The supply chain management (SCM) market has seen significant activity in terms of vendor consolidation in recent years, as well as facing declining markets as adoption of mature software increases.
Gartner analyst Tim Payne says the decline in the SCM market in about 2000 can be attributed to the flurry of upgrades and installations that took place before Y2K. The early adopters and big customers had thus already sorted out their SCM needs by the turn of the century, leaving only the smaller companies, which may not need or want a large-scale SCM system. The needs of these smaller players are now being serviced by players like i2 and Manugistics, which are developing niche solutions and filling the gaps left by the heavyweights like SAP, SSA Global and Oracle, which supply SCM suites as part of their larger solutions offerings.
Both Gartner and Datamonitor are forecasting growth for this sector this year - of 10% and just over 8% respectively. According to Datamonitor`s SCM Technology Focus: "The worldwide market for SCM software will grow from $1.5 billion in 2003 to $2.6 billion by 2010 as manufacturers continue to invest in the mature technology.
"A compound annual growth rate of 8% belies a downward trend for year-on-year growth past 2008," it notes. "In 2008, growth will be just over 10.5%. However, by 2010, this will have dropped to just over 8%. This reflects the fairly mature state of SCM technology within the manufacturing industry. SCM applications have been offered by technology vendors for a number of years now and many manufacturing companies are already benefiting from their investments in it. For many, SCM, along with ERP, forms the backbone of their IT infrastructure. Upgrade cycles will start to take effect as manufacturers with systems several years old look to gain the additional functionality provided by modern, more advanced, solution suites."
Sources: Gartner Africa and Marketworks.
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