The year ahead: There will be continued pressure on IT budgets and consolidation in the industry, SAP America's Bill McDermott says, but at some point, customer spending will return to more normal levels.
There's little doubt that the economy will continue to play a dominant role in shaping the enterprise software market in 2003. While many predict the long-awaited economic recovery will begin this year, geopolitical instability and the prospect of war cloud this picture.
One thing we know is that the economy will continue to exert pressure on IT budgets, accelerating many trends that took shape last year. The market saw momentum shift dramatically from best-of-breed niche software providers to suite vendors such as SAP, as customers and analysts began to understand the challenges and true costs of integration. We expect this trend to continue this year.
We also expect further consolidation of the software industry. Customers want trusted partners with longer track records, sound finances that ensure research and development investment and longevity, broader functionality, and the efficiency and confidence that comes with a long-term relationship.
The emphasis on integration has moved beyond company walls to extend functionality into partner and customer relationships. This process pushes enterprise solutions into suppliers, vendors, and partners to enhance customer service and smooth logistics. At SAP, we see underlying technology playing a critical role, as companies extend the enterprise to third parties and face the challenges of connecting to disparate systems that make up their supply and value chains on a global basis.
One area that will have particular focus for SAP in 2003 will be building on relationships through our extended partner network of technology partners, systems integrators, and channel partners. An important market-focus area for business solutions in 2003 will be in the small and midsize business arena, where partners play a key, customer-facing role.
At SAP, we remain cautiously optimistic about the year ahead. At some point, customer spending will return to more normal levels. Until then, we're doing what market-leading companies should be doing: laying the groundwork in system improvements and customer-support networks to be ready to capitalize on the market's ultimate return.
Bill McDermott is president and CEO of SAP America. In a past life, McDermott was president of Gartner Inc.
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