I’ve talked to a number of the leading vendors of ETRM systems in the last few of days and most are reporting the market for new systems isn’t dead, but it has started to get a little lethargic. These software companies are saying that while their sales pipelines are healthy, they are having trouble pushing some deals to closure. Given the current credit crisis and overall lousy economic conditions, it’s really not surprising that many of the buyers are slowing down, reluctant to make a multi-million dollar commitment on new software.

This is particularly true of what we call around here the “asset heavy” companies, those that rely on physical assets (such as producers, generators, and pipelines) for the bulk of their revenue streams. These companies rely heavily on the capital markets for much of their growth and operations. Given the recent market meltdown, it’s to be expected that they would be proceeding cautiously when contemplating a significant new investment.

While many of the utilities we deal with have indicated they are reducing discretionary spending and are cutting many budgeted projects, oil and gas producers are being even more cautious as they are faced with rapidly declining values for their products. With crude trading below $50 today, and natural gas off more than 50% from its highs of just a few months ago, these producers are cutting back and are having to revisit their 2009 budgets which were developed based on the assumption that oil would remain at least $75/bbl.

It won’t be surprising if many of the deals that have been in negotiations over the last few weeks don’t make it to closing until after the markets find the bottom, which hopefully will be very soon but probably not until sometime in the first quarter of the new year.

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