AMR research publishes that Software vendor consolidation will continue as major suite vendors vie for account control by buying and building functional and geographic breadth to their portfolios. Other drivers:
- Customers desire to standardize on a fewer set of software providers
- Installed base of other best-of-breed players – a major challenge. In 1999, the top five vendors in the ERP market, the so-called JBOPS—J.D. Edwards, Baan, Oracle, PeopleSoft, and SAP—accounted for 59% of the industry’s revenue. In 2005, the top five vendors—SAP, Oracle, Sage Group, Microsoft, and SSA Technologies—will account for 74% of ERP vendors’ total revenue.
Growth among ERP vendors will be due to two different trends: New customer growth in core ERP from new industries (Banking and Insurance, Retail), emerging countries (Brazil, India, China), and Small and Midsize Businesses (SMB); growth in existing accounts through sales of strategic extensions like Customer Relationship Management (CRM), supply chain, and Supplier Relationship Management (SRM); and infrastructure components (such as data warehousing/business intelligence, application servers).
Oracle and SAP now command a major presence in almost all vertical markets, geographies, company sizes, and product categories. SAP has a lead among the major ERP vendors, with AMR Research predicting a 43% revenue market share in 2005. and the new Oracle is expected to reach 19% revenue market share based on total ERP vendor revenue. SAP had less revenue than Oracle + PS together in 2004 and recent quarterly trends suggest that SAP will assume leadership position there. Most customers will be spending a greater portion of their IT investment with one of these two organizations in the next three to five years.
My take: Consolidation trends are clearly to be seen. But at the same time – it is far too early to write off segment biggies – for example the troubled Siebel has over 3 million seats deployed and they deployed more than 1 million last year alone - more in the last year than its major competition's customer bases combined. It would be not be easy to displace or write off other players for atleast next three years.
Category : Software Consolidation