NEW YORK January 28, 2002 Jupiter Media Metrix, an Internet and new technology analysis and measurement company, recently reported that midsize companies (100 to 500 employees) will be a critical driving force in the growth of the market for enterprise software in North America over the next two years.
According to a new Jupiter MarketAccess Report titled "Enterprise Software Adoption in the SMB Market," executives in midsize companies indicated they will purchase and implement software in the next six months to streamline accounting and financial management (26 percent of respondents), customer relationship management (CRM, 26 percent) or e-commerce storefronts (28 percent). Jupiter analysts advise enterprise software companies - which historically focused on larger Global 2,000 businesses - to rethink their marketing initiatives to accommodate the purchasing behavior of small and midsize businesses.
"Midsize companies are showing strong demand for enterprise software," said Marc Harrison, Jupiter senior analyst and research director. "Although small companies will purchase software to simplify discrete business processes such as accounting, the bulk of the dollars to drive the market to the next level will come from midsize businesses, which are more likely to invest in CRM and other enterprise-grade software. Software vendors should take note that midsize businesses are looking for full-featured software packages that have some interconnectivity without a great deal of costly customization or integration."
In other findings, Jupiter estimates that the North America market for enterprise software applications and related services sold into small and midsize businesses (SMBs) will grow from $971 million in 2001 to $3.4 billion by 2006. According to Jupiter analysts, increasing availability of full-featured functionality - without the high-ticket pricing scheme that defines the large enterprise market - will drive growth, along with demand among SMBs for solutions that can scale as companies grow.
In addition, SMBs will invest the most dollars in tools for e-commerce/Web presence (Web presence defined as sites devoted to corporate marketing and product information, etc.) and CRM. According to an October 2001 Jupiter Executive Survey, nearly half of SMBs (49 percent) will have built a Web presence in the next year. Jupiter analysts forecast that e-commerce/Web presence applications will grow to $1.1 billion by 2006 and account for over one-third of the market - up from 14 percent in 2001.
Spending on CRM software by SMBs will reach $651 million and make up 19 percent of the market by 2006 - up from 10 percent in 2001. As the relationships between SMBs and their customers become more complex and as the number of customer touch points increase, Jupiter analysts expect that SMBs will increasingly look to software and services to help manage these relationships.
"Despite continued economic difficulties and dot-com fallout, Jupiter data indicate that SMBs still see the Internet, and their presence in it, as an essential element of their overall strategy. There is a sizable market opportunity, to the tune of 3.4 billion dollars by 2006, for vendors selling enterprise-grade applications to SMBs," Harrison said.
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