Big Four to dominate supply chain says Forrester

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Supply chain management (SCM) is set to remain a major growth area with US firms ready to spend a total of $35 billion over the next five years, but there will be major shake-ups in vendor rankings to come.

According to Forrester Research’s new report "SCM Processes Replace Apps: 2003 To 2008," firms will increasingly extend their supply chain processes across departmental and partner boundaries. For firms this means the end of investments in narrowly focused functional supply chain management (SCM) apps and concentration on supply chain processes that support firms' migration to adaptive supply networks.

The end result of this is bad news for the majority of SCM vendors as the market will coalesce around four major players - IBM, Microsoft, Oracle, and SAP. Forrester predicts that established players such as i2 and Manugistics will end up playing “second fiddle to ERP vendors”. And the bad news for everyone is that by 2006, Forrester expects that Microsoft will give large ISVs a run for their money and corner the midmarket.

Today customers are complaining that variability and process inflexibility hamper supply chain performance with forty-six per cent of interviewees citing difficulties in getting processes and people adjusted to changes as impediments to supply chain performance. Forty-two per cent pointed to high variability in supply and demand, while fifty-four per cent of interviewees say their supply chain apps have failed to meet their expectations, most often citing immaturity of technology standards.

Only eight per cent of interviewees plan to significantly increase SCM apps spending in the next three years, while fifty per cent plan a moderate increase, and 27 per cent say spending will remain the same. Services - particularly post-implementation consulting - will take the lion's share of supply chain spending, while spending on licence fees will plummet -- and stay there.

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