ERP to take a hit in 2009, but CRM looking strong

Spending on ERP applications will drop in 2009 as a result of the economic crisis, according to IDC.
A survey from the analyst firm shows 21 percent of respondents said their ERP spend would be lower or much lower in 2009 than in 2008, with larger enterprises the most vulnerable to ERP spending cutbacks.
However, respondents hinted at increased spending in 2009 for all other software categories, including security software, storage software, databases, systems management, and systems software. IDC says this confirms its 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,” says 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 organisations 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 percent of all respondents. However, this implies that 77 percent 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 percentof 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,” continues 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.”