Western European SRM Applications Market on the Upswing as Strategic Sourcing Fuels Growth, Says IDC

Send to friend

Demand for supplier relationship management (SRM) applications in Western Europe increased in 2004, according to a new study from IDC. Much of the demand has come from a surge in orders for strategic sourcing solutions integrating and leveraging existing procurement systems.

With a high implementation rate of traditional ERP applications, including core purchasing and contract management software, IDC expects bolt-on offerings such as integrated strategic sourcing to perform well in Western Europe and grow by 9.8% CAGR between 2005 and 2009. At the same time, innovative on-demand offerings have proven to be a popular application delivery model and, with Western Europe not yet fully embracing outsourcing or more holistic BPO offerings, IDC expects growth of on-demand SRM solutions to be 3.8% for 2005 to 2009. This compares with a worldwide forecast of 5% CAGR.

With leading SRM software vendors responding to this transition in application delivery models by offering a mix of traditional application delivery and innovative on-demand services, the Western European SRM applications market grew 2.5% in 2004. With the growth in professional service expertise in sourcing and purchasing processes, IDC expects the total SRM applications market in Western Europe to increase by 3.9% CAGR between 2005 and 2009.

"The SRM market has turned out to be very specific as it increasingly unifies two market segments - applications and services," said Anita Liess, supply chain solutions program manager at IDC. "The essential need for business process know-how on sourcing and purchasing processes and the broad interest in on-demand SRM services will drive an incremental convergence of SRM software and services in the long term."

The study identified the following key trends:
As targets for cost saving increase, purchasing needs to become smarter and more strategic. Strategic sourcing is attracting increasing market interest and sourcing implementations are about to take off in the mainstream market.

Maturing contract management is increasing the number of installations addressing supplier risk mitigation, vertical specifications, and improved contract execution capabilities.
The renaissance in emarketplaces has improved supplier collaboration and given internal staff more time to pursue more strategic tasks.

Ongoing demand for procurement BPO offerings and hosted solutions signals a trend towards clients being ready to pay on a subscription-based level for demonstrated value.

A shift in focus from a license-based sales model to a software as a service (SaaS) delivery model.

The study, Western European Supplier Relationship Management Applications, Vendor Shares 2004 and Forecast 2005-2009 (Doc #LS04M, August 2005), analyzes the current SRM market and delivers insight on the SRM-related
results of an end-user survey carried out in March 2005 among 625 Western European end-user organizations. It includes an in-depth discussion of future market trends and potential inhibitors, and provides the latest Western European SRM market forecast for 2005 to 2006 by four major strategic segments: strategic sourcing, contract management, core procurement, and supplier collaboration. The study also looks at the current SRM vendor landscape, providing profiles and market shares for 14 vendors (in U.S. dollars and euros) for Western Europe.

Comments (0)

Add a Comment

This thread has been closed from taking new comments.