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Survey says ERP budgets are tight

A new Forrester Research study says that only one-third of SAP customers plan to increase their SAP budgets next year. But even fewer Oracle and PeopleSoft customers will increase spending on those vendors.

According to Cambridge, Mass.-based Forrester Research, 34% of SAP clients who responded to a recent survey will increase their spending with the vendor during the next 12 months, while over 65% said spending would remain the same or decrease.

Forrester surveyed 354 enterprise-application decision makers at North American companies. The research brief, "What Matters to Enterprise Apps Buyers?", was released by Forrester last month.

The results of the survey are representative of a still-dreary economy and a saturated tier-one ERP market, which is drying up for large vendors like SAP, according to Byron Miller, an ERP analyst with Forrester.

However, SAP is doing a good job of positioning itself as a haven for companies dealing with the uncertainty caused by recent market consolidation, Miller said. In the same Forrester survey, only 19% of PeopleSoft clients and 12% of Oracle applications clients said they expect to increase spending on new software.

The survey also showed that, while 65% of SAP clients will spend the same or decrease spending with the company over the next 12 months, 79% of PeopleSoft clients and 89% of Oracle applications clients will hold the line on new spending or decrease spending.

"All the signs in the economy at the moment are very positive, but we're not far enough along for along for a company to gauge how to spend on new ERP technology," Miller said.

Those firms increasing spending with SAP are 1.4 times more likely than clients of other vendors to be in the midmarket, Miller said. Forrester defines a midmarket firm as one whose revenue is greater than $500 million and less than $1 billion.

Miller predicted that midmarket companies that plan to upgrade with SAP will eventually embrace the company's NetWeaver technology. NetWeaver is SAP's first fully interoperable Web-based, cross-application platform that can be used to develop not only SAP applications but others as well.

"Moving forward, SAP users are realizing that if they're sticking with SAP, they're eventually going to have to move to a Web-application server architecture," Miller said. "More and more of NetWeaver is going to be in that picture."


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To provide feedback on this article, contact Robert Westervelt.

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