No Recession in the Supply Chain Arena

Revenues for supply chain software rose more than 17% in 2007.

How big is the market for supply chain management (SCM) software? According to analyst firm Gartner Inc., worldwide spending on SCM solutions reached $6 billion in 2007, which was up a healthy 17.6% from 2006. The primary beneficiaries of that spending were SAP, which gained 2.4% more of the market off SCM revenues of $1.3 billion and an annual growth rate of 31.9% (see chart). Oracle solidified its hold on second place, while JDA Software (which includes the former Manugistics product line) grew by 67.4% and moved into third place.

"SCM technologies are well-positioned to address the economic realities facing worldwide markets where costs are skyrocketing while competition and customer demands are intensifying," says Chad Eschinger, research director at Gartner. "During the past 18 months, we've witnessed businesses rediscovering the criticality of supply chain technologies to drive greater customer and supplier satisfaction through better visibility and planning."

We've also witnessed a lot of movement amongst the SCM solution vendors themselves, with no fewer than 25 acquisitions and mergers in 2007 alone, and more than 85 since 2005, Eschinger observes. "Given the market's fragmentation of vendors and solutions, and the continued expansion of suite vendors' capabilities within supply chain technologies, we expect consolidation of vendors and share to mimic what's occurred in the enterprise resource planning (ERP) market," he predicts. "However, unlike the ERP market, we expect a longer timeline with more activity with new entrants, given the breadth of needs across supply chains and functional domains."

In the accompanying chart, Gartner defines total software revenue as revenue generated from new licenses, updates, subscriptions and hosting, technical support, and maintenance. Professional services revenue and hardware revenue are not included in total software revenue.

Worldwide Supply Chain Management Software Revenue Estimates for 2007 (millions)
Company 2007 Revenue 2007 Market Share (%) 2006 Revenue 2006 Market Share (%) 2006-2007 Growth
SAP 1,334.4 22.4 1,011.6 20.0 31.9
Oracle 955.2 16.0 757.5 14.9 26.1
JDA Software 229.6 3.9 137.2 2.7 67.4
Ariba 160.3 2.7 150.7 3.0 6.3
Manhattan Associates 152.2 2.6 134.6 2.7 13.0
Others 3,131.5 52.5 2,878.5 56.8 8.8
TOTAL 5,963.2 100.0 5,070.1 100.0 17.6

Source: Gartner (May 2008)

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