Middle market set to be $50 billion spender

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The middle market enterprise sector (MME) - companies with annual revenue between $50 million and $1 billion - will account for up to $50 billion in total technology purchased by mid-decade, according to market research firm Aberdeen Group.

Aberdeen insits that quantifying "middle market" by employee size is only useful to vendors who sell solutions such as outsourced payroll by the head, patients managed, or other per capita-based applications. For many solutions, employee headcount fails to capture the potential complexity - or the simplicity, in some cases - of the company's business. Business decisions regarding enterprise applications other than human capital management, payroll, or others that are per seat or per capita software purchases, can most easily be predicted by annual revenue than by headcount.

It argues that the vertical industry of the mid-market company more than either revenue or employee count is a better indicator of product fit and section criteria. In the public sector, however, agencies with smaller revenue ranges share more in common with the MME than with the smaller markets below the revenue range of $50 million.

"The ability to eliminate waste, redundancy, and lack of productivity through intelligent software choices in this vast market sector may well prove key to the turnaround in the global economy," says Katherine Jones, research director at Aberdeen Group and author of the report, The Small and Middle Market Enterprise: Addressing Today's Business Issues Through Technology.

"Many middle market enterprises have had their existing business applications for several years, and will be looking for new applications during 2003-2005. While these companies take such software purchasing decisions very seriously, they often lack the sophistication of a large corporation in wisely selecting vendors or products that are the best fit with their corporation."

Aberdeen also warns that middle market companies often do not recognise when they have outgrown their financial applications, an issue that can lead to data loss and accounting errors. The lack of data migration between products as companies migrate to more robust products is an ongoing issue; there is no systematic growth path in the offerings of many of the suppliers to this market, causing the company to virtually start over with a new software package when the initial application has been outgrown.

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