Users switch focus to supply-chain, CRM projects

For the next five years, large companies will spend a hefty portion of their information technology budgets on best-of-breed software and implementation projects designed to streamline supply chains and manage customer relationships, according to AMR Research Between now and 2004, purchases of both supply-chain and customer relationship management (CRM) software are likely to grow 35 to 40 per cent annually to reach a combined total of more than $US40 billion ($70 billion), analysts predicted at an AMR conference for IT executives in Boston recently.

On the other hand, AMR said sales of all-encompassing suites of enterprise resource planning (ERP) applications, such as SAP's R/3 software, will slow significantly. The company predicted that ERP purchases will grow by just 5 per cent a year as more users focus on integrating highly specialised e-business applications for tasks such as managing channel partners via the Internet.

AMR said the estimates were based on a survey of 1400 software vendors and interviews with 1000 user companies across 13 vertical industries.

"Between 1995 and 1998, the ERP market grew at 40 per cent a year, but now it's running out of gas," said AMR analyst Rod Johnson. One main reason is that the Internet has forced companies' attention away from the back office to more "customer-facing activities", an area ERP vendors are targeting but one in which they face much broader competition and some scepticism from users, according to AMR's findings. w

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