In this economic slump companies are racing to carve out the fat from their IT spending budgets and vendors are subsequently jumping through hoops to accommodate special requests, lowering licensing and annual maintenance costs and providing special financing arrangements for new and existing customers.  Most of all, the enterprise software vendors are touting more than ever the cost saving benefits and ROI on their products.

In this economic slump companies are racing to carve out the fat from their IT spending budgets and vendors are subsequently jumping through hoops to accommodate special requests, lowering licensing and annual maintenance costs and providing special financing arrangements for new and existing customers.  Most of all, the enterprise software vendors are touting more than ever the cost saving benefits and ROI on their products.

In these no nonsense times, products continue to be refined with the goal of adding visible, tangible benefits to an organization’s profitability.  This focus is recalibrating the foundation of software pricing models for vendors around the globe.  ERP products that do infact offer invaluable solutions to companies but don’t deliver visible ROI, or make a short term positive impact to the P&L are feeling the pressure to lower their pricing or face losing critical market share and user base.  Collaboration software is an example of and enterprise solution that may make it easier for employees to communicate with each other and in the long run positively impact the company’s profitability.  However, the difficultly in detailing and articulating what the short term benefits to profitability are is making it difficult in this business climate close the deal.

The critical features of ERP software today will show company’s detail into where to save costs, focus resources to do more for less and increase topline sales by focusing resources on the lowest hanging fruit .  Features of the past that are merely the icing on the cake such as a more user friendly email system, or a solution that makes things go a little faster won’t be compelling enough to win the sale.

This is causing the large enterprise resource planning software giants, like SAP, to offer more flexible, modular solutions to companies to ease the sticker shock of a “big” enterprise software implementation.  SAP is moving down this “pay as you go” road with more emphasis now on products that could be purchased and implemented in a modular fashion.  SAP has been offering modular solutions for a  while now, but the sales pitch is targeted toward this in this climate.

On the positive side, IT analysts believe that the business climate will lead to better solutions for the market place.  “The IT market and tech people are resourceful, and as we saw in the last recession, the layoffs forced many IT professionals to focus on their entrepreneurial ideas to build a better mousetrap, and many did” says Brad Meinert, a software analyst for a leading VC in Palo Alto.

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rich