Published on the 15/05/2014 | Written by Newsdesk
Better control of supply chains can deliver competitive advantage which is driving growth in supply chain and procurement software sales – but the local market is far from saturated…
The benefit of greater control over supply chains can be significant; analysis by software company Apptricity has revealed that retailers with good supply chains can for example turn over inventory 15 times a year compared to a quarterly turnover by laggards.
Demand for that sort of performance improvement helped the worldwide supply chain management (SCM) and procurement software market grow 7.3 percent to $US8.9 billion in 2013 according to Gartner.
SAP has for more than a decade led the market and this year commanded a 23.9 percent share of the global market. It also grew SCM revenues in the sector by 24 percent – a staggering increase for such an entrenched supplier.
In sharp contrast, Oracle in second spot with 16.3 percent of the market, grew revenues just 0.1 percent.
JDA Software, with 15 percent of the market, was in third position with the rest of the market being extremely fragmented with no other vendor holding more than a two percent share.
Despite the relatively strong growth in demand for SCM and procurement software globally, in Australia and New Zealand access to information systems to support at least the procurement process remains an issue for many organisations. According to a report released earlier this year by Tenderlink in association with Financial Review Business Intelligence “inadequate IT systems to support procurement tasks” was identified as the third most significant challenge facing purchasing and procurement professionals.
Access to funds to invest in such systems has been a key problem. The Gartner report however points to a growing appetite for cloud-based or point solutions to support specific supply chain management and procurement tasks, which might help reduce barriers to entry and prompt further deployment – although it could impact revenues for vendors used to large up-front payments for on-premise sales.
“Cloud and subscription-based pricing is shifting revenue streams and influencing growth,” said Chad Eschinger, research vice president at Gartner. “While growth rates are high, the starting point is much lower and many of the deals are for specific functionality, rather than full suite deployments.”
