In-Depth

Applications on demand: One element of overall IT utility market growth

• By Steve Ulfelder
• March 1, 2005

Applications on demand are just one expression of the trend toward utility-based computing. Shown below is Gartner's most recent forecast for the overall growth of this market. The worldwide IT utility services market will grow from $16.5 billion in 2003 to $78.5 billion in 2008, a compound annual growth rate of 37 percent. This forecast envisions IT utility services growing from 5.6 percent of the total outsourcing market in 2003 to 18.2 percent in 2008.

Applications on demand represent about 17 percent of the 2003 figure ($2.6bn) and will grow to be worth $11.4bn by the end of this planning horizon.

Gartner estimates the North American OD market to have been worth $7.5bn in 2003. Gartner forecasts that the market will be worth $41bn by the end of 2008. This represents a CAGR of 41 percent.

Growth rates for traditional client/server and traditional external service models are in the range 3 to 7 percent over the medium term (although of course in absolute terms, these remain far larger markets over this period).

The largest and most readily identifiable IT utility markets are hosting and remote monitoring and management. Gartner's forecast recognizes that demand will increasingly move toward business value and away from technical value. Technical value will increasingly become subsumed within IT infrastructure utility services that support application and business process offerings focused on business values.

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