Forrester

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Forrester

  1. 1. November 30, 2006. Call in at 12:55 p.m. Eastern Time Andrew Bartels Vice President Forrester Research Teleconference The Spend Management Market — How Big, Where Is It Growing, Who Are the Market Leaders
  2. 2. Agenda <ul><li>Spend management market — what it is </li></ul><ul><li>Size and key trends for overall spend management market </li></ul><ul><li>Demand side indicators — who is buying? </li></ul><ul><li>eProcurement — Size, trends, leading vendors </li></ul><ul><li>eSourcing — Size, trends, leading vendors </li></ul><ul><li>Spend analysis — Size, trends, leading vendors </li></ul><ul><li>Contract life-cycle management — Size, trends, leading vendors </li></ul><ul><li>EIPP — Size, trends, leading vendors </li></ul><ul><li>Supplier networks — Size, trends, leading vendors </li></ul><ul><li>Services procurement and procurement BPO </li></ul><ul><li>Recommendations </li></ul>
  3. 3. The spend management market includes software that supports the eight-stage ePurchasing process 1. Spend analysis 3. Supplier identification 4. Sourcing 5. Contract management 6. Procurement 7. Order fulfillment 8. Invoicing, reconciliation, and payment 2. Supplier assessment
  4. 4. Spend management revenues on rise, with eProcurement and eSourcing still dominating US$ millions Source: Forrester Research, Inc. $1,887 $2,059 $2,170 $2,465 $2,660 $2,999 Base: 60 vendors (numbers are rounded)
  5. 5. Subscription and maintenance revenues outpacing license and services US$ millions $1,887 $2,059 $2,170 $2,465 $2,660 $2,999 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  6. 6. eProcurement and eSourcing adoption most advanced Number of clients (thousands) Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  7. 7. EIPP and contract management growing fastest Compound annual growth rate, 2003-2008 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  8. 8. Software as a service most popular for EIPP, supplier network, and spend analysis Subscriptions revenue as percentage of total revenues, 2006 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  9. 9. North American demand strongest at Global 2000 “ Will your company purchase any procurement or sourcing software in 2007?” N = 204 N =206 N=143 N = 240 N = 130 N= 101 Source: Forrester Business Technographics ® September 2006 North American And European SMB Software Survey
  10. 10. European demand strongest at medium-large and large companies “ Will your company purchase any procurement or sourcing software in 2007?” N = 75 N =80 N=64 N = 96 N= 57 N= 43 Source: Forrester Business Technographics ® September 2006 North American And European SMB Software Survey
  11. 11. Manufacturers will be biggest buyers in 2007 “ Will your company purchase any procurement or sourcing software in 2007?” N = 198 N = 80 N = 118 N = 36 N = 42 N = 82 N = 111 Source: Forrester Business Technographics ® September 2006 North American And European SMB Software Survey
  12. 12. eProcurement/eSourcing market consolidating Percentage share of market Number of vendors Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  13. 13. The Forrester Wave™: eProcurement Risky Strong Bets Contenders Performers Leaders <ul><li>Other vendors </li></ul><ul><li>not included : </li></ul><ul><li>BasWare </li></ul><ul><li>ePlus </li></ul><ul><li>MRO Software </li></ul><ul><li>Proactis (UK) </li></ul><ul><li>SciQuest </li></ul><ul><li>Lawson, Infor, other ERP </li></ul><ul><li>eMarkets such as: </li></ul><ul><ul><li>Agentrics </li></ul></ul><ul><ul><li>cc-hubwoo </li></ul></ul><ul><ul><li>IBX </li></ul></ul><ul><ul><li>Quadrem </li></ul></ul>Update coming in Q1 2007 January 4, 2005, Tech Choices “Forrester Wave™: eProcurement, Q4 2004”
  14. 14. Largest eProcurement vendors Source: Forrester Research, Inc., based on vendor data from over 60 vendors Mining and CPG companies; SaaS 30-40 Quadrem US mostly; SaaS offering 80-90 Perfect US only; linked to IT product sales 450 ePlus Fortune 500 clients, not much growth 250 Ariba Nordic countries; SaaS offering 80-90 IBX Nordic countries; licensed product 80-90 BasWare Mostly licensed, some licensed under Oracle OnDemand model 2,400 Oracle with PeopleSoft* Largest vendor, almost all licensed 2,500 SAP* US; SaaS 25-30 Ketera Germany and France; SaaS 60-70 CC-Hubwoo Comments Estimated number of clients, 2006 Vendor
