Supply chain mgmt software market may consolidate
Worldwide supply chain management (SCM) software revenue totaled US $6.2 billion in 2009, which according to Gartner, is a 0.7 percent decline from revenue recorded in 2008. Additionally, new license revenue was down 7.4 percent in 2009, while recurring revenue associated with subscriptions and maintenance were the saving grace of the market — growing 10.8 percent and 0.2 percent, respectively.
However, the specialized segment of SCM software revenue totaled US $3.5 billion in 2009, which is a 1.6 percent increase from 2008. But the suites segment of SCM software revenue totaled US $2.7 billion in 2009 — a 3.7 percent decline from 2008 revenue.
"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 percent annual growth, driven by some pent-up demand, but more so from growth in subscriptions and the many maintenance renewals that were due in the fourth quarter."
The Gartner research also indicated that new software sales were difficult to obtain in 2009. Vendors that 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 best-of-breed approach, also generated slight growth. The remaining four market share leaders — namely, SAP, JDA Software, i2 Technologies, Manhattan Associates — 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 Eschinger.
According to Eschinger, due to the market’s vendor fragmentation and continued expansion of suite vendors, Gartner expects market consolidation and the share in the SCM market to eventually copy that of the ERP market. "However, unlike the ERP market, we expect the process to take longer, with less ‘lock-out’ and more activity with new entrants, given the breadth of needs across supply chains and functional domains."
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