SCM Applications in Western Europe to Grow Again

Western Europe IDC: Despite continued uncertainty in Western European economies, a marked improvement in supply chain business activity. In 2004, the supply chain management (SCM) applications market in Western Europe increased by 6.5%. Though when weighted with the exchange rate impact of 2004, this corresponds to a still negative market development of -1.3% in current exchange rates. Compared to the sagging market results of previous years, this result implies a slow but persistent market recovery for supply chain management applications in Western Europe.

For the forecast period through 2009 the Western European SCM applications market to grow by 3.5% compound annual growth rate (CAGR). Major market drivers will be the need to keep up with the evolving concepts around composite applications, the proliferation of RFID deployments, data synchronization projects as a prerequisite for collaborative supply chains, increasing demand for supply chain analytics, and compliance with new EU directives.

Unlike other software markets in Western Europe, supply chain management application revenue is more concentrated in major industrial markets like Germany, the United Kingdom, and France. In 2004, more than 60% of supply chain revenue was derived from these countries. Benelux and the Nordics added 10% each in revenue contribution and another 6.5% market share came from Italy. By this means the slow economic growth in key Western European markets like France, Germany, and Italy limits the growth potential and results in a much lower growth perspective for Western Europe than the worldwide outlook for SCM applications, anticipating a 5.7% CAGR through 2009. The sole focus on cost cutting gave way to enterprises starting to look at improving their competitiveness and initiating improvement measures with consolidation and simplification of IT infrastructures, data, and applications. In particular, the optimization of supply chains attracted a large portion of the enterprises' attention as a means toward achieving better financial performance and improving competitive positions in an increasingly global business environment.

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