What Q4 Software Vendors’ Earnings Mean For Technology Executives
Forrester has analyzed the Q4 2022 earnings announcements of a basket of leading public companies that provide enterprise software including Adobe, IBM, Microsoft, Oracle, Salesforce, SAP, and Workday. These announcements provide insights and valuable implications from which all technology executives can benefit. Here are some of the key points we heard and inferred:
- Cloud applications growth remains strong. Despite economic headwinds, leading enterprise applications vendors were still reporting healthy growth in their Q4 earnings, albeit slower than what we saw in previous quarters. This shows that buyers are still investing in modernizing their applications to the cloud and have not delayed or cut projects for the most part. This is consistent with what we’re hearing in Forrester client conversations.
- Industry solutions are an important part of the future. Most major enterprise software providers have some form of industry solution, and these increasingly feature in earnings calls and other executive discussions. For example, Oracle touted its efforts to lead in healthcare cloud in the wake of the Cerner acquisition of 2021. Buyers should recognize that these moves are creating new options for them because it impacts which solutions they buy and how much customization they need. For example, Salesforce buyers can still choose horizontal clouds for CRM process areas or prebundled, preconfigured industry ones.
- Acquisitions and divestitures continue. SAP announced the July 2022 acquisition of Askdata (search analytics) as well as the divestiture of Litmos (learning management software). Customers should prepare for volatile times, especially as funding dries up and economic pressure mounts — which we expect will accelerate M&A activity. This has implications for customers on both ends of those deals — those who are customers of the acquirer and of the target.
In our new report for Forrester clients, we share more analysis of what we’re seeing in the enterprise software market and what that means for technology executives. We will also host a webinar in early February to share our analysis of three major sectors of technology earnings: services, software, and cloud platforms.