Supply Management Budgets Seen Increasing 14.5 percent in 2008

Companies ramping up spending to fill key functionality gaps, AMR reports; opportunity seen for best-of-breed apps

Boston — February 4, 2008 — Spending on supply management applications and services will increase 14.5 percent in 2008, according to a recent report from AMR Research.

According to AMR's report "The Supply Management Spending Report 2007-2008," companies are increasing spending to fill functionality gaps in key areas such as supply visibility, contract management and supplier connectivity.

"We found that many organizations are looking to fill functionality gaps by investing in the tools that will ensure reliable supply in 2008," said Mickey North Rizza, a research director at AMR Research. "We were not surprised to see this overall increase in spending, especially considering the importance of supply management to a company's P&L and balance sheet. Even in a time of economic uncertainty, companies understand that supply management applications can bring more to the bottom line. Tightening up spending equates to spending on applications and services that bring added value, such as supply management."

The study, which surveyed supply management and IT executives from 12 industries across Europe and the United States, found that increased productivity (ranked first by 29 percent of respondents) and profitability (27 percent) are the top two business priorities for supply management executives in 2008.

Additional highlights of this report include:

  • U.S. budget allocations will fall mainly in hardware or application infrastructure (24 percent), software licensees (22 percent) and maintenance (22 percent). In Europe, allocations will go toward internal head count (22 percent), infrastructure (22 percent), and software licenses (21 percent).
  • Within three years, a shift will occur away from ERP in most supply management areas, leaving opportunity for best-of-breed and custom applications.

The AMR report is available (subscription required) at