2001: a software odyssey

Application packages sector faces mass redundancies after 2000, reports Cath Everett

THE applications software industry faces a major crisis after the year 2000, because most users will have upgraded their systems and will not need to do so again for up to 10 years.

According to estimates, 70% of firms will have replaced or upgraded systems by 2000. Few plan to buy much software after that date.

Because most users are unlikely to replace these systems for another 5 to 10 years and upgrades are often free, many applications suppliers will see their revenues and profits crash. Large-scale redundancies are predicted for the sector.

Dennis Keeling, analyst at Ovum and chairman of the Business & Accounting Software Developers Association, said: ?By the end of this year, most big companies will have made their buying decisions. Most mid-range companies will have made theirs by the end of next year, and most small ones by the end of 1999.

?Most will leave the European monetary union question till 2000/1, but that should be covered by upgrades. This means that the majority of licence sales will be made before the millennium and other revenues will come mainly from services.?

Keeling added that many users were so unhappy with the year 2000 problem that they ?don?t want the industry anywhere near them for years?.

David Hughes-Soloman, SAP?s UK director of technology and marketing, did not agree. ?We?re not planning mass redundancies. Many companies are fixing what they?ve got rather than replacing it, but there will be increased demand after that date [2000], because many people are holding off their buying decisions until then.?

? Report by VNU Newswire.