Asia/Pacific SCM Market Size and Forecast, 2002 (Executive Summary) Executive Summary

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1 Asia/Pacific SCM Market Size and Forecast, 2002 (Executive Summary) Executive Summary Publication Date: 28 July 2003

2 Authors Yanna Dharmasthira Pranav Kumar Nanta Photduang Dickson Tang Chad Eschinger This document has been published to the following Marketplace codes: SOFT-WW-EX-0102 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2003 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Asia/Pacific SCM Market Size and Forecast, 2002 (Executive Summary) Overview Gartner Dataquest has restated its numbers for the supply chain management (SCM) market. We have combined the procurement subsegments, from enterprise resource planning (ERP), with the previous year's e-commerce buy-side market to more accurately reflect the shifting conditions within these markets. The restatement not only reflects changes with taxonomy, but also an expansion of coverage, vendor restatements of revenue and new information gained during our extensive research. Please see Chapter 8 in "Asia/Pacific Market Size and Forecast, 2002: Shake-Up Continues," SWSF-AP-MS The SCM market in Asia/Pacific tumbled 15 percent in 2002, registering $116.4 million of license revenue, confirming the global economic slowdown. Uncertainties during this period also delayed purchasing decisions, which were restricted by tighter IT user budgets. Nevertheless, the Asia/Pacific share of the worldwide market increased from 5.1 percent in 2001 to 5.5 percent in The worldwide SCM market registered a steeper fall, with a negative 20 percent year-over-year decline in The SCM market in Asia/Pacific is forecast to generate positive growth from 2004 onward. By 2007, the market is expected to reach $153.5 million, with a compound annual growth rate (CAGR) of 6 percent from 2002 through A significant change took place in the vendor market landscape as SAP replaced i2 to lead the Asia/Pacific market. Market shares of Commerce One and Ariba shrank as demand for e-procurement fell sharply. These vendors were overtaken by ERP II players Oracle and PeopleSoft. Table 1 summarizes the major vendors ranking in Asia/Pacific and their year-overyear growth rates. Table 1 Vendor Ranking and Growth Rates Market Share (%) 2001 Market Share (%) 2002 Rank 2001 Rank 2002 Growth Rate (%) SAP AG i2 Technologies Oracle PeopleSoft Freemarkets Gartner Dataquest surveyed 11 markets in Asia/Pacific, which included Australia, China, Hong Kong, India, Indonesia, Malaysia, New Zealand, Singapore, South Korea, Taiwan and Thailand. All markets except Indonesia and Hong Kong experienced negative year-over-year growth in Further declines, though less steep, are expected in Figure 1 Summarizes the year over year growth rates of 11 markets in Asia/Pacific in Gartner, Inc. and/or its Affiliates. All Rights Reserved. 1

4 2 Asia/Pacific SCM Market Size and Forecast, 2002 (Executive Summary) Figure 1 Asia/Pacific: SCM Market Year-Over-Year Change, Percent Australia China Hong Kong India Indonesia Malaysia New Zealand Singapore South Korea Taiwan Thailand All the SCM segments supply chain planning (SCP), supply chain execution (SCE), and sourcing and procurement (SP) experienced a year-over-year market decline in SCP occupied the biggest segment share of the SCM market in SCE, although smaller than SCP, registered the lowest year-over-year decline in the SCE is expected to continue to perform better than other segments and to register the highest CAGR from 2002 through Figure 2 summarizes the SCM segment market share in Figure 2 Asia/Pacific: SCM Segment Market Share, 2002 SP (28%) SCP (42%) SCE (30%) Gartner, Inc. and/or its Affiliates. All Rights Reserved. 28 July 2003

5 Asia/Pacific SCM Market Size and Forecast, 2002 (Executive Summary) 3 Gartner Dataquest Perspective Although there were differences among markets in the dynamics of their SCM markets in 2002, broadly the trend was downward everywhere. A weak global economic outlook and prospects of regional terrorism kept buyers cautious. Further pressure in the previous year's market resulted from a shift in end-user buying behavior, in which end users tended to put more priority on ERP implementations, especially in the emerging markets of China, India and Malaysia. Lack of education was also the reason for low penetration into this market. In more mature markets, such as Australia and Singapore, the uncertain business outlook put large scale spending on hold for SCM projects. Generally there have been fewer success stories compared with ERP implementations. The aggressive push by ERP vendors in the SCM market caused significant changes in the vendor competitive landscape. This was witnessed by the considerable decline in market shares of such pure-play vendors as i2, Ariba and Commerce One, among others. However, even in this depressed and highly competitive market, some players, especially local ones, have succeeded as a result of their focus on the requirements of the local markets and strong implementation capabilities. What's Next? The market has good long-term growth potential, because SCM is still in its infancy and has considerable room for expansion. With the assumption that severe acute respiratory syndrome (SARS) will be contained in key markets by the first half of 2003, the intention to invest is expected to gradually return after two years of postponed projects. Although the market performance in 2003 will still be challenged, the SCM market will see positive growth from 2004 onward. Vendors that have a healthy cash flow, a loyal customer base, good support andstrongpartnershipswillendurethisdifficultperiodandemergeasstrong market competitors, if not market leaders. For a more detailed statistics and figures, see "Asia/Pacific SCM Market Size and Forecast, 2002: Shake-Up Continues," SWSF-AP-MS-0111, which presents the Asia/Pacific market size by countries/markets, segments, vertical markets, and platforms. A five-year market forecast is detailed by countries/markets and segments Gartner, Inc. and/or its Affiliates. All Rights Reserved. 28 July 2003