Worldwide supply chain management (SCM) software revenue totalled $6.2 billion in 2009, a 0.7 per cent decline from 2008 revenue, according to Gartner, Inc. New license revenue was down 7.4 per cent in 2009, while recurring revenue associated with subscriptions and maintenance were the "life vest" of the market, growing 10.8 per cent and 0.2 per cent, respectively.
"Despite the slight dip in overall revenue, the market for supply chain applications seems to have largely weathered the recent financial storms," said Chad Eschinger, research director at Gartner. "Although the first nine months of 2009 contracted, the fourth quarter sustained 6 per cent annual growth, driven by some pentup demand, but more so from growth in subscriptions and the many maintenance renewals that were due in the fourth quarter."
New software sales were difficult to obtain in 2009, and vendors that have succeeded have transitioned part or all of their business toward subscription delivery of their solutions. This was evident within the top six vendors, where Ariba generated positive growth, but also where Oracle, with more of a bestofbreed approach, also generated slight growth (see Table 1). The remaining four market share leaders all experienced a decline in SCM software revenue in 2009.
The economic climate of the past few years and the maturity and saturation of implemented business applications has proven difficult. This stressed environment has forced many vendors to increase maintenance rates and explore various channel, delivery and pricing options," said Mr Eschinger. "Competition between enterprise suite and specialist, bestofbreed vendors has heightened. Although suite vendors are typically wellpositioned within organisations to stall emergingapplication purchases, there are significant opportunities for specialised vendors that offer differentiating domain and vertical solutions that are 'blind spots' in a suite provider's offering."
The specialised segment of SCM software revenue totalled $3.5 billion in 2009, a 1.6 per cent increase from 2008. The suites segment of SCM software revenue totalled $2.7 billion in 2009, a 3.7 per cent decline from 2008 revenue.
Specialised vendors' sole or primary business is to market supply chain applications within defined markets. These vendors may offer a suite of supply chain solutions but typically do not provide solutions in other markets. Suite vendors compete with specialised vendors, but they market products in several markets, and revenue from supply chain applications is not their primary focus. Some suite vendors have acquired bestofbreed or specialised vendors, but because these are part of a larger application portfolio, they are included in this category.
"Given the market's vendor fragmentation and the continued expansion of suite vendors, we expect market consolidation and share in the SCM market to eventually mimic that of the enterprise resource planning (ERP) market," Mr Eschinger said. "However, unlike the ERP market, we expect the process to take longer, with less 'lockout' and more activity with new entrants, given the breadth of needs across supply chains and functional domains."
Additional analysis is available in the Gartner report "Market Trends: Supply Chain Management, Worldwide, 2009-2010." The report is available on Gartner's website at http://www.gartner.com/.... More detailed statistics are available in the Gartner report "Market Share: SCM Worldwide, 2009." The report is available on Gartner's website at http://www.gartner.com/....
About AMR Research Supply Chain Executive Conference 2010
The future direction of the supply chain industry will be examined at the AMR Research Supply Chain Executive Conference, 13-14 September 2010, at the Lancaster London hotel, in London. Supply chain executives are looking ahead to a smarter, moreconnected and moresustainable physical and information infrastructure as they plan for 2010 and beyond. This means new business opportunities for industrial manufacturers as well as new challenges for consumer and retail leaders who must master a very different global supply network. AMR analysts and industry leaders from across sectors will look ahead at what this new infrastructure means to business growth. For more information, please visit http://www.gartner.com/....
Members of the media can register for the event by contacting Laurence Goasduff at laurence.goasduff@gartner.com
Additional information from the event will be shared on Twitter at http://twitter.com/... and at #AMRsc.
"Despite the slight dip in overall revenue, the market for supply chain applications seems to have largely weathered the recent financial storms," said Chad Eschinger, research director at Gartner. "Although the first nine months of 2009 contracted, the fourth quarter sustained 6 per cent annual growth, driven by some pentup demand, but more so from growth in subscriptions and the many maintenance renewals that were due in the fourth quarter."
New software sales were difficult to obtain in 2009, and vendors that have succeeded have transitioned part or all of their business toward subscription delivery of their solutions. This was evident within the top six vendors, where Ariba generated positive growth, but also where Oracle, with more of a bestofbreed approach, also generated slight growth (see Table 1). The remaining four market share leaders all experienced a decline in SCM software revenue in 2009.
The economic climate of the past few years and the maturity and saturation of implemented business applications has proven difficult. This stressed environment has forced many vendors to increase maintenance rates and explore various channel, delivery and pricing options," said Mr Eschinger. "Competition between enterprise suite and specialist, bestofbreed vendors has heightened. Although suite vendors are typically wellpositioned within organisations to stall emergingapplication purchases, there are significant opportunities for specialised vendors that offer differentiating domain and vertical solutions that are 'blind spots' in a suite provider's offering."
The specialised segment of SCM software revenue totalled $3.5 billion in 2009, a 1.6 per cent increase from 2008. The suites segment of SCM software revenue totalled $2.7 billion in 2009, a 3.7 per cent decline from 2008 revenue.
Specialised vendors' sole or primary business is to market supply chain applications within defined markets. These vendors may offer a suite of supply chain solutions but typically do not provide solutions in other markets. Suite vendors compete with specialised vendors, but they market products in several markets, and revenue from supply chain applications is not their primary focus. Some suite vendors have acquired bestofbreed or specialised vendors, but because these are part of a larger application portfolio, they are included in this category.
"Given the market's vendor fragmentation and the continued expansion of suite vendors, we expect market consolidation and share in the SCM market to eventually mimic that of the enterprise resource planning (ERP) market," Mr Eschinger said. "However, unlike the ERP market, we expect the process to take longer, with less 'lockout' and more activity with new entrants, given the breadth of needs across supply chains and functional domains."
Additional analysis is available in the Gartner report "Market Trends: Supply Chain Management, Worldwide, 2009-2010." The report is available on Gartner's website at http://www.gartner.com/.... More detailed statistics are available in the Gartner report "Market Share: SCM Worldwide, 2009." The report is available on Gartner's website at http://www.gartner.com/....
About AMR Research Supply Chain Executive Conference 2010
The future direction of the supply chain industry will be examined at the AMR Research Supply Chain Executive Conference, 13-14 September 2010, at the Lancaster London hotel, in London. Supply chain executives are looking ahead to a smarter, moreconnected and moresustainable physical and information infrastructure as they plan for 2010 and beyond. This means new business opportunities for industrial manufacturers as well as new challenges for consumer and retail leaders who must master a very different global supply network. AMR analysts and industry leaders from across sectors will look ahead at what this new infrastructure means to business growth. For more information, please visit http://www.gartner.com/....
Members of the media can register for the event by contacting Laurence Goasduff at laurence.goasduff@gartner.com
Additional information from the event will be shared on Twitter at http://twitter.com/... and at #AMRsc.
