Service revenues for enterprise resource planning are dramatically exceeding software license revenues for the first time and have become a key factor in vendor selection among users with revenues below $1 billion, technology analysts with ARC Advisory Group say in a study. ERP services including consulting, implementation, training and maintenance accounted for almost 65 percent of $9 billion in ERP revenues from the industrial discrete and process industries last year as new implementations fell dramatically, ARC says.

"ERP services have become so important to both users and suppliers that services tend to be a key differentiator in vendor selection," says Steve Clouther, ERP analyst for Dedham, Massachusetts-based ARC. "Users want real value-added services that deliver a comprehensive solution in the shortest time period and least costs."

Clouther says fast-track ERP implementations which are measured in thousands of dollars rather than millions and months rather than years will be critical to ERP market recovery.

ARC's "ERP Software and Services Global Outlook" market study found that maintenance services accounted for 42 percent of ERP service revenues in 2001 and that for many vendors maintenance revenues were in the 60 to 70 percent range. "The ever-growing installed user base and ever-changing technologies and architectures will continue to make maintenance a very vital element of the future revenues," Clouther says.

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