Fragility Of The Global Recovery Driving ERM Market

International Data Corporation (IDC) has announced the latest results of its Worldwide Semiannual Enterprise Resource Management (ERM) Applications Tracker. The Tracker monitors nearly 370 ERM vendors in a total of 49 countries, providing biannual market size, vendor share, and forecast data for the eight functional markets that comprise the ERM market in IDC’s software taxonomy.

“Companies are expected to spend a total of $37.9 billion on ERM during 2011,” said Wilvin Chee, associate vice president, Worldwide Software Trackers. “In terms of functional markets, three out of eight are expected to perform the best; they are Financial Performance and Strategy Management, Order Management, and Project & Portfolio Management.”

Geographically, every region is forecast to grow above the market average this year except for the U.S. and Japan. Latin America and CEMA regions will perform the best as investments in ERM heighten in countries such as Brazil, Czech Republic, Israel, Romania, Russia, and South Africa. Asia/Pacific is also continuing its traditionally strong showing with Australia, China, India, and Indonesia leading the way. Investment in 2012 is expected to slow to 6.3 percent growth, which is similar to the growth experienced in 2010.

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“The fragility of the global recovery has placed a greater need for software and services that help drive down costs, manage risk, improve efficiencies of production, and identify new opportunities for growth,” said Scott Guinn, research director, Enterprise Applications. “Technology trends fueling the recovery include advances in architectural constructs, such as cloud computing, mobility, and new social models and tools for enhanced customer, employee, supplier, and partner engagement. These technologies and the changed business models and processes that they enable will play vital roles in spurring spend in enterprise resource management solutions.”

SAP, Oracle, and Microsoft continued to be the only three ERM vendors with revenues of more than $1 billion in the first half of 2011 (1H11), solidifying their positions in the top 3 spots. Despite their massive ERM revenue figures, SAP and Microsoft still managed to achieve above average market growth during 1H11. Outside of the top 3, market competition proved to be very intense. Five out of the eight functional markets featured more than 100 vendors (that the Tracker monitors). The most intense competition was found in the Financial Accounting, Human Capital Management, and Procurement functionals. 1H11 also saw an increase in the number of ERM vendors with revenues of more than $100 million. A year ago, there were 16, but this year the figure grew to 22. The newcomers include Deltek, SuccessFactors, Taleo, UFIDA, Ultimate Software, and Visma. Among them, UFIDA had the most impressive performance as it boosted its first half performance many times over the same period in previous years. Other major vendors with tremendous revenue growth when compared to previous years included ADP, DATEV, Fujitsu, Intuit, McKesson, Sage, and Unit4.

The Worldwide Semiannual Enterprise Resource Management Applications Tracker provides total market size and vendor share for the following ERM market segments: financial accounting applications, human capital management, payroll accounting, procurement, order management, financial performance and strategy management applications, project and portfolio management (PPM), and enterprise asset management. Measurement for this Tracker is total software revenue, which includes license plus maintenance plus SaaS and other subscription revenue. The Tracker covers up to 49 nations in total. Annual five-year market forecasts for this Tracker are updated semiannually and include five-year annual market projections.