CSCMP's Supply Chain Quarterly
November 18, 2017
Supply Chain Executive Insight E-Newsletter
Each month the Supply Chain Executive Insight e-newsletter will include brief articles about developments that are often overlooked by other supply chain publications. We will present you with summaries of the latest research as well as new ideas on how to make your supply chain operations more effective. And we'll offer commentary that sheds light on what's happening in supply chains today.
Sign up now!

Most Read Articles

News from our sister publication
DC Velocity
Forward Thinking

Supply chain management software market expected to exceed US$13 billion in 2017

Comment
Gartner forecasts 11 percent increase over 2016; growth in software-as-a-service (SaaS) deployments could take the market to US$19 billion by 2021.

The supply chain management (SCM) software market will exceed US$13 billion in total revenue by the end of 2017, up 11 percent from 2016, according to the technology research and advisory firm Gartner Inc. This increase puts the market on pace to exceed $19 billion by 2021, as software-as-a-service (SaaS) enables new revenue opportunities, analysts said in the research note "Forecast Overview: Supply Chain Management, Worldwide, 2016 Update."

"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, in a statement. "Digitalization is increasing demand for agility and forcing new business models, which is boosting spending in the SCM market."

Another reason for that growth, Eschinger said, is that end-user organizations are seeking to discover and exploit value in the huge amounts of data generated throughout the extended network of businesses and connections that make up a modern supply chain. Moreover, the move to SaaS delivery shifts costs from capital expenditure (for outright purchase of hardware and on-premise software) to operational expenditure (for more flexible, "pay as you go" service), making investment in SCM technology more attractive to resource-constrained small and midsize businesses and organizations in emerging markets. Gartner expects this will expand the market and increase overall spending on SCM software.

In general, SaaS revenue growth is driven by a combination of vendors moving to cloud-first or cloud-only deployment models and end-user organizations becoming more comfortable with SaaS solutions and issues such as cloud security, according to Gartner.

The adoption rates for SaaS vary for different software categories, according to the report. Gartner's SCM market forecast includes three software categories: supply chain planning (SCP), supply chain execution (SCE), and procurement. Procurement is currently leading the move to cloud-based deployment, and SCP is trailing, analysts said.

According to the report, SaaS deployments will account for more than 35 percent of total SCM spending by 2021, while 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, researchers found.

Eschinger predicted that the needs of next-generation supply chains and real-time business requirements will push consolidation of existing solutions into "broader, multidomain suites," even as "new point solutions ... that address specific needs and offer new value," will gain traction. The growing impact of digital commerce, he added, will drive greater investment in supply chain analytics. Additionally, "the lure of faster decision making and eradicating inefficiencies" will drive investment in smart machines, the Internet of Things (IoT), and the associated SCM software, he said.

Join the Discussion

After you comment, click Post. If you're not already logged in, you will be asked to log in or register.


Want more articles like this? Sign up for a free subscription to Supply Chain Executive Insight, a monthly e-newsletter that provides insights and commentary on supply chain trends and developments. Click here to subscribe.

We Want to Hear From You! We invite you to share your thoughts and opinions about this article by sending an e-mail to ?Subject=Letter to the Editor: Quarter : Supply chain management software market expected to exceed US$13 billion in 2017"> . We will publish selected readers' comments in future issues of CSCMP's Supply Chain Quarterly. Correspondence may be edited for clarity or for length.

Want more articles like this? Subscribe to CSCMP's Supply Chain Quarterly.