Tempe, AZ June 4, 2002 The worldwide market for enterprise asset management (EAM) and computerized maintenance management systems (CMMS) will reach $1.8 billion by 2006, while the product lifecycle management (PLM) services market will reach $5.5 billion the same year, according to studies out this week from different technology research firms.
In its new study, ARC Advisory Group reports that the market for EAM and CMMS solutions was $1.2 billion in 2001 and will grow at a compounded annual growth rate (CAGR) of 5.3 percent over the next five years, hitting $1.8 billion in 2006.
"The majority of the EAM market growth will come from application service provider (ASP) Web-hosted solutions and electronic maintenance, repair and operations (e-MRO) procurement," said Houghton LeRoy, ARC director of consulting and the author of the study. "The EAM market has matured, causing software license sales to decline and customers to request more services for better performance and continuous improvement."
According to ARC, customer service and support expectations in asset intensive industries have increased, requiring more consulting and continuous improvement services from suppliers. Companies that have seen good benefits are expanding EAM functionality to other groups and facilities. Companies with little or no payback justifications are looking for help establishing key performance indicators to measure return on investment. Some are even outsourcing the problem to service providers who offer performance guarantees.
Several EAM suppliers are realizing the strong growth potential for outsourced services, such as ASP Web hosting and e-MRO procurement. Web hosting is a very attractive and cost effective approach for asset management and other enterprise applications, ARC says, since it permits faster implementation, simplifies support, integrates distributed operations, facilitates collaborations and can reduce total cost of ownership (TCO). Customers pay only for needed functionality and can accurately determine their annual costs.
The ARC study suggests that e-MRO procurement is also a beneficial service with strong growth expectations for enterprise suppliers. Companies can reduce purchasing costs and acquire needed equipment and materials much quicker using e-MRO. However, EAM suppliers are not alone in this very lucrative market space and will probably not be the dominant players over time. e-MRO will continue to generate additional revenues for EAM suppliers but strong competition from other enterprise solution suppliers will prevent it from becoming a major EAM market growth catalyst, ARC concluded.
Meanwhile, a study out from research firm IDC predicted that the product life cycle management services market will grow at a compound annual growth rate of 23.4 percent to reach $5.5 billion in 2006.
IDC defined PLM IT services as consulting, implementation, operations management, training and support services required to design, build and operate PLM applications and related systems.
"PLM solutions are among the fastest growing, most promising services opportunities for the next 12 to 24 months, due in large part to the ability of PLM applications and processes to dramatically lower product design and development costs, while accelerating time-to-market for new product offerings," said Romala Ravi, program manager of IDC's supply chain and logistics management services research.
While not without challenges, the PLM services market is driven by the need for companies to achieve greater economies, efficiencies and competitive differentiation in their product design, engineering and development functions.
According to IDC, factors that favor PLM service adoption include the high level of technology embedded in the composition and manufacture of products, the complexity of products' manufacturing process and the complexity and dispersion of the teams involved in developing, manufacturing, distributing, selling and servicing products.