Gartner report: Worldwide SCM software revenue grew 18 percent in 2007


"[Supply chain management] 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 Stamford, Conn.-based 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."
In fact, a new report issued by Gartner indicates worldwide supply chain management (SCM) software revenue totaled $6 billion in 2007—a 17.6-percent increase from 2006 revenue of $5.1 billion. A weakened U.S. dollar resulted in the growth rate increasing approximately 4 percent.
"There is greater need for vendor services to help support, improve, or tune applications to meet business needs, environments, and processes. Vendors must work to provide these value-added services with greater domain expertise to leverage a repeatable quick value for end users while aiding technology-provider margins," says Eschinger.
Consolidation continued among business application and SCM vendors with 25 significant acquisitions in 2007, and more than 85 since 2005. SAP and Oracle continued to be the market leaders, with SAP holding the No. 1 position with 22.4 percent of SCM software revenue in 2007 ( see table ). Oracle was the only other vendor to have double-digital market share (at 16 percent).

"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 resources planning [ERP] market," Eschinger adds. "However, unlike the ERP market, we expect a longer time line with more activity with new entrants, given the breadth of needs across supply chains and functional domains."
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.
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