Supply chain software market shows its resilience

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Software subscriptions and maintenance proved to be the saviour of the supply chain management software market last year, according to research by Gartner.

New licence revenue was down 7.4 per cent in 2009, but recurring revenue associated with subscriptions and maintenance growing 10.8 per cent and 0.2 per cent, respectively.

As a result, in the face of the recession, total worldwide revenues fell a mere 0.7 per cent to £4.26 billion ($6.2bn).

Chad Eschinger, research director at Gartner, said: “Although the first nine months of 2009 contracted, the fourth quarter sustained six per cent 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.”

Table: Worldwide SCM vendor software revenue ($m)

Vendor 2009 Sales 2009 Share % 2008 Sales 2008 Share % 2008-2009 Growth %
SAP 1,223.3 19.8 1,341.3 21.5 -8.8
Oracle 1,038.6 16.8 1,036.4 16.6 0.2
JDA Software   258.1 4.2 264.7 4.2 -2.5
Ariba 228.7 3.7 210.3 3.4 8.8
i2 Technologies   114.0 1.8 116.4 1.9 -2.0
Manhattan Associates   111.8 1.8 142.3 2.3 -21.4
Other Vendors   3,215.4 51.9 3,123.3 50.1 3.0
Total 6,190.0 100.0 6,234.7 100.0 -0.7












Source: Gartner

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.

“Competition between enterprise suite and specialist, best-of-breed vendors has heightened. Although suite vendors are typically well-positioned within organisations to stall emerging-application 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 £2.4bn ($3.5bn) in 2009, a 1.6 per cent increase from 2008. The suites segment of SCM software revenue totalled £1.86bn ($2.7bn) in 2009, a 3.7 per cent decline from 2008.

“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 market,” said Eschinger.

“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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