ERP spending predicted to fall

Cost cutting prioritised for 2009 - and ERP is first in the firing line

CIOs have entered survival mode

Nearly a quarter of European IT leaders have made cost cutting their top priority for the coming year, according to analyst IDC.

With firms in the teeth of an economic storm, European IT leaders are slashing expenditure, according to research. A survey of more than 500 IT decision makers across Western Europe showed 23 per cent had identified IT cost reduction as their chief priority.

"Between a third and a quarter of respondents are entering survival mode in which reductions in IT costs and IT project cancellations are a way to survive the economic crisis," said Bo Lykkegaard, research director at IDC.

Enterprise resource planning (ERP) has been identified as a potential source of cost savings, reports IDC - 21 per cent of firms said their ERP spending would be lower or much lower in 2009 than in 2008.

For other categories of software, including security, storage, databases and systems management, spending plans were more resilient, said IDC. Spending on customer relationship management software may also increase.

This suggests that IT leaders are prioritising investments in infrastructure software and specific applications which could improve efficiency or customer interactions, said Lykkegaard.

"We also see a large segment of the market making proactive IT investments to automate processes and increase the level of efficiency inside and outside the IT department," he said.