  15. 15. eProcurement market inches toward $1 billion US$ millions Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded) $972 $970 $1,059 $888
  16. 16. The Forrester Wave™: eSourcing Suites <ul><li>Others vendors not included: </li></ul><ul><ul><li>I-Faber </li></ul></ul><ul><ul><li>Bravo Solutions </li></ul></ul><ul><ul><li>Intesource </li></ul></ul><ul><li>eMarkets such as: </li></ul><ul><ul><li>Agentrics </li></ul></ul><ul><ul><li>Quadrem </li></ul></ul><ul><ul><li>IBX </li></ul></ul><ul><li>Changes to market: </li></ul><ul><ul><li>SAP acquired Frictionless </li></ul></ul><ul><ul><li>IBX acquired Portum </li></ul></ul><ul><ul><li>Emptoris acquired Mindflow </li></ul></ul>November 17, 2005, Tech Choices “The Forrester Wave™: eSourcing Suites, Q4 2005”
  17. 17. Largest sourcing vendors Source: Forrester Research, Inc., based on vendor data from over 60 vendors Acquired Portum 60 IBX with Portum SaaS, Italy, and Germany 150 I-Faber Strong growth, acquirer 150 Emptoris Linking to PLM 80 UGS Slow uptake in install base 140 Oracle/PeopleSoft Pure SaaS; reseller partnership with CC-Hubwoo 150 Procuri Pushing on-demand 300+ Ariba SaaS vendor; growing 60 Global eProcure Low-cost SaaS; partner with Ketera 70 Iasta Frictionless acquisition fills hole 160 (120 + 40) SAP with Frictionless Licensed; France and Germany 50 Synertrade SaaS vendor 60 Perfect Commerce On the block 50 VerticalNet Comments Estimated number of clients, 2006 Vendor
  18. 18. eSourcing market shifts away from services US$ millions $585 $548 $591 $629 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  19. 19. Spend analysis vendors <ul><li>Other vendors with competitive offerings: </li></ul><ul><ul><li>Zycus </li></ul></ul><ul><ul><li>Ketera </li></ul></ul><ul><ul><li>CGI Silver Oak </li></ul></ul><ul><ul><li>SAS </li></ul></ul><ul><li>Changes to market: </li></ul><ul><ul><li>Procuri acquires TrueSource </li></ul></ul>Source: November 17, 2005, Tech Choices “The Forrester Wave™: eSourcing Suites, Q4 2005” Wave coming in Q2 2007 3.3 SynerTrade 3.6 Global eProcure 3.6 Procuri 3.8 Frictionless Commerce 4.0 Perfect Commerce 4.3 Ariba 4.5 Verticalnet 5.0 Emptoris eSourcing Wave Vendor
  20. 20. Spend analysis market shifts to software as a service US$ millions $73 $100 $110 $72 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  21. 21. EIPP and CLM markets still fragmented, and dominated by specialists Percentage share of market Number of vendors Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  22. 22. <ul><li>Vendors with contract management specifically for purchasing contracts: </li></ul><ul><ul><li>Perfect </li></ul></ul><ul><ul><li>Frictionless (acquired by SAP) </li></ul></ul><ul><li>Changes to market: </li></ul><ul><ul><li>Emptoris acquired diCarta </li></ul></ul><ul><ul><li>OpenText acquired Hummingbird </li></ul></ul>The Forrester Wave™: Contract Life-cycle Management September 2006, Best Practices “How To Drive Document Management Adoption”
  23. 23. Largest CLM vendors Source: Forrester Research, Inc., based on vendor data from over 60 vendors Licensed product; acquired Hummingbird 30 Open Text Acquired CMSI 150 Procuri Mostly for services contract; about 80 buy-side 500 Oracle Acquired diCarta; licensed, growing 60 Emptoris Pushing into SaaS 120 Ariba Mix of buy-side revenue management contracts and all contracts 280 I-Many Real estate contracts 350 Accruent SaaS; acquired Determine 25 Selectica Licensed product; growing 50 Nextance .Net based; licensed and SaaS 85 Upside Comments Estimated number of clients, 2006 Vendor
  24. 24. Contract life-cycle market booms US$ millions $238 $272 $388 $187 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  25. 25. Buy-side contract life-cycle management still dominates US$ millions $196 $225 $302 $149 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  26. 26. Forrester Wave™: Accounts Payable EIPP August 2005, Tech Choices “Accounts Payable EIPP, Q3 2005” <ul><li>Other vendors </li></ul><ul><li>not included : </li></ul><ul><li>Harbor Payments </li></ul><ul><li>Perfect Commerce </li></ul><ul><li>Bottomline </li></ul><ul><li>170 Systems </li></ul><ul><li>Dozens of small vendors </li></ul>
