Western Europe's SMBs Opening IT Wallets

A free-for-all is brewing in Western Europe's small to medium-business (SMB) arena, according to report released today from London-based researcher Datamonitor. And as vendors converge on the opportunity there, consolidation is inevitable. The SMB space remains a bright spot in the generally dreary IT landscape. Enterprise spending on ERP, SCM and CRM software is expected to be flat for the foreseeable future, Datamonitor reported. But the SME market is poised for hyper growth: Western Europe SME expenditures will more than triple from $2 billion last year to a whopping $4.6 billion in 2005. Why the rush? SMBs have traditionally been slow to embrace e-business technology. Thanks to growing awareness of e-business technology's potential to streamline operations, cut costs and even win customers, the adoption curve is shifting. In a domino effect of sorts, high-tech vendors are tuning products to the SMB space, which in turn fuels increased competition and falling prices. All of this is convincing conservative SMBs to adopt e-business. The biggest software opportunity remains in CRM. Datamonitor predicts that the Western European SME market for CRM will rise from $580 million last year to $1.9 billion in 2005. Large and small vendors haven't missed the signs, either. Already, sniping between SAP and Siebel over competitive advertising in Germany has led to a German court ruling against certain Siebel advertisements. Datamonitor believes convergence in the mid-market will bring about acquisitions, as in Microsoft recently announced plans to buy Danish ERP software vendor Navision. "The intense competition in the marketplace, combined with the convergence of enterprise application groups will certainly catalyze future merger and acquisition activity," said Martin Atherton, e-infrastructure analyst at Datamonitor, in a statement. While the mid-market is fragmented, a single vendor can still corner the market. "A key question is whether a global vendor will be able to establish itself as the mid-market leader in areas such as ERP or CRM," said Atherton, adding, "Indeed, the struggle is worth the return, but vendors are going to have to fight very hard to secure the top spot."