Manufacturing and Financial Services to Drive ERP and CRM Short-Term Investments in Western Europe, Says IDC

MILAN – DECEMBER, 12, 2006 – A new study from IDC's European Vertical Markets group shows that manufacturing and financial services will drive ERP and CRM short-term investments in Western Europe. Technology adoption and investments by companies, however, will differ significantly across vertical markets.

"Vendors need to continue monitoring the industries in which they have traditionally been strongest, adapting their offerings to their customers' changing needs and seizing any new opportunities for upgrades," said Serena Da Rold, program manager, IDC European Vertical Views. "At the same time, it is vital for their longer-term growth to identify the sectors where penetration is still low, but companies' needs are evolving fast."

Focusing on technology adoption and investment plans in ERP, CRM, and industry-specific solutions, as well as channel selection, across eight vertical markets, the study found that:

Manufacturing remains the most attractive industry for ERP vendors, despite its already large installed base, and has the highest share of companies building or implementing a new solution. More than 51% of manufacturers plan to invest in the next 12 months.

Financial services, transport, communications, and utilities (TCU), and business services have the highest CRM penetration and will continue to offer the best opportunities for CRM vendors, driven by a high rate of new implementations and upgrades.

Industry-specific solutions continue to offer high-growth potential: nearly 41% of survey respondents are planning new investments in industry-specific solutions over the next 12 months. The best opportunities will be generated in the financial services and TCU sectors.

The trend towards SaaS is on the rise, although short-term plans to replace existing ERP, CRM, or industry-specific solutions with the new delivery model are limited.

IDC asked survey respondents to indicate their company's primary sources for software purchases in 2006 in order to show which channels vendors should consider to target potential customers. VARs and direct sales are the primary sources for packaged software purchases across most verticals. However, many companies are now purchasing from third-party players accepting orders exclusively online or by phone.

This study, Applications Adoption in Western European Vertical Markets: An End-User Perspective, 2006 (Doc #SV02N, December 2006), is based on the results of the latest IDC European Vertical Market Survey, carried out in July 2006 among 1,950 companies with 20 or more employees, operating in five Western European countries (France, Germany, Italy, Spain, and the U.K.). The survey investigated IT spending directions, solution priorities, investment plans, and the adoption of new technologies across vertical markets.

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IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

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