Table 1
Worldwide SCM Vendor Software Revenue (Millions of Dollars)
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New license revenue was down 7.4 percent in 2009, while recurring revenue associated with subscriptions and maintenance were the "life vest" of the market, growing 10.8 percent and 0.2 percent, respectively, Gartner said.
"Despite the slight dip in overall revenue, the market for supply chain applications seems to have largely weathered the recent financial storms," said Chad Eschinger, research director at Gartner. "Although the first nine months of 2009 contracted, the fourth quarter sustained 6 percent annual growth, driven by some pent-up demand, but more so from growth in subscriptions and the many maintenance renewals that were due in the fourth quarter."
New software sales were difficult to obtain in 2009, Gartner said, and vendors that have succeeded have transitioned part or all of their business toward subscription delivery of their solutions. This was evident within the top six vendors, where Ariba generated positive growth, but also where Oracle, with more of a best-of-breed approach, also generated slight growth (see Table 1). The remaining four market share leaders all experienced a decline in SCM software revenue in 2009.
Table 1
Worldwide SCM Vendor Software Revenue (Millions of Dollars)
| Vendor | 2009 Revenue | 2009 Market Share (%) | 2008 Revenue | 2008 Market Share (%) | 2008-2009 Growth (%) |
| SAP | 1,223.3 | 19.8 | 1,341.3 | 21.5 | -8.8 |
| Oracle | 1,038.6 | 16.8 | 1,036.4 | 16.6 | 0.2 |
| JDA Software | 258.1 | 4.2 | 264.7 | 4.2 | -2.5 |
| Ariba | 228.7 | 3.7 | 210.3 | 3.4 | 8.8 |
| i2 Technologies | 114.0 | 1.8 | 116.4 | 1.9 | -2.0 |
| | 111.8 | 1.8 | 142.3 | 2.3 | -21.4 |
| Other Vendors | 3,215.4 | 51.9 | 3,123.3 | 50.1 | 3.0 |
| Total | 6,190.0 | 100.0 | 6,234.7 | 100.0 | -0.7 |
Note: Gartner defines total software revenue as revenue that is generated from appliances, new licenses, updates, subscriptions and hosting, technical support, and maintenance. Professional services revenue and hardware revenue are not included in total software revenue.
Source: Gartner (June 2010)
"Stressed Environment"
"The economic climate of the past few years and the maturity and saturation of implemented business applications have proven difficult," Eschinger said. "This stressed environment has forced many vendors to increase maintenance rates and explore various channel, delivery and pricing options."
He added that competition between enterprise suite and specialist, best-of-breed vendors has heightened. "Although suite vendors are typically well-positioned within organizations to stall emerging-application purchases, there are significant opportunities for specialized vendors that offer differentiating domain and vertical solutions that are 'blind spots' in a suite provider's offering," he said.
The specialized segment of SCM software revenue totaled $3.5 billion in 2009, a 1.6 percent increase from 2008. The suites segment of SCM software revenue totaled $2.7 billion in 2009, a 3.7 percent decline from 2008 revenue.
Specialized vendors' sole or primary business is to market supply chain applications within defined markets. These vendors may offer a suite of supply chain solutions but typically do not provide solutions in other markets. Suite vendors compete with specialized vendors, but they market products in several markets, and revenue from supply chain applications is not their primary focus. Some suite vendors have acquired best-of-breed or specialized vendors, but because these are part of a larger application portfolio, they are included in this category.
"Given the market's vendor fragmentation and the continued expansion of suite vendors, we expect market consolidation and share in the SCM market to eventually mimic that of the enterprise resource planning (ERP) market," Eschinger said. "However, unlike the ERP market, we expect the process to take longer, with less 'lock-out' and more activity with new entrants, given the breadth of needs across supply chains and functional domains."
Additional analysis is available in the Gartner report "Market Trends: Supply Chain Management, Worldwide, 2009-2010." The report is available to Gartner clients or for purchase on Gartner's Web site at http://www.gartner.com/resId=1377614. More detailed statistics are available in the Gartner report "Market Share: SCM Worldwide, 2009." The report is available at http://www.gartner.com/resId=1361513.
