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Home » Corporate Pocketbooks Are Opening Again, AMR Says, and Logistics Vendors Will Benefit

Corporate Pocketbooks Are Opening Again, AMR Says, and Logistics Vendors Will Benefit

March 1, 2006
Global Logistics & Supply Chain Strategies

Are companies finally ready to open up their wallets and start buying supply chain software again? Maybe they already have. According to AMR Research Inc., a number of software vendors saw big jumps in their stock values last year. Top of the list was Logility Inc., with a 104.5-percent increase in valuation. It was followed by SPSS Inc. (97.8 percent), Salesforce.com (89.2 percent) and SSA Global (66.4 percent). Other companies posting big gains included Business Objects SA, Descartes Systems Group, Geac Computer Corp. Ltd. and Informatica Corp.

Speaking at AMR's Strategy 21 conference in Half Moon Bay, Calif., chief research officer Bruce Richardson said businesses are eager to post supply chain productivity gains, and new software systems can help. The NASDAQ index still hasn't recovered from its multi-year plunge, Richardson acknowledged, but there are signs of recovery on the horizon for tech vendors, even those whose initials aren't SAP. Software investments that have taken place over the past five years have mostly been on the consumer side, he said, and business-to-business systems are now poised for a healthy rise in sales. Richardson said companies have been socking away capital, to the tune of $1tr, and they can't sit on those reserves forever. "The amount of cash building up will be spent," he said. "It's not going to be continuously used for stock buybacks.... We think this is going to be a great year for software vendors."

One of the strongest areas of focus will be business intelligence, Richardson said. Companies are eager to improve the way they collect, aggregate and analyze data in order to make better business decisions. Positive side effects include lean manufacturing, cost-containment through outsourcing and better compliance with new regulations. At the same time, said Richardson, control over software spending is moving away from tech managers and chief information officers to supply chain executives with a higher view of the organization. "Think line of business, not IT," he said.

One thing seems certain: complex supply chains will become even more so. Outsourcing will increase, said Tony Friscia, AMR's president and chief executive officer, as the contribution by outside suppliers to the content of manufactured goods such as automobiles keeps rising. Other developments to keep in mind that will impact the business software market in 2006 include service-oriented architectures (SOA), self-contained services that communicate with one another; ongoing efforts by vendors to sell their software as a service, and the new joint marketing venture between industry behemoths SAP and Microsoft.

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