IDC predicts rapid growth for the BPM software market, which is expected to reach $5.5 billion by 2011.
Posted Aug 9, 2007
A new IDC study reveals that the business process management suite (BPMS) software market is among the fastest-growing, and is establishing itself as the front end to next-generation platforms used to build custom applications. The BPMS market grew nearly 80 percent in 2006, to $890 million, according to IDC, and the research firm predicts continued growth over the next five years, albeit at a slightly less-torrid pace: a 44 percent compound annual growth rate (CAGR), pushing the market to $5.5 billion in 2011.
The increasing importance of customer loyalty and the rise of the Internet have changed the dynamics of business, analysts say, requiring better flexibility and timeliness of response. This change will inevitably lead to a renewed interest among enterprises for software solutions to better coordinate in the management of business processes.
A recent Gartner study on BPM highlights the software's evolution from mere process management theories and practices like quality management to a management discipline that views business processes as assets that can be designed, reused, and exploited in order to improve business agility and operational performance. (Gartner's study, like IDC's, predicts significant growth in the market over the next half-decade; Gartner's forecast is for a CAGR of 24 percent in the period from 2006 to 2011.)
IDC says the growth in this market will be fueled by several factors:
- BPMS software penetration is relatively minuscule thus far, and governs only a tiny percentage of the total potential market. As more enterprises invest in BPM, a significant percentage of those buyers will purchase a BPMS solution.
- Because many BPMS installations have been purchased on a project basis rather than as enterprise infrastructure, IDC expects growth to result from the expansion of initial deployments to additional processes and locations within existing accounts.
- As the platform vendors mature their BPM software and go to market with suites or BPM bundles, purchasing among their huge installed bases will be strong over the forecast period. IBM, Oracle, BEA, and Tibco are all experiencing strong growth within their BPM portfolios. Microsoft, through its Business Process Alliance (BPA), has signaled an interest in this market. BPA members, including Ascentn, K2, and Metastorm, will benefit from this attention and investment.
- Software-as-a-service (SaaS) is only beginning to emerge as a business model in this market. However, the SaaS model, as it develops, will help fuel growth in the midmarket, small business, and B2B arenas during the latter half of the forecast period.
"This year and next are critical years for BPMS vendors," says Maureen Fleming, program director for Business Process Integration and Deployment Software at IDC. "The market has had failures and consolidation, and this will continue over the forecast period. Most of the vendors have invested in their next-generation capabilities. For those who aren't already, the focus should be on investing time, effort, energy, and cash building market share."
Over the next several years, the many BPMS pure-play vendors will be fighting against the larger vendors for market share, Fleming says. "This will be a challenge when a small portion of a large project involves the implementation of workflow to solve a process automation problem," she writes in the report. However, enterprises planning to invest in process excellence will be assessing potential BPMS purchases on two fronts, she adds: the level of knowledge the vendor has about business process management, and the degree of sophistication of the product offering.
From that perspective, the pure-play vendors' abilities to innovate by continually responding to customer needs will help them battle the larger vendors and will continue to push the larger vendors to improve their own offerings. Over the next several years, Fleming says, innovations coming from the pure plays--Lombardi, Global 360, Ascentn, Appian, Savvion, Bluespring, Ultimus, and others--will continue to drive advances in the market.
To that end, Gartner has already predicted that four or more pure-play BPMS vendors will be acquired by platform or application vendors by 2009. Janelle Hill, a research vice president at Gartner and author of that firm's study, says that 2007 "represents a turning point in terms of growth acceleration in the market for BPMS." She adds, "We will see some vendors--such as IBM, SAP, and Oracle--making their intentions very clear and aggressively trying to mature their BPMS offerings. Others--such as Microsoft and [Computer Associates]--will lag behind pursuing the BPMS market [themselves] as a complementary market to their [in-house] middleware offerings, particularly in the context of SOA initiatives."
The market will see dramatic growth over the coming years, as BPM vendors begin to leverage SOA.
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