Niche Technology Providers Find Footing in Supply Chain Software
A new Gartner Inc. report says smaller, tightly-focused software companies are using cloud-based services to fuel rapid growth
A Gartner report said revenue growth for niche supply chain software providers far outstripped the gains of larger companies. PHOTO:BLOOMBERG NEWS
Niche software providers are finding their footing in the supply chain management market by specializing in cloud-based services and tailoring products to specific industries, according to a new report by research firm Gartner Inc.
Sales of software that help companies manage, plan and operate complex supply chains grew 10.8% in 2014 to $9.9 billion, compared to 7.5% growth in 2013, according to the Gartner report being released this week. Strong revenue growth by a few top players helped fuel that growth, including Germany’s SAP SE, which reported a 22% increase in revenue in its first-quarter earnings last month thanks to increased adoption of its cloud offerings.
But while other top-10 vendors including International Business Machines Corp., OracleCorp. and JDA Software Group Inc. saw flat or declining sales in the supply chain management sector, smaller companies saw high growth, Gartner said.
Revenue for San Francisco-based risk management provider Aravo Solutions Inc. grew 70% last year, for instance, by providing software that allows companies to collect data from their suppliers in a standardized format, making it easier to identify and act on problems.
The software, which Aravo said is used by companies including Cisco Systems Inc. andProcter & Gamble Co., is cloud-based, so clients don’t need to coordinate or maintain complicated local installations in order to use it.
‘Niche vendors maintained dominance through new capabilities and focus on customer intimacy.’
Another company, Boston-based ToolsGroup Inc., specializes in helping businesses forecast demand and minimize inventory for retail and telecommunications clients and grew 31.1%.
HighJump Software Inc. climbed the ranks in 2014 to become the 10th-largest supply chain software provider thanks to a merger with logistics provider Accellos, with $91.6 million in combined revenue. It touts both cloud-based and on premise solutions for warehousing, manufacturing, transportation and retail at lower costs.
“Niche vendors maintained dominance within individual submarkets through new capabilities and focus on customer intimacy,” Gartner said.
Meanwhile, subscription-based software solutions grew in popularity over full solutions that require large capital expenditures. Companies see targeted subscription services “to provide more focused capabilities and typically less expensive, quicker deployments.”
