The supply chain management (SCM) software market will exceed $13bn in value by the end of the year, according to Gartner.
Gartner said the market would grow by 11% compared to 2016 and it was on course to exceed $19bn by 2021, driven by software-as-a-service (SaaS).
Chad Eschinger, managing vice president at Gartner, said: “Between 2017 and 2021 Gartner predicts nearly $6bn in total software revenue will be added to the SCM market.
“Digitalisation is increasing demand for agility and forcing new business models, which is boosting spending in the SCM market.”
Gartner said business technologies around mobile, machine learning and the internet of things (IoT) were being incorporated by businesses, while to remain competitive they were “seeking to discover and exploit value in the huge amounts of data generated throughout an ever-expanding network of businesses and connections that make up a modern supply chain”.
SaaS shifted costs from capital expenditure to operational spend, which made it more attractive to SMEs and organisations in emerging markets.
The SCM market is made up of supply chain planning, supply chain execution and procurement, said Gartner. SaaS is affecting these categories differently, with procurement leading the move to cloud technology.
SaaS growth is driven by vendors moving to cloud-first or cloud-only deployment models and end-user organisations becoming more comfortable with cloud security.
Gartner said SaaS would account for 35% of SCM spending by 2021 and sales of on-premises licences would drop to less than 20% of total spending.
Eschinger said: “To help support next-generation supply chains and real-time business requirements, we expect consolidation of existing solutions into broader, multidomain suites, but also a continued stream of new point solutions that will support innovation, address specific needs and offer new value.
“The growing impact of digital commerce will drive greater investment in supply chain analytics, and the lure of faster decision making and eradicating inefficiencies will drive investment in smart machines and IoT and the associated SCM software.”
☛ Want to stay up to date with the news? Sign up to our daily bulletin.