High Demand for Commodities and Energy Seen Driving Enterprise Asset Management Sales

Strong manufacturing sector worldwide permitting many companies to increase budgets for maintenance and capital expenditures; Latin America, Asia-Pacific, E. Europe look good

Dedham, MA — August 29, 2008 — The worldwide market for enterprise asset management/computerized maintenance management (EAM/CMMS) software is expected to grow at a compounded annual growth rate (CAGR) of 6.5 percent over the next five years, rising from $1.343.5 billion in 2007 and to a forecasted level of over $1.800 billion in 2012, according to a new ARC Advisory Group study.

A strong manufacturing sector with high demand for commodities and energy has permitted many companies to increase budgets for maintenance and capital expenditures. However, some remain cautious as economic uncertainty, driven by an impending U.S. recession, threatens growth prospects. While the state of the global economy still appears uncertain for many reasons, spending for asset management software and services has remained healthy in most regions, according to ARC.

The developing regions of the world are investing heavily in new infrastructure and other products manufactured by asset intensive industries to support their rapid growth. This growth has contributed to a commodities boom that has propelled growth in natural resource exporting countries such as Brazil.

"The emerging markets of Latin America, Asia-Pacific and Eastern Europe continue to offer the best opportunities for new sales of EAM software and services due to the growth in capital spending related to infrastructure projects and commodities demand," according to Clint Reiser, analyst enterprise applications and principal author of ARC Advisory Group's "Enterprise Asset Management (EAM/CMMS) Worldwide Outlook."

Market Trends

Much of the growth in EAM sales is going to be driven by services, with prominent growth from maintenance and support services and moderate growth in implementation services, Reiser writes. This pattern is typical for mature markets such as EAM.

Mining and metals, oil and gas, and electric power are the industrial manufacturing industries from which strong EAM software sales growth is anticipated. These industries are currently experiencing growth due to emerging market demand and an increase in capital spending.

Limited growth is expected from tier one as most of these companies in developed regions have implemented an EAM solution and are either reaping the benefits or struggling to improve solution performance. Tier two is expected to experience moderate growth as these companies are adopting best practices from proven implementation to remain competitive. Tier three is anticipated to experience the strongest growth as EAM adoption expands in this market segment of limited size.

Innovation in functionality offered by vendors and integration with complementary systems are factors anticipated to contribute to future sales in the EAM market. Some of the areas of integration and functionality that are expected to drive sales include integration with real-time condition monitoring systems, GIS systems, mobile wireless and maintenance strategy solutions. Integration with these systems provides users of EAM systems with a more comprehensive and robust platform of asset information and infrastructure for information delivery.