A recent IDC survey in Western Europe suggests that 2009 spending on ERP applications will be strongly impacted by the current economic crisis.
21% of all respondents said their ERP spend would be lower or much lower in 2009 than in 2008. France will be particularly hard hit, but the Nordics and Germany will feel less of an impact. A closer look at ERP spending plans also shows that larger enterprises with more than 2,500 employees will be most vulnerable to ERP spending cutbacks.
On a more positive note, respondents hinted at increased average spending in 2009 for all other software categories, including security software, storage software, databases, systems management, and systems software. This confirms IDC's view that infrastructure software spend will be the most resilient to macroeconomic fluctuations. There are also clear indications that CRM applications will see increased spending in 2009.
"For ERP vendors in Europe, 2009 will no doubt be a very hard year, particularly for those selling in the large enterprise segment," said Bo Lykkegaard, research director, European Software and Services, IDC. "Those ERP vendors that post positive growth during 2009 will increase their market share. It is interesting to see how CRM, which declined two years in a row after the recession at the beginning of the millennium, is looking much stronger during this crisis. We see many organizations investing in sales force automation, ecommerce, Internet-based marketing, loyalty management, and customer self-service during this crisis as a way to bring down the cost of doing business."
IT cost reduction was the most popular IT priority for 2009, selected by 23% of all respondents. However, this implies that 77% of all respondents had other IT priorities besides cost, including IT security, support of new business requirements, IT infrastructure consolidation, and business applications, each of which were selected by at least 10% of all respondents.
"The survey shows that between a third and a quarter of respondents are entering survival mode in which reductions in IT costs and IT project cancellations are a way to survive the economic crisis," said Lykkegaard. "Selling to this segment will be very difficult for all but the most entrenched suppliers. However, we also see a large segment of the market making proactive IT investments to automate processes and increase the level of efficiency inside and outside the IT department. Successful IT suppliers will find ways to support this quest for automation and efficiency."
IDC surveyed 515 IT decision makers in Western Europe in February 2009. The survey focused on European organizations' responses to the economic crisis and their 2009 spending plans. The results related to enterprise applications and general IT plans are analyzed in the studies Enterprise Applications Spending Plans: European Investment Reality Check 2009 (IDC #LC01R9, March 2009) and IT Plans During Times of Crisis: European Investment Reality Check 2009 (IDC #LC54R9, April 2009).
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