Enterprise Resource Planning (ERP) software allows companies to automate their financial accounting, supply chain, manufacturing and other mission critical functions. Organizations that implement ERP software solutions are able to capture, process, and report on business transactions in the way that makes the best sense.

A recent survey conducted by Forrester Research finds that ERP software spending across organizations worldwide will decline in 2011, though only slightly. This decline is significant according to Forrester Research (News - Alert), especially because increase in IT spending is expected in most other areas of IT. However, ERP software spending in 2010 was much higher than the previous year.

While ERP software applications are evolving rapidly to enable more flexibility and better user experience, most customers may not taken advantage of the latest product innovations in 2011 due to limited IT budgets and daunting upgraded project costs, Paul Hamerman, vice president and principal analyst at Forrester, said.

The survey found that about one quarter of companies with ERP systems plan to upgrade their software this year, which is down from the 29 percent that upgraded last year.  

Further contributing for the decline in ERP software spending, 72 percent of companies using ERP software currently said they have no plans to upgrade or make additional investments to their existing ERP systems.

Despite the availability of new ERP deployment options offering more predictable long-term costs of ownership, customers are reluctant to upgrade to the new system, the survey finds. Customers who are running two or more major versions behind the current release are opting for the upgrade mainly because they understand the maintenance cost of running old products often rise dramatically.

While ERP market trend indicates a decline in spending, ERP vendors are still adding more features and delivery options in the hope of bringing the customers back. Advanced ERP solutions focus on cloud-computing deployment options, mobile applications and embedded business process modeling, according to Forrester Research.

According to Hamerman, some of the slack in demand for ERP software is due the fact that customers are looking for more cost-effective SaaS (News - Alert)-based ERP products, but the vendors just aren’t there yet, and most of the offerings in that area to date are “downscale.” While several ERP products are lined up to offer attractive packages to customers, Hamerman believes it will take a couple of years for these solutions to become all the rage.

Meanwhile, Gartner recently published the results of a study, indicating that sales of business management software like enterprise resource planning (ERP) systems is set to witness remarkable increase, TMCnet reported.

According to Gartner (News - Alert) research, ERP software revenue across the globe will soon shoot upwards to $253.7 billion. This is an increase of 7.5 percent when compared to that of 2010. The only question is, which trend will ERP software really follow in 2011?