A difficult market for supply chain management (SCM) tools resulted in several mergers in late 2002. And a continuation of that is one of five key trends Forrester Research Inc. is looking for this year.

It expects that big vendors will get bigger, as weak demand and a lack of venture capital will force 40% of SCM vendors to merge or close. Second, users will spend $2.4 billion on SCM software and services to wring value out of existing systems. Third, warehouses will outsource supply chain activities. Fourth, Microsoft will push aside other vendors to woo small- and mid-size businesses with its entry-level SCM suite. And fifth, software vendors will stop developing generic products, and instead focus on tweaking custom applications.