Gartner: SCM Software up 18 percent in ‘07

Sean Murphy, Associate Editor -- Supply Chain Management Review, 6/23/2008 11:41:00 AM

A new report from Gartner, Inc. shows that a bad economy isn’t bad for everyone, at least not in the supply chain management(SCM) software arena.

Revenues went up nearly 18 percent in the industry in 2007, according to "Market Share: Supply Chain Management Software, Worldwide, 2007."

In spite of a weakened U.S. dollar, the report shows software revenue came to $6 billion in 2007, up 17.6 percent from $5.1 billion in 2006.

“SCM technologies are well-positioned to address the economic realities facing worldwide markets where costs are skyrocketing while competition and customer demands are intensifying," said 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."

The report also indicates a lot of software vendors are teaming up. There were 25 “significant acquisitions” among business application and SCM vendors in 2007, according to Gartner. Since 2005, there have 85 such acquisitions signaling the consolidation trend.

SAP topped the revenue leaders with over $1.3 billion estimated revenue in 2007, and was the only company in Gartner’s top five that broke the $1 billion mark. Oracle came in second with $955.2 million, followed by JDA Software’s $229.6 million, Ariba with $160.3 million, and Manhattan Associates with an estimated 2008 revenue of $152.2 million, according to Gartner.

"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," Eschinger said. "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."

Gartner defines the companies’ annual 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.”