AMR Predicts Moderate ERP Spending Growth for 2008

November 27, 2007 Alex Woodie

AMR Research predicts spending on ERP software among large companies will grow about 5 percent in 2008 compared to 2007 levels, a decent rate of growth, but a bit off of the pace of growth over the past three years.

In the paper “The Enterprise ERP Spending Report, 2007-2008,” AMR analysts Simon Jacobson, Jim Shepherd, and Bob Kraus slice and dice the predicted ERP spending for the new year. The findings were based on about 200 interviews with IT decision makers at companies with more than 1,000 employees in the U.S., the U.K., and Germany. A report for smaller companies is expected to follow.

Overall, AMR expects ERP spending to increase by 5.8 percent across all industries for the segment. In the U.S., the group expects a solid 6.9 percent growth in ERP spending at midsize companies with between 1,000 and 4,999 employees, compared to 5.3 percent at larger companies. This is because most larger companies have already standardized on a core set of ERP products, the group says.

The trend is switched in Europe, where larger companies are expected to increase their spending at a 5 percent rate, compared to 4.5 percent growth at midsize companies. However, there was much more uncertainty about 2008 spending levels compared to 2007 levels at European firms than U.S. companies.

Less than half (47 percent) of the companies AMR surveyed said they will increase their spending, a decrease from two years ago, when nearly three out of four were predicting increases.

Nevertheless, AMR says don’t expect ERP spending to “subside” in 2008. The group sees a strong desire among European companies to expand globally, while U.S. companies are stressing cost savings and consolidation. As the ERP vendors continue their convergence, large companies will continue to buy more seats and functionality, particularly in areas like CRM and business intelligence.