Supply chain software Top 10 suppliers

The supply chain management (SCM) software market grew at an 8.6% clip in 2019, exceeding $15 billion in vendor revenue by helping companies automate and manage their domestic and global supply networks. According to Gartner, Cloud software revenue grew 2.5 times faster than the overall market, accounting for nearly 34% of the market as all leading vendors took their new product strategies into the Cloud.

These and other revelations were unveiled in the research firm’s Supply Chain Software Top 10 list, which highlights the leading SCM vendors. This year, Gartner reduced its list to 10 vendors (versus a previous 20) to focus in more closely on this software sector’s top growth drivers and strategies. “The top 10 vendors account for a huge amount of market share,” says Balaji Abbabatulla, Gartner UK’s senior director of product management research for SCM software.

“In terms of distinct growth strategies, there are few vendors outside of the top 10 that had unique strategies that helped them achieve rapid growth,” Abbabatulla continues. “As a result, we thought focusing on the top 10 would give us a good representation of the various growth drivers and strategies that are enabling these vendors to grow quickly [within] the supply chain market.”

The top SCM players

For 2019, the top spots on Gartner’s list were occupied by the sector’s biggest players, all of which saw their SCM revenues increase last year. SAP took the top spot with $4.12 billion in SCM revenues (up from $3.79 billion in 2018), followed by Oracle at $1.73 billion, and Blue Yonder (previously JDA Software) with $835.8 million in revenues.

One of 2019’s biggest movers in the SCM space was Coupa, whose revenues jumped from $226.4 million to $334.8 million. The company leapfrogged both Descartes Systems and Infor Global Solutions to claim the fourth spot on Gartner’s 2019 ranking.

Taking the fifth spot on the Top 10 list, Infor posted an SCM revenue increase from $322.3 million in 2018 to $333.1 million last year. The sixth spot went to E2open, which made a significant jump from its eleventh-place finish in 2018. According to Gartner, the company’s revenues increased from $168.5 million in 2018 to $287.2 million in 2019.

Rounding out this year’s list was Descartes, with $282.3 million in SCM revenues; WiseTech Global at $261.1 million; Jaggaer with $260.7 million; and Manhattan Associates, which took the 10th spot with $244.9 million in annual SCM revenues. Cumulatively, 2019’s top 10 vendors posted $8.70 billion in SCM software revenues, up from $7.89 billion in 2018.

Key market drivers

Crediting Cloud as a key driver of SCM revenues last year, Abbabatulla says not all “Cloud-dominant” suppliers experienced significant growth. “It’s interesting because some of the vendors that have adopted Cloud are still not able to grow as fast as others,” he explains, “while vendors like Coupa have just been going crazy and growing at 30% to 40% year on year.”

So, while adoption of Cloud-based software platforms continues to drive the market, it’s not necessarily buoying all Cloud-led SCM software vendors. “High-growth vendors accelerated growth through incremental value delivered through seamless expansion of product capabilities within a single Cloud platform,” he points out. “It’s about how vendors use Cloud to expand their revenues, focus on their current customer bases, and ensure that there is incremental revenue taking place consistently within the platform.”

Abbabatulla says Coupa is one vendor that’s done a good job of expanding the boundaries of its SCM platform while concurrently helping its customers to use more applications within that platform. “That seems to be one of the key ingredients to rapid growth in this market,” he notes.

Descartes, on the other hand, offers a broad set of applications, most of which are “really more a collection of different features,” Abbabatulla says, “versus being integrated into a single platform where customers can quickly go from using one module to another without really having to spend too much time and effort on training or process change management.”

A deep dive

Taking a deeper dive into this year’s list, Abbabatulla says procurement maturity is shifting expectations from digital transformation to increased adoption by new users and higher usage by existing users, and that supply chain execution (SCE) convergence is becoming more common. The latter is gaining ground across sub-market segments (but sometimes cutting across SCE, supply chain planning [SCP], and the procurement market).

