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Seven Forces Reshaping Enterprise Software

This report is based on “Seven Forces Reshaping Enterprise Software” from Boston Consulting Group in collaboration with Sand Hill Group released exclusively at the sold-out Enterprise Retreat in Half Moon Bay, CA, March 28, 2019. 

We analyzed BCG’s latest research, industry data, and our work with both software vendors and buyers to gain insights into the major trends that are reshaping the enterprise software business today and their potential impact on stakeholders over the next 12 to 24 months.

Force 1: Big Investments

A steady stream of capital is driving deals and values. Investors’ appetite for enterprise software is growing, and they’re betting big. The money pouring in is increasing both total funding and money not yet put to work, along with deal sizes and company valuations. 

Force 2: Cloud 2.0

For software buyers, Cloud 2.0 is in full swing, with more of them moving traditional on-premise applications to native and other cloud solutions. By 2020, more than 70% of corporate workloads are expected to be housed in public-, hybrid-, or private-cloud settings.

Force 3: AI Pioneers

Early adopters are using AI and data as strategic assets to power digital transformation. The twin turbines of AI and big data could account for approximately 40% of the $1.7 trillion that companies worldwide are forecast to spend on digital transformation initiatives in 2019.

Force 4: End-User Power

Business units and millennials are reshaping spending. As more enterprise software moves to the cloud and platforms, it’s leading to a change in how software is consumed. Buying power is shifting to business units and a new generation of buyers, as reflected in evolving software-purchasing behaviors. 

Force 5: Data Protection

Regulations and breaches are amplifying data privacy concerns. Countries worldwide are adopting strict data privacy regulations, led by the EU’s robust General Data Protection Regulation (GDPR) and, in the US, California’s Consumer Privacy Act, both passed in 2018. In a survey of 105 countries, more than 40% reported instituting stronger data policies and enforcement.

Force 6: Preferred Platforms

Buyers and sellers are flocking to platforms as value creation from ecosystems becomes the new logic for competition. Platforms and the ecosystems that have developed around them have become integral to how enterprise software is sold, used, and managed. 

Force 7: Hiring Hell

Tech employers are dogged by a talent shortage aggravated by a skills gap and changing work preferences. Enterprise software growth has created a surge in jobs for people with in-demand digital skills.

For the full report on the Seven Forces Reshaping Enterprise Software, click here. 



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