Businesses Up Investment in Supply Chain Management Software

The report also indicated organizations that adopt supply chain software still prefer hosted or on-premises applications.

supply chain software and IT management

Supply chain management software is on track to reach $10 billion in revenue in 2014, a 12.2 percent increase from 2013, and the highest annual growth rate since 2011, according to a report from IT research firm Gartner.

While the report noted the SCM software market is nearing the point at which more than 60 percent of its revenue will derive from existing implementations, approximately 16 percent of SCM investments were by companies adopting this software for the first time.

Gartner expects that figure to fall to fewer than 10 percent by 2018, and that the vast majority of "new" spending will come from organizations that already have SCM and are purchasing add-on functionality.

"The magnitude of information becoming available is staggering. It reminds me of RFID—every single item or package is getting scanned, and that created a huge amount of data," Chad Eschinger, research vice president at Gartner, told eWEEK. "Businesses were struggling to manage it, and that’s the same thing businesses are struggling with today—that’s one reason we’re seeing a rise in analytics and more predictive types of analytics."

Based on a survey of 447 supply chain professionals across North America conducted in the fourth quarter of 2013, the study revealed 43 percent feel that due to deal with rising levels of integration complexity, they were strongly committed to a single underlying technology platform that would improve the visibility of internal processes and enable more effective communication and collaboration with suppliers and buyers.

"There’s a need for orchestrating end-processes, and a single platform under arch is probably the best means to efficiently org those processes," Eschinger explained. "From customs, shipping, where it is manufactured, where it is heading, be it the end user or a distribution center—there is great value in being able to understand where those products are."

The company projected that through 2018, nearly 70 percent of businesses will pursue a single-platform (underlying architecture) strategy to integrate disparate systems, in order to improve supply chain visibility.

"Within supply chains, a lot of the existing footprint has been on-premise—there is a lot of sensitive information that needs to be leveraged by supply chain planners trying to do what-if scenarios to marketing campaigns for instance," Eschinger said. "A lot of organizations might be reluctant to have that information mingling out there with others."

The report also indicated organizations that adopt supply chain software still prefer hosted or on-premises applications.

Eschinger said this is largely because software-as-a-service (SaaS) SCM solutions have not reached functional parity with leading on-premises SCM offerings.

"The center of all of this is the consumer," he noted. "If they’re not the sole nucleus, it’s an extremely important component—making sure you and I are satisfied with your experience and having your expectations met. There’s technology involved but there’s also a need for stronger processes in order to leverage it."