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ERP market predictions that you can't ignore

The tough economic times are affecting the ERP market. Find out what ERP market trends you should be watching and learn six top expert ERP predictions for 2009.

Based on current economic conditions, continuing industry trajectories, and newly emerging trends, Panorama Consulting Group has compiled its six top ERP predictions for 2009:

1. Continuing growth of the SMB segment. Because of both the soft economy and the continuing growth of small and medium-sized businesses (SMBs), ERP's widespread adoption in this segment will continue, thanks to its ability to automate business processes and allow small businesses to do more with less. However, expect SMBs to proceed with caution and in a cost-effective manner.

2. Rationalized costs. The days of implementing ERP at any cost may be over, at least temporarily -- hopefully for good. Because capital and IT budgets are under pressure, CIOs can no longer afford to implement ERP without reining in total cost of ownership. This is already causing vendors to price their solution offerings more aggressively to win new business.

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3. More benefits realization, fewer new implementations. A pattern we are seeing with our client base is greater interest in stabilizing and optimizing current ERP systems rather than replacing them. Because companies are becoming more cautious in their capital spending, many CIOs are looking for ways to leverage their current ERP systems to generate more measurable business benefits that they can take to their executive team.

4. Continued adoption of Software as a Service (SaaS). Predictions number 1 and 2 are driving more companies to look at SaaS offerings, which usually require less up-front investment than traditional ERP implementations. However, they may also provide less flexibility, so CIOs need to evaluate tradeoffs during their ERP software selection.

5. Emergence of open source. Budgetary pressures will also drive companies to give open source ERP a closer look. Open source allows companies to own and customize the software's source code, providing a great deal of flexibility at a lower initial cost.

As with SaaS, however, there are tradeoffs: Such flexibility can introduce costly complexities, and ongoing software maintenance is generally less robust than with an off-the-shelf ERP solution. These tradeoffs need to be considered during the ERP software selection process.

6. Higher adoption in specific industry verticals. Evolving government priorities and a new U.S. administration will probably increase ERP adoption in certain industry verticals. The U.S. federal government is expected to grow significantly in the foreseeable future, and this will likely increase ERP spending in the government sector. In addition, green energy, labor, legal services and other industries are expected to benefit and grow, owing to changing priorities in the U.S. These industries are likely to look to ERP solutions as viable options for scaling for such growth.

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