Thailand software spending to reach B40.9bn
Applications development and deployment is signalling the fastest growth among the three main categories in 2019
The software market in Thailand is expected to be valued at 40.9 billion baht in 2019, representing growth of 7.6% from 38.1 billion last year, according to International Data Corporation (IDC).
IDC classifies software into three main categories, with the highest contribution this year forecast to come from applications at 17.1 billion baht, a gain of 6.9% from a year earlier, followed by system infrastructure (14.7 billion, up 7.3%) and application development and deployment (9.1 billion, up 9.4%).
A recent update to the Worldwide Semiannual Software Tracker from IDC forecasts the local software market to achieve a compound annual growth rate (CAGR) of 9.0% over the five-year forecast period of 2018-22. That is relatively slower than some other Asia-Pacific countries, as the market is gradually becoming more mature.
Nevertheless, software spending will grow as a result of new and specific solutions responding to market demand for more affordable pricing models via subscriptions, and third-platform innovations such as cloud delivery models. Enterprises are turning towards mobility and security, as well as solutions to focus on productivity and efficiency gains.
Applications account for almost half of Thailand's software market (41.7%) as they are among the top priorities for large organisations. They offer greater cost efficiency, usability and increased flexibility for customers, and the data gathered can help deliver targeted intelligence and better guidance to everyday users. IDC forecasts the overall applications market to achieve 8.0% CAGR, with an estimated value of 21 billion baht by 2022.
As well, digital transformation (DX) projects that have been successfully carried out by early adopters are fuelling the growth of DX initiatives among more enterprises consequently resulting in a rise of the market. The top two software categories within the applications market are collaborative applications with a year-on-year growth rate of 14.2%, followed by customer relationship management (CRM) at 7.9%.
The rise of "super apps" will feed demand for cross-industry expertise aided by collaborative applications. And because the communication revolution is putting huge amounts of information at consumers' fingertips, organisations need CRM software to meet and exceed their customers' high expectations.
System infrastructure software accounts for a 36.1% share of the software market. Demand is being driven by the need to monitor, manage and optimise systems, infrastructure, applications and end-user experiences across increasingly complex on-premises, hybrid, public cloud and multicloud environments.
The IDC CloudView Survey in 2018 noted that 54% of Thai organisations already had workload portability from hybrid cloud capabilities in place, to run applications in multiple environments. IDC predicts that the fastest-growing software categories within the system infrastructure segment in 2019 will be system and service management with growth of 15.3%, followed by storage software at 14.1%.
Demand for IT system and service management software is being driven by the need to manage applications and infrastructure in dynamic environments supporting digital and customer-facing applications.
DX initiatives create demand for more storage software tools to effectively transport, manage, analyse and protect data assets and help accelerate the adoption of public cloud and multicloud along with on-premises systems. IDC forecasts the system infrastructure market will record 5.7% CAGR to 17 billion baht by 2022.
Applications development and deployment contributes a 22.2% share of the local software market. But its high growth of 9.4% relative to the other two segments suggests that Thailand is beginning to prioritise DevOps to improve agility, nimbleness to market and improved user experiences.
Digital natives and startup businesses such as fintech providers are beginning to embrace DevOps and open-source software for their cost effectiveness and innovation. The main category within the app development and deployment segment is application platforms with 38.3% growth forecast, followed by analytics and AI (9.8%).
In the platform category, robotic process automation software (RPA) is small but is expected to grow by 230.2% in 2019. Businesses are using RPA to streamline and replace human tasks that are often based on existing business-to-business and business-to-consumer (B2B and B2C) applications.
Voice-enabled usage and task automation have increased significantly over the past year, and many businesses are looking to add voice-activated functionality to their existing mobile applications and/or are replacing traditional screen-based applications with "bots" created by RPA.
Analytics and AI has made an impact in business and in the social realm. An innovative example of the latter is an AI-enabled solution developed by Telenor Asia experts. An AI-powered chatbot is now available for victims of domestic violence to get access to the judicial system and counselling. The chatbot is an efficient tool for communicating with the victims in a comfortable way.
The high growth rate of RPA and analytics and AI contributes significantly to the applications development and deployment market in Thailand, which will record 10.2% CAGR to 12 billion baht by 2022.
Anchalee Sudechawongsakul is a market analyst for software at IDC in Thailand.