ARC Advisory Group Predicts 2002 Bright Spots: What Does the New Year Have in Store?

Business/Technology Editors

DEDHAM, Mass.--(BUSINESS WIRE)--Jan. 16, 2002

2001 was a year that virtually all businesses would just as soon forget. Recovery from a recession in many industry sectors seemed imminent, until the tragic events of September 11th erased such hopes.

While pundits are now stating that full-recovery will not occur until the second half of 2002, for many software sectors recovery could take even longer. But ARC predicts there will be some bright spots as companies seek a competitive advantage in a highly volatile global economic climate.

ARC's Predictions for 2002:

1. Sales for Most Enterprise Applications Will Remain Weak

An over-abundance of available software coupled with the post-September 11 reality scenarios creates a market that is reluctant to purchase many new applications.

2. Enterprise and Automation Service Providers Strengthen Ties

The realization that manufacturing must be more tightly linked to the enterprise will create relationships that are tighter, more extensive, and strategic.

3. Transitional Year for Portals and Business Process Management

Management-enabling platform systems and manufacturers will work together to learn how to apply technologies to extract business value and, of course, ROI.

4. Web Services Will Not See Commercial Daylight

Commercially, web services will not move to the next stage, due in large part due to the security issues that must be resolved before the market is comfortable with deployment.

5. Process/Event Management Permeates Numerous Applications

Process/event management will extend its adopted reach and become a standard feature for a wide range of manufacturing and enterprise applications.

6. Global Logistics Solutions See Strong Growth

GLS will experience strong growth in 2002 despite continued consolidation in the market.

7. "Tight" Supply Chain Execution Applications Also See Growth

The focus to promote and improve SCE solutions will occur as users demand tight applications that can be implemented quickly to extract ROI.

8. Strategic Sourcing is "In"

The creation of a Strategic Sourcing market (such as PLM or SRM solutions) will create significant confusion in the market as users struggle to determine which supplier's solution is best for their specific strategic sourcing needs.

9. Public Exchanges Gain Traction

The remaining public exchanges will grow in market influence and extend their value proposition.

10. Applications Addressing Security Concerns at Top of CIO's List

The need for secure systems that insure business continuity will be a top issue. Cyber-security systems will have a good year while other software application suppliers will continue to provide features and address security concerns that are pertinent to their solutions.

ARC's Recommendations

1. Suppliers must focus on technology partnerships as they will have few resources to support extensive, internal R&D efforts. ARC advises companies on their current gaps in their solution suite and can suggest suppliers that may wish to partner to fill such gaps.

2. Users must carefully evaluate supplier offerings as many will promise the moon to try and land the sale. These are desperate times for suppliers, so companies must be careful in the evaluation stage and ask for live demos.

3. ARC Advisory Group views the tumultuous events of 2001 as bringing absolute clarity to the need for secure systems that insure business continuity. The threat of a terrorist cyber-attack on a business' operations has become a very real issue, and companies large and small are investing to shore-up the security of their digital operations. Such cyber-security investments can certainly be considered an overhead expense; therefore they will have absolutely no ROI. But not making such investments is an unacceptable option. Thus, suppliers of cyber-security systems will have a good year. It is also expected that suppliers of other software applications will begin providing features that address the security concerns that are pertinent to their solutions.

Contact Maryanne Flynn at mailto:mflynn@arcweb.com for a complete PDF of this ARC Insight.

ARC Advisory Group is the leader for strategic planning and technology assessment services to manufacturing companies, utilities, and global logistics providers, as well as to software and solution suppliers worldwide. From Global 1000 companies to small start-up firms, ARC has the strategic knowledge needed to succeed in today's technology driven economy. Further information can be obtained from ARC, Three Allied Drive, Dedham, MA 02026, 781-471-1000, Fax 781-471-1100, E-mail info@arcweb.com, Web ARCweb.com.