Enterprise Technology Blog

If we are to believe the daily media reports, the economy is either in a recession or perilously close to slipping into one. If this is the case, one has to wonder why ERP spending continues to rise. SearchSAP.com gives us part of the answer in this post.

Quoting Jim Shepherd, a vice president at of AMR Research, SearchSAP.com points to two primary drivers of growing EPR spending: SMB’s survival instincts and more companies becoming global. 

I entered the ERP space on January 17, 2000. At the time ERP publishers were coming off the high of the Y2K scare and the economy was moving into a recession. As I recall, IT spending was predicted to stay constant if not be slightly reduced. Contrast that with what AMR is saying now and I’m left wondering why spending expectations are different today under what appear to be similar economical circumstances. 

Shepherd mentioned two, I’ve offered four additional possibilities below:

1. Economic growth has slowed, but we have not entered a recession - regardless of how it “feels” - so companies are moving forward with their IT plans.

2. We have entered a recession, but companies are more sophisticated today and see IT as a strategic investment that offers a quantifiable return by streamlining processes and increasing efficiencies.

3. Many of the SMB’s who bought new systems during the gloom and doom talk preceeding January 1, 2000 have, eight years later, outgrown those systems and the hardware has become obsolete. 

4. The links in the supply chain are becoming increasingly connected. A SME supplier to a larger enterprise is no longer electronically autonomous. EDI, RFID, etc. have dramatically changed the way companies up and down the chain communicate and if you don’t keep up, you don’t stay in business.

So many factors can impact the economy - the November election, Russia and Georgia appear to be heading toward a fullscale war, terror attacks on US soil are always a possibility - that what was is called a study can more accurately be called a poll. A snapshot in time, based on current circumstances, that could turn 180 degrees in the next 24 hours.

It’ll be interesting to look back a year from now and see how accurate AMR’s proved to be.