Logistics technology: ARC says 2009 was a tough year for WMS sector

The damage the global recession inflicted in the Warehouse Management Systems (WMS) marketplace in 2009 was severe to say the least, according to an analysis from ARC Advisory Group.

ARC said that the initial signs of the recession for the WMS market were evident in 2007 and 2008 saw market revenues decline slightly year-over-year. But with implementations taking several months sometimes, ARC explained that backlog projects protected suppliers’ 2008 revenues until the backlog dried up in 2009, which made for a trying year in the WMS sector.

What’s more, these factors lessened the prospects of any meaningful WMS industry consolidation, which many analysts thought was likely in the past.

ARC Service Director for Supply Chain Management Steve Banker told LM that the with consolidation not occurring maintenance revenue streams protected companies during that time and companies also took steps to downsize and cut salaries to stay solvent.

While WMS had a tough time in 2009, the SaaS (Software-as-a-Service) segment, which is comprised of services packaged as part of a leasing model and are hosted online, continued to grow at a double-digit pace from a small base, according to ARC and Banker.

Banker said this is mainly happening with “small companies that never would have bought WMS in the past because it was too expensive.”

As for the future, ARC said that uncertainty is the prevailing theme. To regain the traction that was lost in the WMS Market in 2009, Banker said avoiding a double-dip recession is the key.