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Enterprise software set for double-digit growth

Spend on enterprise application software (EAS) in the Middle East and North Africa (MENA) region is poised to grow 12.5% in 2006, potentially creating a market worth almost US$210m. In 2005, the size of the region’s EAS sector expanded 16% to US$187m according to figures just released by IDC.

Spend on enterprise application software (EAS) in the Middle East and North Africa (MENA) region is poised to grow 12.5% in 2006, potentially creating a market worth almost US$210m. In 2005, the size of the region’s EAS sector expanded 16% to US$187m according to figures just released by IDC.

Responsible for this increased spending are banks discrete manufacturers and the gas and oil industry, as they accounted for 40% of EAS investment last year.

Vinay Nair, senior analyst, software at IDC Middle East and Africa, explained: “Although small and medium-sized organisations are now implementing EAS solutions and generating new demand, leading vendors are in a heated battle for clients. The primary arena has been mainly the large enterprise segment and the replacement market, but the price slashing and aggressive sales approach have spilled into the SMB segment, creating a buyer’s market despite the high demand.”

Saudi Arabia was the largest EAS market in the MENA followed by the UAE in 2005, and that trend looks set to continue this year. Together, the GCC countries represented over 80% of EAS expenditure, and as Saudi and the UAE experienced the fastest growth last year, both look set to repeat this feat over the next two years.

According to Nair: “North Africa will be the most dynamic market in the medium term. In terms of EAS and IT in general, it is still underdeveloped and there is a great deal of pent-up demand. Tapping it will require careful articulation of strategy and hands-on training for implementation partners.”

Five vendors in particular benefited from this increased expenditure and accounted for over 75% of EAS sales: SAP, Oracle, Microsoft Dynamics, 3i Infotech and Sage. SAP and Oracle led the market with Microsoft Dynamics occupying a distant third place.

“Globally, competition between vendors extends beyond the implementation of EAS solutions to the application platform itself. Fortunately in the MENA mid-market, many organizations have yet to commit to an EAS solution and migrating from one platform to another will not be a cumbersome or costly process. This means vendors will need cogent arguments not just for adoption of EAS but also for the long-term benefits of their preferred platform,” Nair concluded.

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