The enterprise applications market delivered solid revenue growth in 2023 as artificial intelligence (AI), and particularly generative AI (GenAI), has started to reshape the employee and customer experience of business software.

According to a new report from International Data Corporation (IDC), the enterprise applications market grew 12% YoY in 2023 with worldwide revenues reaching $356-billion.

The integration of AI and GenAI into enterprise applications brings more intelligence, faster time to insights, and enhanced decision velocity to users. As a result, employees can have a greater reliance on enterprise software as a coworker to help solve business problems and navigate the dynamic world of change. All of this is possible with increased reliance on cloud technology as the foundation from which to innovate fast, quickly changing up the employee, customer, and partner experiences and resulting in faster time to value and competitive differentiation.

“SaaS and cloud-enabled applications continue their growth across the enterprise applications market,” says Mickey North Rizza, group vice-president, Enterprise Software at IDC. “With new innovation such as generative AI and its plethora of use cases, the opportunity to reshape businesses with intelligent technology using cloud applications brings greater competitive advantage.

“Experience-orchestrated (X-O) businesses are leveraging more modern, innovative, and intelligent enterprise applications, improving their decision velocity with smarter business decisions and ultimately bringing greater differentiation for organisations globally,” Rizza adds.

The top five enterprise application vendors in 2023 were SAP, Salesforce, Oracle, Microsoft, and Intuit which together accounted for 21,2% of worldwide revenues. With just 0,2% of market share separating SAP and Salesforce, IDC regards these two companies as statistically tied for the number one position in the worldwide enterprise applications market for 2023. (IDC declares a statistical tie in software competitive markets when there is a difference of 0,5% or less between the market share of two or more companies).

IDC forecasts worldwide revenues for the enterprise applications market will be more than $600-billion in 2028 as organisations further integrate traditional AI, machine learning, and GenAI into workflows creating faster and more intelligent insights and decisions. Organisations will also invest in new tools to keep their application portfolio up to date as they move further into the digital era.

Meanwhile, public cloud will become the foundational deployment model for enterprise applications software, accounting for more than 70% of new enterprise applications spending in 2028. Demand for public cloud-based enterprise applications is forecast to produce a five-year compound annual growth rate (CAGR) of 16,5%, surpassing the 11,1% CAGR for the overall market.