May 17, 2004 2:02 PM PDT

Rebound seen for resource management software

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Sales of applications for managing enterprise resources are expected to grow 7 percent this year to $26.7 billion, with the top vendors taking a larger share, according to a report released Monday by IDC.

Midsize customers, government agencies and industries such as health care are helping to drive the rebound in enterprise resource planning, or ERP, software, which IDC attributed to an increase in spending on information technology and a pent-up demand for new applications to increase productivity. The market is expected to grow to about $37 billion by 2008.

"It's become more apparent in the past six to nine months we're ready for a rebound," said Albert Pang, enterprise applications research director at IDC. "Last year, it was a getting-ready year for some of these ERP users. And in 2004, it's the contract signing and implementation years for them."

Two years ago, the ERP market remained flat at $23.7 billion. Last year, however it grew 5 percent and this year it's on track to increase by 7 percent, Pang said.

?Health care is one area to see some growth, because many organizations are running on legacy systems that they want to move to integrated solutions,? Pang said. ?The public sector is another one, because they have homegrown solutions or legacy systems that they want to move to integrated solutions.?

A move to open-source technologies is helping to spur demand for ERP software, especially as organizations and companies start to plan their upgrade cycle, Pang said.

As the market grows, IDC predicts, the top 10 ERP vendors will grab a bigger share. Last year, the top 10 accounted for 46 percent of the $25 billion market. They held 44.5 percent in the previous year.

The top five companies in the field are SAP, PeopleSoft, Oracle, Microsoft and Sage.


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