Cloud SCM Market Overview
The cloud SCM market size was valued at $3.3 billion in 2016, which is expected to grow at a CAGR of 19.2% during the forecast period. North America continues being the largest market, during 2013 – 2016, the highest market growth was observed in Asia-Pacific. The growing government support to small & medium enterprises across various countries in Asia-Pacific, has been driving the demand of cloud supply chain management in the region.
Demand planning & forecasting had been the largest revenue generating solution in the cloud SCM industry in 2016, and it is also expected to be the fastest growing solution during the forecast period. The growing need of enterprises to forecast the requirements of the industry and customers can be cited as the key factor responsible for the burgeoning demand of this solution.
GLOBAL CLOUD SCM MARKET, BY SOLUTION, $M (2013 – 2023)
Demand planning enables business organizations to link and integrate processes across networks. The increasing number of internet dependent organizations is also accelerating the need for cloud SCM demand planning solutions. Besides, demand planning also enables closer collaboration among the employees of the organizations, and responds dynamically to market and consumer trends. Moreover, it helps business enterprises to deliver a better and more rewarding experience across the value chain.
The three types of services offered in the cloud SCM market include training & consulting, managed services, and support & maintenance, of which, the former holds the largest share in cloud SCM market. The growing demand of expertise to enhance the supply chain and rising need of low investment has been driving the demand for training & consulting services.
Hybrid cloud continues being the most sought deployment type, having above 50% of the cloud SCM market share in 2016, while the public cloud and private cloud each generated less than half the market revenue. The adoption of cloud supply chain management has been on the rise in both large, and small & medium enterprises; where revenue generated through the former stands as the largest. Its adoption has been increasing across all the end-user industries, where energy & power continues to be the largest revenue stream.
Cloud SCM Market Dynamics
The global cloud SCM industry is driven by factors such as increasing need for demand management solutions among business enterprises and cost advantages associated with it.
The need for demand management solutions is on the rise across enterprises of all levels, which calls for a solution that makes processes easy. Demand management and forecasting has been evolving as one of the key solutions catering to such need. Business enterprises remain equipped with advanced tools, technologies and forecasting methodologies, which sharpen their ability to view numbers and predict information.
Demand management solutions help enterprises in predicting information for various contexts, based on independent and dependent demand data provided for various products and channels. It also helps in generating statistics based forecasts from the most recent data, causal factors and events, which helps enterprises to fulfil their consumers’ demand. Due to such benefits, the market for demand planning and forecasting is expected to expand at a CAGR of 20.3%, which is boosting the overall cloud SCM market growth.
The on-premises management of supply chain is costly as it incurs several types of associated costs, including periodical maintenance. In contrast, cloud supply chain management offers cost advantages to its customers, due to which its adoption has been increasing. The minimum IT set up required for it encourages businesses to implement it in their processes. It also offers pay per usage licenses as well as endows organizations with the flexibility to scale-up or down the usage, leading to cost benefits.
The total cost of ownership, including IT infrastructure and implementation and training costs, is low in case of cloud SCM. Business organizations are now turning towards advanced IT solutions including cloud to transform their processes, which also endows them with minimization of operational costs. The companies operating in the cloud SCM market have also been upgrading their portfolio to provide customers with solutions that help them to reduce their costs further. For instance, the Oracle cloud supply chain management has gained significant traction in recent years due to its enhanced features, that allow cost reductions.
The massive unexplored market across the globe, growing e-commerce market and rising adoption of cloud supply chain management among small & medium enterprises, are some of the major opportunities for the cloud SCM market players.
The increasing penetration of e-commerce, rising internet penetration and growing average spending per e-shopper propel the demand of e-commerce market across the globe, which in turn has been boosting the cloud SCM market. Logistics, supply chain, demand forecasting and product management, being inherent parts of e-commerce, require cloud based supply chain management for real time tracking.
The e-commerce companies are focusing towards increasing their consumer base through effective delivery of the product in the shortest time. To manage all the complexities in supply chain, the companies in the cloud SCM market are adopting various solutions. The expansion of e-commerce is therefore, expected to be a key opportunity for the companies in the cloud supply chain management market.
The reducing ownership and operational costs associated with cloud supply chain management, are expected to drive its adoption among small & medium enterprises. The number of small and medium enterprises has been growing globally, which is further expected to provide growth opportunity to the players in the cloud SCM market, in the years to come.
Competitive Landscape of Cloud SCM Industry
The intensity of rivalry is high in the global cloud SCM market, owing to the fragmented market structure. The market is fragmented due to the presence of a large number of established players, local software developers and integrators, across the globe.
The high growth rate of the cloud SCM market elevates the intensity of rivalry. With surging demand across several industry verticals, new players are getting inclined towards the cloud SCM market, which escalates the degree of competition among them. High product differentiation further makes the market highly competitive. Some of the key players in the cloud SCM market include SAP SE, Infor, Inc., Oracle Corporation, The Descartes Systems Group Inc., JDA Software Group Inc., Manhattan Associates Inc., Logility Inc., Kinaxis Inc., and IBM Corporation.