AMR Research unveils report on enterprise application spending and penetration

Where is the Automotive industry spending its IT dollars? How about the Retail industry? What about midsize and large companies? Is the money being spent on Supply Chain Management (SCM) or Enterprise Resource Planning (ERP)? How much are companies really investing in Customer Relationship Management (CRM)? AMR Research, the leading industry and market analysis firm specializing in enterprise applications and enabling technologies, unveils the answers to these questions in its Report on Application Spending and Penetration by Vertical Market, 1999.

AMR Research studied 13 industries to reveal what technologies they are buying, how much money they are spending, and from which companies they are purchasing it. The Report details which applications companies within each industry are using, and breaks down application penetration by company size and by vertical, for ERP, SCM, CRM, and Manufacturing systems. For example, AMR Research found that High Tech, Pharmaceuticals, and Finance are the leading verticals with the largest budgets for enterprise application spending.

"Customer satisfaction, cost reduction, increased productivity, and business integration are driving the swiftly growing Enterprise Application market," says Bob Kraus, service director for primary research at AMR Research.

Application spending overview

The following is a breakdown of key application spending patterns in The Enterprise Application market:

Enterprise Resource Planning grabs the largest share of corporate application budgets, commanding 43 percent of respondents` budgets, with ERP systems installed in almost half of these companies.

Customer Relationship Management applications represent 17 percent of the surveyed companies` enterprise application budgets. And despite the hype, the market still lacks a prominent vendor. Although Siebel Systems leads with roughly 17 percent of the market based on revenue, only seven companies out of the 800 surveyed use Siebel products.

Supply Chain Management software consumes 13 percent of corporate enterprise application IT budgets. Roughly 20 percent of the surveyed companies are using SCM software of some kind, including software developed internally and the SCM capability inside ERP packages.

Manufacturing Software comprising of manufacturing execution systems, plant scheduling, maintenance management, product data management, and electronic document management made up 16 percent of the surveyed companies` enterprise application spending budgets.

Identifying the big spenders

High Tech, Pharmaceuticals, and Finance are the three vertical markets with the largest budgets for enterprise applications, and are increasingly spending more on enterprise applications. For example, a $250M Finance company will spend $700K on ERP software, more than $400K on CRM software, and $1.5M on related services this year.

Clear IT spending patterns are now surfacing among the companies interviewed:

High Tech companies invest almost 28 percent of their IT budgets on enterprise applications. ERP is the largest investment for these companies, followed by balanced spending across SCM, CRM, and manufacturing software.

Pharmaceutical companies spend an average of 20 percent of their IT budgets on enterprise applications. They spend most of their money on ERP and SCM products.

Finance companies pour 15 percent of their enormous IT budgets into enterprise applications, with most of the budget going toward ERP and CRM systems.

Conclusion

Customer satisfaction, cutting costs, and increasing productivity are driving the majority of the surveyed companies to spend more on applications.

AMR Research`s Report on Application Spending and Penetration by Vertical Market, 1999, points out clear trends including the increase in IT spending on Web-enabled applications and market opportunities for new software sales.

Research methodology

AMR Research surveyed 800 U.S. companies about specific business issues driving enterprise applications investment. Typical survey participants included IT or application development directors. Midsize companies are defined as those with 300 to 2,500 employees. Large companies are defined as firms with more than 2,500 employees.