Double digit growth for supply chain management

Published on the 27/06/2017 | Written by Newsdesk


Supply chain management

Driven by SaaS, SME deployments…

The supply chain management (SCM) market will exceed US$13 billion in total software revenue by the end of 2017, up 11 percent from 2016. It is on pace to exceed $19 billion by 2021, as software as a service (SaaS) enables new revenue opportunities.

That’s according to market watcher Gartner, which in a statement said SCM providers are differentiating themselves from competitors and driving revenue growth by incorporating into their offerings ‘digital business technologies’ such as mobile, machine learning, in-memory technologies, multienterprise visibility and the Internet of Things (IoT).

“Between 2017 and 2021, Gartner forecasts nearly $6 billion in total software revenue will be added to the SCM market,” said Chad Eschinger, managing vice president at Gartner. “Digitalisation is increasing demand for agility and forcing new business models, which is boosting spending in the SCM market.”

Eschinger added that to remain competitive in this environment, end-user organisations are seeking to discover and exploit value in the data generated throughout an ever-extending network of businesses and connections that make up a modern supply chain.

Moreover, the move to SaaS delivery shifts costs from capital expenditure (capex) to operational expenditure (opex), which makes investment in SCM technology more attractive to small and midsize businesses (SMBs) and organisations in emerging markets, therefore expanding the addressable market and increasing overall spending.

Gartner said its SCM market forecast is made up of three categories: supply chain planning (SCP), supply chain execution (SCE) and procurement. Adoption and associated revenue for SaaS are moving through the market at different rates, with procurement leading the move to cloud, and SCP trailing.

Overall, SaaS revenue growth is driven by a combination of factors: vendors moving to cloud-first or cloud-only deployment models, and end-user organisations becoming more comfortable with issues such as cloud security and appreciating the capabilities and innovation of leading-edge SaaS solutions.

By 2021, SaaS deployments are forecast to account for more than 35 percent of total SCM spending. Sales of on-premises licenses will decline to less than 20 percent of total spending. Hybrid SCM environments with coexisting cloud and on-premises applications are becoming more commonplace, with information hubs and supplier networks dominating the move to cloud.

“To help support next-generation supply chains and real-time business requirements, we expect consolidation of existing solutions into broader, multidomain suites, but also a continued stream of new point solutions that will support innovation, address specific needs and offer new value,” said Eschinger.

“The growing impact of digital commerce will drive greater investment in supply chain analytics, and the lure of faster decision making and eradicating inefficiencies will drive investment in smart machines and IoT and the associated SCM software.”

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