Small firms choose hosted enterprise apps

Global small and medium-sized businesses are investing unprecedented amounts in enterprise-class IT systems by choosing hosted versions of applications that previously would have been available to only their larger competitors.

Firms with between one and 999 employees worldwide are on track to spend $2.44bn on hosted software-as-a-service (SaaS) customer relationship management (CRM), enterprise resource planning (ERP) and supply chain management (SCM) next year.

The figure represents a rise of 17 per cent over 2006 levels, according to a new study by Access Markets International Partners.

Fuelling these investments will be strong demand for CRM from Britain, France, the US and Germany, the analyst firm predicts.

These four countries alone are set to boost their hosted CRM spending to $674m in 2007, up 23 per cent year on year.

Investment trends in ERP and SCM technologies in key countries in the Asia-Pacific region, especially Japan and Singapore, will increase their investment by about 17 per cent in 2007.

"Hosted/SaaS CRM and ERP/SCM are gaining market share over packaged software as more and more SMBs opt for hosted services for their mission-critical applications," said AMI analyst Spencer Richardson.

"Hosted software solutions already account for four per cent of the total global software spend by SMBs. This is set to rise in the coming years."