The middle market enterprise sector (MME), defined as companies with annual revenue between $50 million and $1 billion, will account for up to $50 billion in total technology purchased by mid-decade, according to a recent report by Aberdeen Group, a leading market analysis and positioning services firm.
According to the report, the MME purchasing behavior is better predicated on revenue than on the number of people required to produce that revenue. Thus, business decisions regarding enterprise applications other than human capital management, payroll, or others that are per seat or per capita software purchases, can most easily be predicted by annual revenue than by headcount. In the public sector, however, agencies with smaller revenue ranges share more in common with the MME than with the smaller markets below the revenue range of $50 million.
"The ability to eliminate waste, redundancy, and lack of productivity through intelligent software choices in this vast market sector may well prove key to the turnaround in the global economy," says Katherine Jones, research director at Aberdeen Group and author of the report, “The Small and Middle Market Enterprise: Addressing Today's Business Issues Through Technology.” "Many middle market enterprises have had their existing business applications for several years and will be looking for new applications during 2003-2005. While these companies take such software purchasing decisions very seriously, they often lack the sophistication of a large corporation in wisely selecting vendors or products that are the best fit with their corporation."
The report looks at companies who provide software to the middle market as well as information from the customer base those companies address. Among the findings of the report are:
- Quantifying "middle market" by employee size is only useful to vendors who sell solutions such as outsourced payroll by the head, patients managed, or other per capita-based applications. For many solutions, employee headcount fails to capture the potential complexity - or the simplicity, in some cases - of the company's business.
- The vertical industry of the mid-market company more than either revenue or employee count is a better indicator of product fit and section criteria.
- Issues of integration plague the middle market IT users, leading to repetitive re-entry of data, and the ensuing loss of productivity and chance for error.
- Middle market companies often do not recognize when they have outgrown their financial applications, an issue that can lead to data loss and accounting errors.
- The lack of data migration between products as companies migrate to more robust products is an ongoing issue; there is no systematic growth path in the offerings of many of the suppliers to this market, causing the company to virtually start over with a new software package when the initial application has been outgrown.
In addition to the report, a “Buyer's Guide for Middle-Market Enterprises: Criteria for Vendor Section” can be obtained separately. For a copy of the report or the Buyer's Guide, please visit www.aberdeen.com.
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