Finally, he says stochastic SCP (i.e., software that addresses randomly determined processes) is enabling customers at differing levels of process maturity to migrate to event and scenario-based, automated planning.

Dissecting E2open’s assent up Gartner’s top SCM list, Abbabatulla says not only does its Cloud-based platform cut across various functions, but the company itself made some bold moves in 2018-19 that helped solidify its higher ranking. “E2open’s strategy was really about acquisition,” he explains. “It acquired a number of vendors and integrated those applications into the E2open platform.”

E2open’s most recent acquisitions include the purchase of INTTRA (in 2018) and Amber Road (in 2019). Abbabatulla says the company spent 2019 integrating the former’s ocean shipping platform and the latter’s global trade management (GTM) software into its overall SCM architecture. He compares the strategy to Jaggaer’s acquisition of BravoSolution and POOL4TOOL, both of which created additional revenue streams for the company and boosted its ranking on Gartner’s list at the time (it has since retreated from No. 7 in 2018 to No. 9 in 2019).

“Whether [E2open] will be able to guide its customers through that incremental user journey with minimal disruption is yet to be seen, because its 2019 growth was really about the new revenue streams coming through from acquired entities,” says Abbabatulla. “We’ll still need to wait and see how they integrate those entities.”

More supply chain convergence ahead

With the world in a state of flux right now and with more companies needing to streamline their supply chain activities, demand for SCM is sure to continue through 2020. What this growth actually looks like in chart form remains to be seen, thanks to the global pandemic’s ongoing impacts on human life, business and entire economies.

Other key trends to watch this year include a leveling-off of demand for procurement applications, which Abbabatulla says had been growing at a “fairly rapid clip and outpacing the growth of both SCE and SCP over the last few years.” That growth dropped off in 2019, signaling a move to the “second level of maturity” for procurement applications.

“We believe that decrease is a reflection of the maturity of customers and of the vendors supporting this market,” says Abbabatulla. “A number of them are offering pretty similar features. There’s not much differentiation purely from automation of workflow, which used to be the main driver.” Now, customers are expecting either a broader or deeper set of features from their procurement software. “Last year could have been the year procurement transitioned to being a more ‘mature’ software offering,” he adds.

Abbabatulla is also seeing a push toward more convergence in the SCE space, where vendors are working to connect different processes (e.g., warehouse management, transportation management, etc.) on single, unified platforms. “The way we look at SCE in the traditional sense is being blended together,” he explains, noting that vendors are actively integrating their functionalities and features to deliver a broader set of insights.

“The role of multi-enterprise networks that can cover multiple tiers of the supply chain is growing, and that’s not only helping to fuel a convergence across applications,” says Abbabatulla, “but it’s also enabling vendors to deliver better insights.”

Making the list

This is the 19th time Modern has reported on the supply chain software market from a business standpoint. Although we initially focused on the top providers of WMS solutions, the lines between supply chain execution and supply chain planning providers are no longer clearly drawn; enterprise resource planning (ERP) providers supply WMS and supply chain execution providers offer planning and optimization solutions. Companies are increasingly looking to integrate their procurement activities into their manufacturing, distribution and transportation strategies.

For that reason, Modern partners with Gartner to create this list. Our starting point is Gartner’s annual list of the top supply chain management providers. It’s a numbers game and not a popularity contest. The rankings are based on Gartner’s estimates of a provider’s annual sales for 2019. Meanwhile, Gartner’s estimates are based on revenues related to supply chain management software and not a company’s total revenues.

Admittedly, this is an imperfect science. Gartner, for instance, strips out hardware sales from its estimates. What’s more, Gartner does not follow the warehouse control systems (WCS) or manufacturing execution system (MES) spaces for the purposes of its chart.

Finally, it does not include SCM suppliers that focus on specific verticals. That said, it is an apples to apples comparison to previous years.