When it comes to identifying who is the key buyer of enterprise software, vendors are looking past the Fortune 500. In fact, mid-size companies with between 100 and 500 employees will be a key driver of the North American enterprise software market over the next two years, predicts Jupiter Media Metrix.
In a Jupiter online survey of 563 information technology executives last November, 26 percent indicated that they planned to purchase and implement software within six months to streamline accounting and financial management; 26 percent said they would implement software to support customer relationship management; and 28 percent noted they would adopt applications for e-commerce storefronts.
"Although small companies will purchase software to simplify discrete business processes such as accounting, the bulk of the dollars to drive the market to the next level will come from mid- size businesses, which are more likely to invest in CRM and other enterprise-grade software," says Marc Harrison, Jupiter senior analyst and research director. "Mid-size businesses are looking for full-featured software packages that have some interconnectivity without a great deal of costly customization or integration."
Spending on enterprise software by small businesses—with between 10 and 100 employees—and mid-size companies will increase from $971 million in 2001 to $3.4 billion by 2006, Jupiter projects. Driving the growth will be increased availability of full-feature functionality without the high- ticket pricing that defines the large enterprise market, the firm notes. The SMBs also will demand applications that can scale as companies grow, Jupiter adds.
The most SMB dollars are expected to go for tools that support electronic commerce and Web sites devoted to corporate marketing and product information. The applications will account for $1.1 billion in revenue by 2006, comprising more than one- third of the market, up from 14 percent of the market in 2001, Jupiter projects.
Customer relationship management software purchases by SMBs will total $651 million by 2006 and comprise 19 percent of the market, up from 10 percent in 2001, Jupiter notes. Companies will increasingly look to software and services to manage their relationships with customers as the number of customer touch points increase.
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