According to the Boston-based Yankee Group, 2006 will be the year for price management and profit optimization systems. A new report by the consultancy claims that PMPO tools "are the best-kept secrets in enterprise software." It predicts that the market for related software will reach $1bn by 2007. The budgets of big corporations now include an average of $5m for pricing systems, "indicating the growing breadth of PMPO initiatives." The majority of implementers are Fortune 1000 businesses, which have realized a return on investment from profit improvements of up to 20 percent. "No other packaged software in the market delivers the same type of top-line benefits while addressing bottom-line inefficiencies," the Yankee Group says.
So why does PMPO have such a relatively low profile? Many companies that have benefited greatly from the application are hesitant to advertise their success, the report says, "for the fear of losing a unique competitive advantage." Companies begin by rolling out software for price optimization, execution or analysis. But the self-funding nature of the technology usually allows them to adopt the full suite of pricing capabilities, with all three modules included.
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