Supply Chain Management Software Market: Europe, 2002 (Executive Summary)
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1 Supply Chain Management Software Market: Europe, 2002 (Executive Summary) Executive Summary Marketplace: Publication Date: 28 August 2003
2 Authors Fabrizio Biscotti Chad Eschinger Chris Pang This document has been published to the following Marketplace codes: SOFT-WW-EX-0123 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice
3 Supply Chain Management Software Market: Europe, 2002 (Executive Summary) License revenue in the European market for supply chain management (SCM) software shrank 12.5 percent in 2002 (see Figure 1). The market suffered from a combination of deflated hype, constrained IT budgets and a change in buyer behavior. Yet in comparison with the worldwide market, which fell more than 20 percent, it weathered the downturn in demand relatively well. Figure 1 Supply Chain Management Software License : Europe, $800 Millions of Dollars $700 $600 $500 $400 $300 $200 $100 $ The only segment to grow was supply chain execution, at 0.2 percent. Supply chain execution software gives users better visibility of a supply chain, improving decision-making and customer service. Organizations are aware of the efficiency gains and cost savings that can arise from successful SCM implementations, but the current economic climate means that vendors need to provide convincing models that show a swift return on any investment. Sales of supply chain sourcing software experienced a further steep decline, as shown in Table 1. Market saturation, continued effects of the dot-com fallout and stalled resurgence of the economy continue to inhibit this segment's growth. Supply chain planning also shrank significantly in 2002, although several best-of-breed providers experienced significant growth in this segment. Examples include the European vendors Intentia and Aldata Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1
4 2 Supply Chain Management Software Market: Europe, 2002 (Executive Summary) Table 1 Supply Chain Management Software License by Segment: Europe, ($M) 2001 ($M) 2002 Market Share 2001 Market Share 2002 Growth Rate 2002 Supply Chain Planning % 37.2% -15.5% Supply Chain Execution % 29.2% 0.2% Supply Chain Sourcing % 33.7% -18.3% Total % 100.0% -12.5% Table2showsthatthetopfivevendorsinEuroperemainthesameasin2001. SAP consolidated its lead, but the rest of the market is fragmented. The gap between second and fifth place is only 3 percent market share. Table 2 Top Five Supply Chain Management Software Vendors: Europe, Vendor ($M) 2001 ($M) 2002 Market Share 2001 Market Share 2002 Growth Rate 2002 SAP % 21.6% 2.8% IBS % 6.2% 23.1% Oracle % 5.3% -13.8% i2 Technologies % 4.0% -67.2% Ariba % 3.2% -38.2% Others % 59.7% -7.8% Total % 100.0% -12.5% The market is extremely crowded with numerous application providers offering similar applications. Vendors without large market share lack sufficient mass to survive current economic conditions as they jostle with direct competitors. They need to differentiate themselves while adding depth and breadth to their product range. Greater competition from mature enterprise resource planning (ERP) vendors has affected this market, specifically supply chain planning software, for many years. ERP vendors offer a viable alternative to "pure play" SCM vendors, and their products have reduced the average license fee. Pure-play SCM vendors without a large user base, plans to expand or ally with an ERP vendor are under increasing threat. Many will find 2003 a critical year. Users with "good enough" systems are likely to buy smaller components or solutions that meet a specific need. Those with aging systems are likely to consider replacing them with a software suite. This will increase competitive pressure on best-of-breed vendors, which must produce successful references to combat sales challenges. Vendors are also advised to focus on existing customers, to reaffirm commitment and to ensure that business value is being measured appropriately. The lines between traditional ERP, SCM and customer relationship management applications are blurring as new suites offer these components in a single solution. Pure-play SCM software vendors must establish a strategy to counter encroachment by suite products, perhaps by working with other vendors. As the viability of suppliers remains a major factor in the selection process, software vendors must continually evaluate and balance their costs and revenue Gartner, Inc. and/or its Affiliates. All Rights Reserved. 28 August 2003
5 Supply Chain Management Software Market: Europe, 2002 (Executive Summary) 3 Link For more information, see "Supply Chain Management Software Market: Europe, 2002," which is published to the Software Europe Cluster: SWSF-EU-MS Gartner, Inc. and/or its Affiliates. All Rights Reserved. 28 August 2003
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