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By Laton McCartney

The economic downturn derailed at least one major enterprise resource planning (ERP) project when Minneapolis-based Select Comfort, the nation's leading bed retailer, abruptly cancelled the rollout of an estimated $20 million worth of SAP's supply chain management (SCM) and customer relationship management (CRM) applications in late December.

The cancellation came about as part of cost-cutting measures imposed upon Select by the Clinton Group, an investment firm that is a major Select Comfort shareholder.

The Select Comfort situation, however, is clearly an anomaly, as the ERP market remains relatively strong despite the deepening financial crisis. "We deal with hundreds of companies that have ERP," says Jim Shepherd, senior vice president, AMR Research. "I don't know of a single one that's cancelled an implementation."

Indeed, organizations continue to spend on ERP according to several recent ERP market studies such as one carried out by Irvine, California-based Resources Global Professionals of some 90 executives in Australia, the U.S. and Europe. Resources Global, an international consultancy, in fact, ranked ERP systems improvement as the number two IT priority for 2009, second only to business process improvement within the IT department. Of the respondents, 16% said they were planning ERP systems improvements while 10% said they were implementing new ERP modules.

A recent pole of clients by the Panorama Consulting Group in Denver indicated that 38% of respondents would begin or continue implementing a new system; 17% planned to upgrade current systems; 24% planned to improve existing systems while only 8% intend to keep current systems unchanged.

Next: Companies Scale Back But Don't Abandon ERP