Healthcare Matters

SCM software sales totaled $7.7bn in 2011, a 12.3% increase from 2010, according to Gartner estimates. This is the second year of double-digit growth and that is a good sign for the profession when considering that IT budgets have remained relatively flat.

“Despite ongoing economic uncertainty, the market for supply chain applications showed itself to be pretty resilient in 2011 with most SCM providers continuing to expand their footprints,” said Chad Eschinger, research vice president at Gartner. “North America and Western Europe continued to be the prime consumers of SCM software in terms of dollars spent, with nearly 79% of market revenue.”

Once again, SAP was the leading vendor, accounting for nearly 20% of the worldwide market. Oracle was number two with 17%% market share. Ariba was number three, but demonstrated the strongest revenue increase (~46% growth), so SAP’s acquisition of Ariba (announced yesterday) will obviously create distance between SAP, Oracle and the other top players (SAP, Oracle, Ariba, JDA and Manhattan Associates collectively held 48% of the global market).

Although the market remains relatively fragmented beyond the top five, the smaller and mid size “best of breed” vendors also showed excellent growth. Private companies like BravoSolution, GHX, Vendormate, Iasta and Procurian are all doing well. Collectively, their half of the market is up 21%.

The well-worn path is when the big players acquire the smaller ones –usually for their technology. SAP’s acquisition of Ariba stands out in contrast. Although it surely represents a significant consolidation at the top of the market, little to no meaningful technology was transferred. The growth of the best of breed application vendors should continue unabated. And demand in the healthcare sector will be the #1 or #2 most significant reason for that continued growth.

—Tom Finn