The supply chain management (SCM) IT services market will expand from $26.1 billion in 2002 to $40.5 billion in 2007, representing a five-year compound annual growth rate (CAGR) of 9.2 percent, a new study from IDC reveals.

Due to the economic downturn and geopolitical concerns, IDC research shows that in 2002, buyers were less receptive to large-scale SCM investments that required complex and lengthy implementations and internal change. Instead, the market demonstrated a clear preference for smaller-scale projects that addressed immediate pain points with an up-front return on investment (ROI) and clear "show me" milestones.

"2002 was a turbulent year for the worldwide SCM IT services market, but opportunities remain," said Romala Ravi, manager for Supply Chain and Logistics services research at IDC. "For today, unearthing these opportunities will require a laser focus on ROI and cost containment. Building strong and lasting relationships with clients will lay the groundwork for success further down the road."

IDC believes that as long as economic and geopolitical uncertainties continue to prevail, clients of SCM solutions will continue to take an incremental and modular approach to enhancing their SCM technologies and processes for 2003. This means there will be interest, but companies will continue to focus on areas that can yield quick ROI and are more easily implemented. This bodes well for SCM segments such as supply chain execution (SCE) and procurement and sourcing.

At the same time, companies will begin to demand that their service providers help them create a larger, long-term framework to steer their modular SCM initiatives toward more strategic goals. At the same time, the "not wanting to be left behind" mentality will cause companies to explore new areas such as supplier relationship management (SRM), product life-cycle management (PLM), and emerging technologies such as radio frequency identification devices (RFIDs). These "explorative" initiatives bode well for the consulting segment of SCM in the near term.

Among the key recommendations IDC's study offers service providers are the following:

  • Deliver on what's promised, on time, within budget, and with the resources allocated to the project.
  • Be responsive to clients' questions and concerns.
  • Do what you do best rather than trying to be everything to everyone.

The document, “Worldwide and U.S. Supply Chain Management IT Services Forecast and Analysis, 2003-2007,” presents the annual update to the five-year forecast for the worldwide market for supply chain management IT services. The purpose of this document is to identify and quantify the impact of recent trends and events influencing the SCM IT services opportunity through the fourth quarter of 2002 and their impact on the five-year forecast.
To purchase this document, call IDC's sales hotline at 508-988-7988 or e- mail sales@idc.com.

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