investments Keep European Software Market on a Growth Trajectory, IDC Says

PRAGUE, December 16, 2022 – According to the recent International Data Corporation (IDC) Worldwide Semiannual Software Tracker 1H22, the European software market is estimated to grow year on year by 10.6% in Western Europe (WE) and by 3.5% in Central and Eastern Europe (CEE) in 2023 in constant currency terms. Despite this performance, the overall European market is slowing down, from 13.2% year-on-year growth in 2022 to 10.1% growth in 2023.

“The software industry's performance is less directly affected by macroeconomic conditions than other technology segments, and 2023 may provide further evidence of this trend,” says IDC Research Manager Tomas Doktor.

Notable events on the European software market in H1 2022 included a few important acquisitions, while key software vendors raised prices and pushed long-term contracts with fixed pricing.

COVID-19 became a driver of software spending, as it urged many organizations to accelerate their cloud migration and digitalization plans. The changes resulting from the impact of the pandemic on the European software market's composition and direction are expected to continue for several years to come.

IDC predicts that public cloud will become the dominant software deployment model in Europe by H1 2023, particularly for application development and deployment (AD&D) solutions. After a wave of spending on enterprise applications, European organizations are now shifting focus to AD&D tools and platforms.

Nevertheless, the on-premises software market in Europe also recorded strong growth of 4.6% in constant US dollars in the first half of 2022. This positive development was mainly the result of increased prices and longer-term contracts that were signed even before the expiration of the license agreement.

European software market growth rates in 2023 exhibit regional variations, as the CEE market is strongly affected by the rapid decline of spending in Russia. This is expected to continue, as western vendors are still curtailing operations in the country, and Russian enterprises have not yet risked investments in local substitutes for imported software.

“Macroeconomic pressures are compelling organizations to prioritize cost reduction while minimizing security risks,” notes IDC's Doktor. “Hence an increasing focus on optimizing previously made AD&D investments and making full use of the available cloud environment capacity. More than 50% of enterprise applications were deployed in or transferred to public cloud by the end of 2022, largely as a result of the pandemic. Now companies are looking to benefit from elastic payment models for big data analytics, automation tools, business intelligence, and AI platforms.”

Worldwide Semiannual Software Tracker

IDC's Worldwide Semiannual Software Tracker ® provides subscribers with an in-depth look into the competitive landscape and the market dynamics shaping the current and future direction of the global software industry. It tracks and details individual software vendors' historical business performance, and it forecasts the development of the industry 5 years into the future — across 54 geographies and 81 discrete software market segments. In addition, the tracker provides an understanding of the transition from traditional on-premises deployments to public cloud services by segmenting software revenue by deployment type, vendor, geography, and market segment. With the rapid transition from 2nd Platform to 3rd Platform technologies, it is critical for software vendors, public cloud services providers, supply chain partners, and the investment community to understand the underlying dynamics behind this transition. This extensive coverage of vendor share information enables both global and local players to benchmark themselves in terms of business growth and market penetration.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. With more than 1,100 analysts worldwide, IDC offers global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. IDC's analysis and insight helps IT professionals, business executives, and the investment community to make fact-based technology decisions and to achieve their key business objectives. Founded in 1964, IDC is a wholly-owned subsidiary of International Data Group (IDG), the world's leading tech media, data and marketing services company. To learn more about IDC, please visit Follow IDC on Twitter at @IDC and LinkedIn. Subscribe to the IDC Blog for industry news and insights: