For CRM, ERP, and SCM, SAP Leads the Way
SAP is the market share leader in the CRM, ERP, and SCM spaces, according to three reports from Gartner Dataquest. Gartner, which has traditionally measured market share in terms of new license revenue, has tweaked its approach to reflect changes in the software industry. Now, Gartner takes total software revenue as revenue generated from new licenses, updates, subscriptions and hosting, technical support, and maintenance, but excludes professional services and hardware revenue.
SAP predictably maintained its ERP leadership status, capturing 28.7 percent of the market with $4.7 billion, a 12.1 percent uptake from 2004's $4.2 billion. The company also placed first in the four ERP software segments that Gartner examines: financial management systems, human capital management, enterprise asset management, and manufacturing operations. Chad Eschinger, principal analyst at Gartner Dataquest and one of the authors of the ERP and SCM reports, attributes much of SAP's success in the ERP market to its focus and stability. "They were one of the earlier providers within the industry," Eschinger says. "It's a very stable organization [and] it has stayed focused. It hasn't necessarily chased every new trend." He also notes SAP's strong manufacturing capabilities matching Germany's manufacturing-oriented nature, and the company's acquisitions. "SAP's made acquisitions, but they've been small, they've been very strategic."
While Oracle pulled in a solid $1.7 billion in 2005, securing 10.2 percent market share, it experienced a decline of 28.4 percent from 2004's $2.3 billion. Sage, with 7.4 percent market share, garnered $1.2 billion in 2005, representing 12.6 percent growth from $1.1 billion in 2004. Microsoft Dynamics and SSA Global Technologies, which is set to be acquired by Infor, round out the top five. Microsoft Dynamics earned $616 million in 2005, up 10.2 percent from 2004, representing 3.7 percent market share, while SSA Global tallied $464 million in 2005 compared to $372 million in 2004, representing 24.5 percent growth and 2.8 percent market share.
Overall, ERP total software revenue totaled $16.5 billion, up from 2004's $15.7 billion. Like several other markets including the CRM industry, the ERP space is experiencing continued consolidation, devoting more attention to the on-demand model, and heightened interest in the midmarket.
On the SCM side, SAP earned $912 million in 2005, up 25 percent from 2004's $729 million, grabbing 19 percent market share. Oracle took the second spot with $617 million and 12.9 percent market share, but a 21.8 percent decline in its software revenue from 2004. I2 Technologies' SCM total software revenue stayed relatively flat year over year; the company took in $169 million in 2005, compared to $170 million in 2005, accounting for 3.5 percent market share. Ariba, which acquired global supply management provider FreeMarkets in 2004, suffered the biggest percentage drop among the top five, pulling in $161 million in 2005 compared to $220 million in 2004, indicative of 3.4 percent market share, but a 26.7 percent plummet. JDA Software Group, which announced in April that it would acquire SCM solutions provider Manugistics, captured the fifth slot with $123 million in 2005, a 10.5 percent increase from 2004's $112 million, accounting for 2.6 percent market share. The SCM market totaled $4.8 billion in total software revenue for 2005, a 2.6 percent increase from 2004's $4.7 billion.
Eschinger notes that ongoing consolidation, enhanced interest in the midmarket, and on-demand functionality are trends within the SCM space. He also says of best-of-breed providers' capabilities: "Someone like an i2 or Ariba is a much more suitable solution in a very complex environment, whereas an Oracle or an SAP, given their heritage, is probably good enough within a less complex environment. Buying from specialists has become acceptable again."
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