The growth in application software sales has slowed in the second quarter of 2002, according to the latest quarterly market confidence survey from the Business Application Software Developers Association (Basda).
But demand for ecommerce applications is bucking the trend and has grown strongly, with sales more than quadrupling since the first quarter of the year.
In particular, the survey of Basda's membership saw strong demand for eprocurement, supply chain and web services, as companies look for ways to improve efficiency.
Basda chief executive Dennis Keeling said that although future prospects look less buoyant than in previous quarters, a real slow down in the sector was still along way off.
"We still have more than 50 per cent of respondents reporting that sales increased in the second quarter. But 10 per cent more members than last time tell us that sales have remained the same or declined," Keeling said.
But other development areas are failing to generate significant sales and in some cases demand has fallen significantly. Interest in the Application Service Provision (ASP) model has fallen sharply from 19 per cent to nine per cent since the last quarter.
"It's a brilliant model but the pricing is still not advantageous for smaller companies," Keeling said.
The only companies showing interest in ASPs are larger organisations with previous experience of running bureau services or facilities management, he said. "There's no real interest out there from the SME market - people don't trust others with their data."
At the same time, extensive publicity following the chancellor's budget announcements has done little to kick start interest in the government's GovTalk initiatives. GovTalk is part of Tony Blair's vision for all government departments to be able to conduct transactions electronically with other departments and the general public by 2005.
But only four per cent of Basda member respondents reported interest in GovTalk-related development projects, compared with three per cent in the previous quarter.
Research among users suggests that this figure is unlikely to change until the government reduces the complexity of using the services and offers some real benefit to end-users to take them up, Keeling said.
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