| The enterprise application market looks remarkably healthy...on the surface. It passed the $50B revenue mark in 2005, and the leading vendors, SAP, Oracle, Sage, UGS, and Microsoft, are all growing at double-digit rates. But peel back that surface, and you find that the success of these giant global players is not indicative of the state of the market.
ERP vendors, like SAP and Oracle, also began to cut off the oxygen to the best-of-breed firms by closing the functionality gaps in their suites through a combination of acquisitions, internal development, and improved marketing. At the same time, the global recession was changing the behavior of enterprise software buyers. IT budgets were slashed; decisions became much more centralized; and everyone became much more risk averse. With the acquisitions of large players like JD Edwards and PeopleSoft and the collapse of high flying companies like i2 Technologies and Commerce One, a best-of-breed IT strategy began to seem far too dangerous for most post-recession CIOs.
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