I have a friend who works in home renovations and he’s been very busy lately. So busy, I haven’t seen him much, but when I did catch up with him recently, I said to him I didn’t think statistically the housing market was doing that well yet. He pointed out to me that while home sales may not yet be booming, home renovations and updates are a different thing.
“A lot of homeowners had put off remodeling during the recession because of the risk of layoffs or other financial insecurities, but that basically just gave them more time to make a wish list,” he told me. “And now, with a bit more security, they’re making some of those wishes a reality.”
I guess that’s a long way to go to make a mediocre analogy, but there’s a very similar trend taking place in the enterprise software market. There are more and more indications that ERP upgrades will be taking off this year, as more companies feel secure enough to “remodel” so to speak.
Industry analyst firm Gartner this week said enterprise software revenue will jump 7.5% this year. “The focus in the enterprise software industry is on upgrading of build-run-manage technologies to improve agility, establishing cloud-computing infrastructure services and results-reporting transparency," said Tom Eid, research vice president at Gartner. “Enterprises are expecting to provide significant resources in 2011 to upgrade all types of systems and software, ranging from personal productivity tools, to bu
ild-run-manage infrastructure software, to user-driven applications. Virtualization is a key modernization factor.”
In a recent interview with Consumer Goods Technology, IDC Group Vice President Bob Parker said, “I think the big push from the vendors will be to get users up on to the latest versions. Quite a few companies postponed their updates over the last couple years, and we are expecting some pent up demand for the new features and functionality, but as long as it comes with clear business benefits.” (By the way, if you haven’t looked at the results of CGT’s Readers’ Choice awards, check them out. SAP scored very well in a variety of categories.)
A survey last month from Forrester Research found that 25% of companies polled plan to invest in their ERP applications in 2011, most of which will be upgrades. According to Forrester, “Adoption patterns indicate that approximately half of ERP customers are currently on releases that are two versions behind the current release, which may be four years old or more. As end-of-support deadlines and support price increases loom on major application releases in 2011 (e.g., from Oracle and SAP), upgrade activity will accelerate.”
Do you have an ERP upgrade planned this year? We’d love to hear about it. Was it something you have been planning or was it put off for a bit? Post a comment or connect with me directly here on ILN to tell us more.