ERP gets ready for a boom time

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

Midsized customers, government agencies and industries such as healthcare 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 $37bn by 2008.

Albert Pang, enterprise applications research director at IDC, said: "It's become more apparent in the past six to nine months we're ready for a rebound. 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 $23.7bn. Last year, however it grew five per cent and this year it's on track to increase by seven per cent, Pang said.

“Healthcare is one area to see some growth, because many organisations 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 organisations 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 per cent of the $25bn market. They held 44.5 per cent in the previous year.

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

Dawn Kawamoto writes for CNET News.com