Executive Summary (This is a document excerpt)

eProcurement and eSourcing applications in 2005 will experience cross-currents of growing demand and options in some segments but maturation and consolidation in others. Innovation is still occurring in niches like automated spend analysis, sourcing bid optimization, and services procurement, but the category as a whole is troubled by challenges of supplier participation and incomplete adoption of all the technologies required for success. As a result, strongest demand for these products and their best results will continue to be concentrated among large enterprises (those with more than $1 billion in revenues). This "glass floor" effect of limited demand for these applications among midtier and small enterprises will hold overall growth in revenues to 3% in 2005 after just 1% growth in 2004. Vendor consolidation and soft prices will continue, as larger suite vendors gradually prevail. But consolidation will move slowly, giving specialist vendors, hosted "on-demand" providers, and sourcing suite vendors room to grow for another year or so.

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