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ERP Market Revenues Declined in 2002

As top ERP vendors battle in court and in corporate boardrooms, newly published Gartner research shows that the Enterprise Resource Planning market was on the decline in 2002. A comparison against a similar report by Gartner a week ago on the Customer Relationship Management market shows that ERP has weathered the downturn better, though.

SAP AG, which hasn't gotten involved in the current melee, retained its number one position and even grew market share slightly. Oracle (No. 2) and PeopleSoft (No. 3) both lost market share in addition to revenues in 2002, the Gartner report shows. Oracle played spoiler to a PeopleSoft bid for J.D. Edwards recently with its own hostile bid for PeopleSoft. The management teams at the three companies have filed several lawsuits in the ongoing fight.

According to Gartner, worldwide ERP new license software revenues are down 9 percent from 2001 to 2002. The 2002 revenues amounted to $5 billion; 2001 revenues were $5.5 billion.

"A shift in buyer behavior, due in part to users' past experiences of software failing to meet expectations, has created a more cautious buyer that seeks smaller, less-expensive pieces of software to quickly drive positive bottom-line results," Chad Eschinger, principal analyst for Gartner's worldwide software applications research group, said in a statement. "Yet the market performed better, given the current state of world economies, merger and acquisition activity, and the change in buyer behavior."

By comparison, worldwide CRM revenues fell a more dramatic 25 percent from 2001 to 2002, according to Gartner. Worldwide new license revenues fell from $3.7 billion to $2.8 billion. It was the second straight year of declines for CRM revenues. Many of the same vendors are involved in both markets.

SAP, which grew its ERP market share to 25.1 percent in 2002, also gained 5 points of CRM market share from year to year. PeopleSoft had mixed results, with a slight share gain in CRM offset by a decline in ERP share. Oracle lost share in both markets. Microsoft Business Solutions, ranked fifth among ERP vendors, saw a slight gain in ERP market share from 4.6 percent to 4.9 percent.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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