SCM Market Took Hit in 2002

Gartner: Supply chain management new license software revenue declined 21 percent; SAP, Oracle gain share

Gartner: Supply chain management new license software revenue declined 21 percent; SAP, Oracle gain share

Stamford, CT  June 25, 2003  Economic conditions continued to take a toll on the supply chain management (SCM) software industry in 2002, as the market declined 20.5 percent, according to technology consultancy Gartner.

Worldwide, SCM new license revenue totaled $2.1 billion in 2002, down from 2001 revenue of $2.7 billion, Gartner reported.

Germany's SAP moved into the No. 1 position in this market segment, usurping i2 Technologies from its historical reign, the consultancy found. Although SAP now holds the leadership position in the market, it only increased its market share 1.7 percent in 2002, while i2's market share shrank more than 8 percentage points.

"Economics, user behavior and pressure from ERP and smaller niche players provided serious challenges to SCM providers," said Chad Eschinger, principal analyst in Gartner's worldwide software applications research group. "In this depressed selling environment, Oracle, Ariba and Manugistics staved off market share advances from vendors within the top 10 in market share such as FreeMarkets, JDA, J.D. Edwards and Retek."

Despite negative license growth in all of the SCM sub-segments, supply chain execution (SCE) providers continued to shake the industry's steep decline by posting only a slight decline of 3 percent in 2002. The SCE segment has remained the most stable of the SCM sub-segments over the past two years, according to Gartner.

On the other hand, the sourcing and procurement segment experienced the steepest decline over the last two years, with 28 percent negative growth in 2002. The segment declined 23 percent in 2001. Market saturation, continued effects of the dot-com fallout and stalled resurgence of marketplaces continues to inhibit this segment's growth, the consultancy says.

Gartner Dataquest's research alert "Worldwide SCM Market Declines in 2002" provides more information on the 2002 SCM market, including statistics on the top-tier vendors within the SCM software market.

Top 5 Worldwide SCM Software New License Revenue Market Share Estimates for 2002

Company................2002 Market Share (%)...................2001 Market Share (%)
SAP...................................11.6....................................................9.9
i2 Technologies...................6.6..................................................14.8
Oracle..................................6.5....................................................6.2
Ariba...................................4.9.....................................................6.4
Manugistics.........................4.2.....................................................5.2
Others................................66.2...................................................57.5
Total Market...................100.0..................................................100.0

Source: Gartner Dataquest (June 2003)
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