MoneyTree™ China TMT Report

Q1 / Q2 2014

Global 100 software leaders report 

May 2013

The software industry is in the midst of significant change as well-known trends - cloud, software-as-a-service (SaaS), mobile devices and consumerisation of IT - are significantly impacting how software vendors develop, market, sell, distribute and support their products. Here, PwC presents not just the leading software companies from key markets around the world but, more importantly, insights into where the industry is going shared by executives from companies such as Adobe, Red Hat, NetSuite, Hitachi, and AVEVA.

Key survey data findings and feedback reflect that:
  • SaaS is gaining traction: Perpetual license revenue has been shrinking since 2004 while subscription revenue (including SaaS and other subscription models) is forecasted to have a 17.5% growth rate in the 2012-2016 timeframe. Strategic software companies are now vigourously evaluating aspects of their business models, including delivery methods, pricing strategies and sales compensation options.
  • Customer is king: With the adoption of cloud services, mobile devices and low-cost apps, CIOs are no longer the sole decision maker in the software purchasing process; end users must be satisfied in order to retain and grow enterprise sales.
  • Emerging hybrid models bring new challenges: A range of business models, from the traditional licensed software to pure SaaS to hybrid approaches, will co-exist and face a host of challenges for the foreseeable future. Identifying the right model without losing market share has become a major focus. Subscription models increase dependency on renewals and risk of customer turnover, making service levels and strategic pricing two of the most crucial components of software sales cycle.
  • Priority on pricing: With the consumerisation of IT via low- and no-cost technology such as iTunes, Google and other apps, software companies are struggling to justify the difference in value between a low-cost mobile app and a full-strength, licensed enterprise software package.
Jianbin Gao
Tel: +[86] (21) 2323 3362 Email