20 January 2005 | David Arminas
Ariba software is the most effective e-procurement programme on the market, according to analysis from Forrester Research.
The Forrester Wave: eProcurement Solutions
report gave Ariba "a narrow lead" over Oracle, PeopleSoft and SAP.
The companies were assessed according to more than 100 criteria, including their handling of settlement and invoicing; reporting capability; merging with a client's processes; managing catalogues and supplier networks.
Forrester asked for written responses from the firms before interviewing them. It then interviewed their customers and from that devised a weighting system.
Firms were rated zero to five by a panel of Forrester experts and scored according to their ratings multiplied by the weighting.
The survey ranks Ketera Technologies ahead of the other externally run hosted e-procurement providers, ICG Commerce and Perfect Commerce.
But e-procurement's poor record on its earliest promises of making big savings is still dampening sales.
A Forrester Business Technographics study in November showed that only 17 per cent of firms will invest in e-procurement in 2005, while 35 per cent will invest in business intelligence software and 31 per cent in financial software (see graph below).
The company estimated that the world market for e-procurement in 2004 was $300 million in licence revenues and $79 million in subscription revenues from hosted e-procurement systems.
Total revenue is expected to be $900 million, the same as in 2003.
The market is forecast to grow by only 1-3 per cent a year until 2008. During that period, most large companies with a turnover of more than $1 billion, such as manufacturers, telecoms, utilities and logistics companies, will upgrade or replace their existing e-procurement systems, rather than buy new ones.
But the financial services sector, business services industries and most smaller businesses stubbornly continue to shun e-procurement investment.
The downturn has taken its toll, the report notes. Of the six vendors that Forrester evaluated in 2002, only Ariba is in the market.
The market for in-house licensed software has now consolidated to four vendors - Ariba; Oracle; PeopleSoft, now part of Oracle; and SAP.