  27. 27. EIPP market dominated by software as a service US$ millions $126 $154 $208 $90 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  28. 28. The logic of eMarkets and supplier networks vs. Buyer #1 Buyer #2 Buyer #1 Buyer #N Buyer #2 Buyer #N
  29. 29. What happened to eMarkets? Primarily collaborative Primarily transactional Mixed collaborative/ transactional Pre- launch Lift- off Escape velocity In Orbit Approaching orbit Rating the Consortia E-Markets, 2001 Transora ChemConnect/ Envera Covisint Pantellos Enporion e2Open Cordiem Omnexus Exostar Trade Ranger Converge Forest Express Rubber Network WWRE GNX CPG Market Over $100 billion in transactions/ year Over $1 billion in transactions/year Over $100 million in transactions/year Over $10 million in transactions/year Elemica SupplyOn Transplace RMX GHX Quadrem Novopoint Asite FSMx Under $10 million in transactions/year $ $ $ $ RIP RIP RIP RIP RIP RIP RIP RIP Agentrics 1SYNC Converge
  30. 30. Leading supplier networks Source: Forrester Research, Inc., based on provider Web sites and briefings * YTD 2006 annualized € 3.5 1.2 1,200 10,000 IBX Nordic € 5.0 1.0 1,800 12,000 CC-Hubwoo $12.5* 5.4* 400 46,500 Quadrem $3.9 7.0 2,500 11,500 Perfect $75.0 76.0 25,000 132,000 Ariba 2005 PO value (billions) 2005 PO volume (millions) Number of customized catalog suppliers Number of suppliers Provider
  31. 31. Supplier network services all subscription and services US$ millions $62 $88 $109 $42 Source: Forrester Research, Inc. Base: 60 vendors (numbers are rounded)
  32. 32. Services procurement vendors <ul><li>Other vendors with </li></ul><ul><li>competitive offerings: </li></ul><ul><ul><li>IQ Navigator </li></ul></ul><ul><ul><li>Fieldglass </li></ul></ul><ul><ul><li>Rearden Commerce </li></ul></ul>Wave coming in Q1 2007 na Perfect Commerce 2.8 SAP 3.1 Ketera Technologies 4.0 Oracle 4.1 PeopleSoft 5.0 Ariba eSourcing Wave Rating Vendor
  33. 33. Suites and BPO <ul><li>Supplier relationship management or spend management suites </li></ul><ul><ul><li>Ariba </li></ul></ul><ul><ul><li>Oracle/PeopleSoft </li></ul></ul><ul><ul><li>SAP </li></ul></ul><ul><ul><li>Perfect Commerce </li></ul></ul><ul><ul><li>Ketera </li></ul></ul><ul><li>BPO </li></ul><ul><ul><li>Accenture </li></ul></ul><ul><ul><li>Ariba </li></ul></ul><ul><ul><li>HP Services </li></ul></ul><ul><ul><li>IBM Global Services </li></ul></ul><ul><ul><li>ICG Commerce </li></ul></ul>Wave coming in Q2 2007
  34. 34. Recommendations for IT buyers <ul><li>For buyers of spend management solutions </li></ul><ul><ul><li>Look separately at procurement/EIPP vs. eSourcing/spend analysis vs. contract management </li></ul></ul><ul><ul><li>SAP and Oracle still have holes and weak points in their offerings — you still need specialists </li></ul></ul><ul><ul><li>Expect new entrants and consolidation in EIPP and contract management </li></ul></ul><ul><ul><li>Prices declining for eProcurement and eSourcing as products get commoditized </li></ul></ul><ul><ul><li>Determine where to use licensed solutions and where to use software as a service solutions — both are available in all categories </li></ul></ul>
  35. 35. Recommendations for IT vendors <ul><li>For vendors of spend management solutions </li></ul><ul><ul><li>Demand is growing but unevenly — pick your segments </li></ul></ul><ul><ul><li>SAP and Oracle are not dominant yet </li></ul></ul><ul><ul><li>Global 2000 enterprises are not as saturated as it had seemed! </li></ul></ul><ul><ul><li>Expect new entrants from enterprise content management into contract management market </li></ul></ul><ul><ul><li>Understand where demand for SaaS is strong (eSourcing, spend analysis, EIPP), and where it is not (eProcurement, contract management) </li></ul></ul>
  36. 36. Thank you Andrew Bartels (516) 869-0128 [email_address] www.forrester.com

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