Product Lifecycle Management: Hot Market Seen in Years Ahead

Double digit growth for PLM solutions pushes market to over $9.1 billion by 2008, ARC predicts

Double digit growth for PLM solutions pushes market to over $9.1 billion by 2008, ARC predicts

Dedham, MA — December 9, 2004 — As manufacturers refocus on top-line growth, adoption of product lifecycle management (PLM) solutions is accelerating, becoming one of the top enterprise software markets through 2008, according to a new study from technology consultancy ARC Advisory Group.

The worldwide market for PLM software and services is expected to grow at a compounded annual growth rate (CAGR) of 11.5 percent over the next five years. The market was $5.3 billion in 2003 and is forecasted to top $9.1 billion in 2008, ARC reported in its study "Product Lifecycle Management Solutions Worldwide Outlook."

Strong growth will occur across most sectors of the PLM market, but particularly strong growth of over 16 percent is projected for product data management (PDM) solutions.

"While PDM solutions have been in the market for a number of years, their adoption and use has been limited to addressing the needs of an enterprise's engineering department," said John Moore, lead author of the study for ARC. Moore said that companies now are realizing that PDM can no longer be confined to engineering but must become the foundation and repository for all product-centric information to enable a multitude of cross division business processes.

"In addition to growth of net new users of PDM solutions, there is a significant replacement market for legacy PDM solutions as they do not have the collaboration capabilities that are required in today's market," Moore noted.

Asia represents a significant opportunity for PLM-enabling applications over the next five years as it continues to grow its industrial manufacturing base, according to ARC. Representing over 20 percent of the PLM market in 2003, the Asian market will rapidly grow to represent over 27 percent of the market by 2008, the consultancy said.

While Japan continues to be the largest market in Asia for PLM solutions, this market is maturing rapidly. Both China and India will see very strong growth in excess of that forecasted for the entire Asian market through 2008.

In addition, ARC believes that portfolio management solutions will see the strongest growth over the forecast period. A relatively new market sector within PLM, the portfolio management is still in the early adopter phase, with tier-one enterprises leading the adoption of such solutions.

Driving growth in this segment is the increasing need of organizations to better track their research and development investments — as well as current products in the market — to optimize the allocation of precious internal resources.

Finally, the consultancy reported that the discrete industry remains by far the largest single sector for PLM solutions in 2003, representing nearly 90 percent of the total market. Within the discrete industry, the automotive market is the single largest market for PLM solutions. The balance of the PLM market is represented by the process industries, which, while small, will see above average growth over the forecast period.

Both the consumer products goods and food and beverage industries will be particularly fertile markets for PLM solutions over the forecast period, ARC predicted.