Priority on protecting investment
In 2003, the highest priority among IT decision-makers was to optimize their IT landscapes and obtain additional value from existing systems. This was confirmed, for example, in April 2003 by IDC’s regular Project Barometer user survey about how the IT budget is spent. In the past, it was common for companies to fully reequip entire business areas with new software; in 2003, the trend was to add to existing IT in response to an isolated, immediate requirement. Companies focused mainly on projects that brought quick-win and financial benefits with a rapid return on investment.

As a result, customers sought to reduce the total cost of ownership of their IT systems and focused investment more on technologies to make IT systems more efficient with end-to-end, interenterprise business processes and to optimize existing system landscapes with future-proof technology and all-round integration.

Falling demand put great pressure on prices in the software industry. Moreover, faltering enterprise software investment led to further consolidation of the market. The acquisition of J.D. Edwards & Company by PeopleSoft, Inc., which was announced in July, altered the balance between the major vendors of enterprise software. Oracle Corp.’s attempted hostile takeover of PeopleSoft, Inc. led to considerable insecurity in the market and, in SAP’s opinion, increased the pressure on prices, particularly in the United States. In SAP’s experience, it is now more evident than ever that stability and security of investment play a critical role when customers decide on a software vendor. Consequently, the Company believes customers increasingly opted for long-term vendor partnerships, based on trust, with vendors offering future-proof solutions.

The trend on the IT market was for companies to strive to simplify their IT structures. Talking to its customers, SAP also found that the trend toward homogeneous system landscapes continues. This approach is seen above all as a way of avoiding high integration costs.