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More Hybrid Cloud Supply Chain Management Solutions

Many CIOs will expand eCommerce projects in 2017, and beyond. As a result, the supply chain management (SCM) market will exceed $13 billion in total software revenue by the end of 2017 -- that's up by 11 percent from 2016, according to the latest market study by Gartner.

Worldwide enterprise SCM vendor deployments are likely to exceed $19 billion by 2021, as software as a service (SaaS) enables new cloud-based revenue opportunities.

"Between 2017 and 2021, Gartner forecasts nearly $6 billion in total software revenue will be added to the SCM market," said Chad Eschinger, managing vice president at Gartner. "Digitalization is increasing demand for agility and forcing new business models, which is boosting spending in the SCM market."

Supply Chain Management Market Development

Gartner analysts believe that SCM vendors are already differentiating themselves from competitors by incorporating digital business transformation technologies -- such as mobility, machine learning, in-memory technologies, multi-enterprise visibility and the Internet of Things (IoT), into their offerings.

To remain competitive in this environment, end-user organizations are seeking to discover and exploit value in the huge amounts of data generated throughout their global network of business partners and other connections that make up a modern supply chain.

Moreover, the move to SaaS delivery shifts costs from capital expenditure (capex) to operational expenditure (opex), which makes investment in SCM technology more attractive to smaller companies across the globe, thereby expanding the market and increasing total spending on these technologies.

The SCM market forecast is made up of three core categories: supply chain planning (SCP), supply chain execution (SCE) and procurement. Adoption and associated revenue for SaaS are moving through the market at different rates, with procurement leading the move to cloud services, while SCP is trailing.

Overall, SaaS revenue growth is driven by a combination of factors: vendors moving to cloud-first deployment models, and end-user organizations becoming more accepting of cloud security and appreciating the capabilities and innovation of leading-edge SaaS solutions.

Outlook for SCM Cloud-Based Deployments

By 2021, SaaS deployments are forecast to account for more than 35 percent of total SCM spending. That being said, sales of on-premises software licenses will decline to less than 20 percent of total spending.

Furthermore, hybrid SCM environments with coexisting cloud and on-premises applications are becoming more commonplace, with information hubs and supplier networks dominating the move to public cloud services.

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