Despite a global slump in IT-related capital spending, the logistics management software market remains strong, with 12% growth predicted through 2006, says Steve Banker, service director of supply chain management at ARC Advisory Group.

That means total revenues for the sector will surge from $1.6 billion in 2001 to $2.9 billion in four years. The logistics management, supply chain, and enterprise software markets have all reported growing price pressure, longer sales cycles, and decreased willingness to risk new projects, banker says.

That sounds ugly, but in fact it spells opportunity for companies selling low-priced tools with a quick payback period. At the same time, the outsourcing trend has overstayed its welcome—vertically oriented companies are still distributing their operations, without changing their centralized decision-making.

That means they're missing out on the new trend—as quick reactions take precedence over long-term planning. The result is overall growth for the three slices of the logistics management market: the warehouse management segment has shrunk slightly, but transportation management and supply chain process management are growing fast, at nearly 20% and 34% respectively.