Running the Numbers - June/July 2005

The latest facts, figures and benchmarking data in the procurement/payment, supply chain management, sourcing/logistics, and the supply chain integration & technology infrastructure markets


Aberdeen said that rather than create the absolute-lowest-cost fixed network, leaders are building more points of flexibility into their logistics networks, which helps them scan their environment for bottleneck symptoms or spikes in demand. Logistics directors cite specific actions that are helping them become more responsive while still letting them take advantage of lower-cost offshore procurement.

Global sourcing is all about remaining price competitive in what has been a declining pricing environment for many industries. Companies are seeking to minimize the unanticipated costs that can erode the expected savings from offshore sourcing by minimizing documentation and supply chain issues through better automation and creating cross-functional teams. Best-in-class companies are further reducing unexpected costs by better synchronizing the physical and financial supply chains, including by implementing collaborative financing.

Global trade leaders are succeeding in driving out cost, time and risk from their business. A number of companies reported reducing delayed shipments by over 25 percent, documentation issues by over 40 percent and total landed cost by more than 25 percent.

Source: Aberdeen Group, 2005

Supply Chain Integration & Technology Infrastructure

AMR Research recently released its annual report on the state of the enterprise resource panning (ERP) market, "The Market Analytix Report: Enterprise Resource Planning, 2004-2009," which reveals that ERP market revenues increased 14 percent in 2004.

While the ERP market has grown in revenue, consolidation continues to change the industry. In 1999, the top five vendors (J.D. Edwards, Baan, Oracle, PeopleSoft and SAP) in the ERP market accounted for 59 percent of the industry's revenue. AMR Research expects the top five vendors in 2005 (SAP, Oracle, Sage Group, Microsoft and SSA Global) to account for 72 percent of ERP vendors' total revenue.

"The ERP market showed solid organic growth in 2004 as IT spending improved," says Jim Shepherd, vice president of research at AMR Research. "The market was also affected by consolidation within the segment, as well as ERP vendors acquiring best-of-breed players to broaden their portfolios."

The report revealed several trends that affected the ERP market in 2004, including:

  • Service-oriented architectures (SOA) may have the same disruptive effect that other technologies have had on the market, such as the emergence of client-server systems in the 1990s.
  • The pace of acquisitions shows no sign of slowing down.
  • The midrange ($50 million – $1 billion in annual revenue) and SMB (less than $50 million in annual revenue) markets continue to be a major focus area for many of the ERP vendors. Midrange solutions and channels are critically important for penetrating China, India, Eastern Europe and Latin America.
  • ERP buyers have moved away from large, upfront purchases, opting to license user seats and functional ERP modules incrementally as they deploy a product.

Source: AMR Research, 2005

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