The federal market for enterprise resource planning systems will grow to nearly $1.8 billion per year by 2005, according to a study released Tuesday by Input, a Chantilly, Va. market research firm. Enterprise resource planning (ERP) systems combine business software applications that have traditionally been run on separate systems into one integrated, single software package. With ERP systems, there is no need to key and re-key data into different applications and later reconciled. Instead, data entered in one application can be used by all applications. Input's study, "Federal ERP MarketView," predicts that enterprise resource planning purchases will amount to approximately 4 percent of all federal IT spending by 2005. "ERP is very much alive and well in the federal government," said Ellen Zidar, Input's manager for e-government and government consulting. "There are many back office-type administrative systems still being overhauled and replaced with ERP systems. Although the market hype all centers around e-business and e-government, there is still a need to implement back office systems as backbones for the customer who is facing processes that will come in the future." ERP customers in the federal market include the U.S. Mint, the Postal Service, Federal Prison Industries, the Smithsonian Institution and the Bonneville Power Administration. Zidar says that cost-cutting is one of the most important reasons that agencies are implementing ERP systems. "Cost-cutting is important in every business," Zidar said, but "the federal government is more willing to be up front about it." Since ERP implementations are expensive and difficult, Input has noticed that "most projects focus on specific functional areas, such as finance or human resources, rather than integrated enterprise solutions." The study said "organizational streamlining and real-time [data] access" are the two major reasons why agencies are contemplating ERP systems. Zidar said software costs represent a fraction of the true cost of an ERP system. According to the study, more than 50 percent of ERP spending "relates to professional services." However, Zidar observed that the major ERP developers-Oracle Corp., PeopleSoft Inc. and SAP Public Services-"are doing very well" in the federal marketplace.
Federal enterprise resource planning market growing