Latest US research shows 1999 is not going to be a growth year for ERP vendors, as many analysts predicted, with ease of integration a key issue amongst those users that are looking to invest.
Enterprise Application Spending and Penetration is the first quantitative study of the American applications market done by US research company AMR. The results showed that while there has been a downturn in budgeted spending across some parts of the enterprise applications market, the overall result for growth in 1999 is flat.
Going forward, the report suggests that spending will remain flat into 2000 but growing from then to 2003.
AMR interviewed more than 800 IT or application development directors in large (turnover $250 million and above) and medium sized (turnover $30 million to $250 million) American enterprises, across 13 industry sectors.
Financial services, high tech and pharmaceuticals were the biggest spenders. The automotive sector is moving up steadily with more than 30 per cent of its spending going on enterprise resource planning (ERP) or manufacturing software.
One of the surprises was that difference in spend patterns between large and small enterprises, were not dramatically different. According to the figures, mid range enterprises are nearly as likely to buy into enterprise class applications as larger ones.
However, vendor preference in each sector is markedly different. As one might expect, SAP is top of the pile in large enterprises with 27 per cent, but it is now sharing that position with Peoplesoft, while Oracle is third with 23 per cent.
In the mid range JD Edwards is the clear leader, followed by Oracle and Peoplesoft, with SAP in fourth position.
AMR interviewed 72 enterprises that are planning new ERP application investments. Of these, 22 are going with Oracle, SAP getting only 13 and Peoplesoft 11. This is something of a turnaround for Oracle, which Bob Kraus, AMR's service director of research, attributes to new applications.
"The market is talking a lot about customer relationship management (CRM) and yes it is growing, but it is Oracle they're looking to as they can put forward a good integration story," he said.
Kraus' view is that projects that extend existing ERP suites will be influenced in choice of vendor by the ease of integration.
"Integration is always a big issue in the second wave, so vendors that have applications now they can tie to existing ones are well placed," he said.
AMR's findings in the CRM market suggest a lack of clear leadership.
"CRM applications represent 17 percent of the surveyed companies' enterprise application budgets. But despite the hype, the market still lacks a prominent vendor," said Kraus, adding that "Siebel Systems isn't is big as it thinks it is, it doesn't own it - only seven companies out of the 800 surveyed use Siebel."
Kraus believes customers are not aware of what the large ERP vendors have to offer, leaving opportunities for niche vendors to steal the limelight on the back of solid marketing efforts.
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