Ten years ago, spurred on by the need to manage increasingly global operations and a desire to reengineer end-to-end business processes, manufacturers, it seemed, could not invest in enterprise applications fast enough. Spending on supply chain management, product lifecycle management, customer relationship management, human capital management, and packaged ERP applications was surging at well over 10% per year. Researchers predicted spending on ERP alone would grow from $15 billion in 2000 to $50 billion in 2005.
The need to replace legacy, often homegrown systems with modern packaged applications drove much of the spending. So did the perceived and real need to cope with increasing business risk and regulation.
But also bolstering spending on enterprise applications was a series of important technology innovations that made enterprise applications easier to use and less expensive to implement. Three-tier client/server architectures allowed manufacturers to deploy enterprise applications on top of less expensive servers and workstations rather than mainframes. More sophisticated relational database management systems supported larger, networked deployments. And graphical user interfaces running on personal computers — followed by browser-based interfaces — began to expand the universe of enterprise applications users.
Fast-forward 10 years, and enterprise application market growth projections look very different. The rate of annual spending across enterprise applications categories for the five years ending in 2013 is expected to decline from 6% to 3%, according to AMR/Gartner. Spending on ERP never has reached the predicted $50 billion level. Spending on ERP in 2010 will be about $37.8 billion, AMR/Gartner predicts.