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As might be expected, AMR Research predicted this week that revenues for enterprise software vendors would be hit by the global economic recession. The Boston-based research firm is predicting that revenues for the group as a whole will decline in the range of 2% to 6% “based on budget lockdowns and the general reluctance by corporations to spend.”
Again, not surprisingly, AMR says vendors will find it very challenging to convince customers to enter into new license sales as they attempt to keep a lid on budgets.
But while the forecast is certainly not positive for enterprise software vendors, AMR also says the news is not all doom and gloom. It does see several “nuggets of opportunity for software vendors.”
In particular, software-as-a-service and cloud computing vendors, such as Salesforce.com, continue to defy the economy. “These models continue to grow at a faster rate over traditional licensing because they are quicker, easier and cheaper to deploy,” AMR says. “All of these are attractive traits, especially during recessionary times.”
In addition, the small and mid-sized business market continues to be an attractive long-term growth opportunity for ERP vendors, and will prove to be an interesting battlefield between existing players, such as Sage Group and Microsoft, and the big ERP vendors like Oracle and SAP, who are looking to shore up revenues. Sage Group was No. 3 in overall revenues in 2008 with $2.4 billion, and Infor, another major player in the small-to-mid-sized segement, was No. 4 with $2.2 billion. Microsoft came in at No. 7 with $1.3 billion in revenue.
While supply chain vendors have certainly been impacted by a decline in manufacturing activity, they have also seen an increased demand for certain modules of software to help customers meet new regulatory, security and compliance requirements.
And as companies look to trim workforces, or make better use of existing workforces, some vendors of workforce management software have been able to take advantage of the opportunity. “Workforce management has become incredibly valuable in this difficult time, both for improving the efficiency of resources, whether it is a retail, manufacturing or distribution environment, or in managing contingent workforces.”
Finally, AMR says there is opportunity for software vendors to take advantage of the need by companies to better manage their procurement budgets. Companies are looking to find ways to either trim existing budgets or strike better deals with existing suppliers, and software vendors can capitalize on that opportunity with the right sales message.
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