Supply chain systems take growing slice of IT spend

20 August 2003
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21 August 2003 | Robin Parker

E-business software such as procurement and supply chain applications account for an increasing share of IT investment, a wide-ranging study claims.

More than a fifth of all IT spend goes on such applications, analysts AT Kearney and Line56 Media have found.

Despite flat spending on IT, e-business initiatives account for 20.3 per cent of computer-related spend, 1 per cent more than last year. The figure is set to grow to 22.8 per cent in 2004.

The annual E-Business Investment Benchmarking Study revealed companies spend an average of $42.6 million on e-business projects, more than a third of which is on infrastructure.

Enterprise resource planning software remains the most common purchase, bought by 21 per cent of firms, followed by portals, supply chain management and customer relationship management (CRM).

Nearly a quarter of the smaller firms polled have bought CRM tools, supporting vendors' claims of their growing popularity with the mid-market.

AT Kearney said the results paint the picture of a lot of smaller or more pilot-type projects, particularly as the researchers uncovered some problems about predicting demand over time.

One in three companies said usage was not meeting investment levels, but in 38 per cent of businesses, investment was only made after demand had been identified.

Christian Hagen, a principal in AT Kearney's business technology practice, said that while companies are largely cutting spend, they are also finding ways to cut their operating costs.

"Smart companies are continuing to invest in value-driven projects," he said.

"They're not going after the 'sexy' projects they were a few years ago but they are undoubtedly investing, especially as protocols and standards are more adopted across the organisation."

Representatives of 150 firms were polled, one in 10 of whom were purchasing managers. The report can be downloaded free from AT Kearney's website www.atkearney.com

SMaug2003

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