According to AMR Research, spending by U.S. companies will rise significantly for both customer management and knowledge management applications in the year ahead. In one report, AMR says tht at customer management application spending will increase 16% in 2008 to nearly $2,200 per employee. Mid-market companies (<$1B in revenue) will see the greatest spending increase at nearly 22%.

This year's report reveals a number of industry positives: 2008 will see the largest average planned increase in CRM budgets to date, and the appeal of software-as-a-service (SaaS) is growing and impacting the industry average for upgrade rates (65% of companies now upgrade at least once a year, with 25% upgrading even more frequently).

But these positives are counterbalanced balanced by a set of somewhat alarming data points:
CRM failure rates remain far too high: 29% of companies reported an implementation failure that kept them from going live with the software versus 31% last year and just 18% in 2005.
User adoption remains a challenge, with 33% to 47% of customer management applications facing serious adoption issues. Unused seats of CRM remain a challenge, with 25% of all licenses undeployed.

"There is an interesting paradox going on in CRM right now," explains Rob Bois, research director at AMR Research. "Spending has reached an all-time high, with expectations nearly as lofty. But implementation failure rates have not improved, nor have ROI metrics. Both buyers and vendors need to figure out how to close this gap soon, or we're just going to repeat the same mistakes made in the late 90s all over again."

In another report, AMR Research predicts that U.S. companies will spend $73B on knowledge management software in 2007, and spending will grow nearly 16% to an average of $1,224 per employee in 2008.

As a growing number of needs and initiatives are left unsupported by established enterprise applications, the demand for KM technologies has increased, leading to record-level activity in knowledge management; content management; navigation, search, and retrieval; and collaboration platforms.

"$73B is a big number that represents an even bigger opportunity for software vendors and service providers," says Jim Murphy, research director at AMR Research. "Enterprises are looking for content management, search, portal, and collaboration technologies that will enable innovation and improve process efficiency, customer satisfaction, and market agility. This wide range of needs unmet by existing systems leaves ample room for software and service providers."

Based on an extensive survey of 350 IT and line-of-business decision-makers, "The Knowledge Management Spending Report" reveals what technologies companies are investing in and why--looking in depth at the four major software categories of AMR Research's Active Knowledge Framework:

1. Portals and portal frameworks-the platforms and gathering points for KM initiatives
2. Content and document management systems-ensure the quality and integrity of information
3. Navigation, search, and retrieval (NSR)-programs that aggregate and extract information from disparate structured, unstructured, internal, and external sources
4. Collaboration-allows people to coordinate and conduct work together

Other highlights of the report include:

1. Collaboration, digital asset management (DAM), and customer- and supplier-facing portals are the biggest areas of planned investment.
2. The preferred KM purchasing models are shifting from traditional licensing to software-as-a-service (SaaS) and open source.
http://www.amrresearch.com