18 September 2003 | Robin Parker
Supply chain management will be the fastest-growing e-business software market over the next year as companies seek new ways to manage their inventories, a report claims.
SCM's share of spending on enterprise software - which also covers enterprise resource planning, procurement and customer relationship management applications - will grow from 13.6 per cent to 16.3 per cent by 2004, according to analysts AMR Research.
The growth, much of which will come in the services sector, is fuelled by a desire to forge better supplier relationships and agreements to rid supply chains of unnecessary costs and manage inventories more effectively.
Spending on other enterprise software systems, which accounts for around a fifth of IT budgets, is expected to remain constant.
Half of the 500 large and medium-sized companies polled currently use SCM, procurement and sourcing software, while two-thirds use ERP applications.
The IT Spending Report 2003-2004 is broadly optimistic about future IT spend. Average budgets are forecast to grow by 2 per cent next year. Less than one in five firms expect budgets to shrink.
The procurement and development of new technology accounts for almost a third of IT budgets for 2003.
The key growth areas outside of the supply chain are enterprise application integration and wireless technology.
But AMR warns of a "definite lack of strategy" about their purchase and implementation. It says a lack of controlled IT strategic spend is leading to haphazard purchasing and deployment, particularly for wireless technology.
Companies were also slow to clamp down on off-contract IT spending, it said, which was worth more than $1 million at a quarter of the firms polled.
• European automotive firms want to invest in SCM software and are increasingly looking to their current ERP vendors to deliver it, according to analyst firm Frost & Sullivan.
In the Understanding the Enterprise Application Opportunity in the European Automotive Market report, it says that new ERP and SCM vendors will struggle to win favour in the sector.