The enterprise applications (EA) software market in the Asia/Pacific excluding Japan, posed only a moderate growth at 5.1% in 2013, as enterprises were more cautious about their investments, said research company IDC.

The EA market grew 9% during 2012.

Although organizations were keen in upgrading existing back-office applications to embrace the "third platform technologies" in 2013 -- namely cloud, analytics, mobility, and social -- enterprises have been spending watchfully, and tech deployments had been largely ad hoc in nature.

Critical driver for enterprise applications growth

"The third platform technologies, especially cloud, will be a critical driver for enterprise applications growth in APeJ. Enterprises are moving from an ad hoc deployment of cloud-based applications and other third platform technologies, to a phase of strategic implementation," said Sabharinath Bala, research manager of IDC's Asia/Pacific enterprise application software research.

"This new era of digital transformation and the speed of innovation of Asian businesses is expected to bring the market back on track in 2014 and through the forecast period."

Big players face challenges

It was the usual suspects -- SAP, Oracle, Yonyou, Infor, and Microsoft -- that dominated in the region from a market share perspective, but most of these major vendors were challenged strongly by niche new players as well as the established software-as-a-service/cloud-based applications vendors.

Some of the names noteworthy of mentioning include Cornerstone OnDemand, Kronos, NetSuite, Workday, and Xero -- all of which posted strong double-digit growth in 2013.

"Although most of the major vendors have been creating new internal IP (intellectual property), as well as acquiring assets and expanding their cloud capability inorganically, the challenge of integrating these new resources with their existing portfolio and convincing clients and prospects to take the cloud path remained critical in attracting newer EA investments," said Sabharinath.

"But this scenario is slowly changing and vendors that rely primarily on maintenance and upgrade revenue for their existing legacy systems will start losing relevance in the coming days. Vendors offering cloud-based systems capable of delivering the agility, flexibility, and scalability of the dynamic Asian businesses, will trump them in their own game," Sabharinath added.

IDC expects the overall EA market to grow at a compound annual growth rate (CAGR) of 8.4% and reach US$9.5 billion in 2018. Double-digit growth is expected from markets like enterprise asset management, logistics, and procurement; and there will be strong support from mature markets like financial accounting, human capital management, and inventory management.