With the supply chain continuing to be a key source of competitive advantage in driving business growth objectives, the worldwide supply chain management (SCM) and procurement software market grew 7,3% to $8,9-billion in 2013.

The market performed well as supply chain investments kept their priority status and moved forward, even as IT budget decision makers remained cautious.

“Both influences have impacted strategic planning processes and have resulted in stronger price-based competition and smaller contracts. Cloud and subscription-based pricing is shifting revenue streams and influencing growth,” says Chad Eschinger, research vice-president at Gartner.

“The impact of cloud on traditional on-premises license sales outside of the procurement market, which is heavily influenced by software as a service, is minimal today. Hence, while growth rates are high, the starting point is much lower and many of the deals are for specific functionality, rather than full suite deployments.”

SAP retained its number one market share position in SCM in 2013, with a 24% increase. SAP held 23,9% of the market and reached $2,14-billion in software revenue. SAP has been the market share leader within the aggregated supply chain market for more than a decade. Second-place Oracle’s growth in its supply chain business during 2013 was relatively flat from 2012.

It retained its position as the second-largest provider of supply chain technologies, growing 0,1% and reaching $1,46-billion in revenue during 2013. JDA Software retained the third spot in 2013, which was a year of transition as it worked through product rationalisation and integration of several years of acquisitions and the 2013 merger with RedPrairie.

In the highly fragmented market, the top 10 vendors experienced a slight shift due to acquisitions, but maintained, in essence, the status quo over smaller competitors in 2013, and accounted for 55,3% of the market.

Collectively, the remaining 58 vendors experienced annual revenue growth of 18,3%, not only indicating opportunity in the market created by acquisitions, but also indicating strong demand for specialised offerings that are competitive, and often complementary, to the larger-suite providers’ offerings.

“While acquisition activity has further consolidated the top 10 market share, it has also opened opportunities for smaller, best of class (BOC) vendors,” says Eschinger.

“These opportunities stem from users looking for alternative solutions to the larger vendors, as well as fear, uncertainty and doubt associated with the initial phases of a merger and acquisition. Typically, there is a 12- to 18-month window of enhanced opportunity for competitors. This is evident in the 2013 results, with BOC providers, collectively, more than doubling the growth of the overall market.”