Despite the adverse economic conditions that have severely affected other applications software segments, project portfolio management (PPM) software licenses continue to grow, according to Gartner, Inc. Worldwide PPM new license revenue grew 36 percent in 2002, totaling $357.7 million, and is expected to increase 18 percent in 2003, to $420.6 million.

"'During periods of economic weakness, organizations have a heightened need to lower costs as their ability to increase revenue is limited,'" said Hams El-Gabri, industry analyst in Gartner's software research group. "'By monitoring project and service delivery, PPM software applications enable organizations to scrutinize their internal processes, provide direct visibility into operations and develop intelligence behind decision making.'"

With portfolio management as the leading driver behind PPM application purchases, other drivers include in-house procurement of IT services, a geographically widespread workforce, and the IT/IS spending slowdown that is forcing organizations to become more efficient. "'However, the unrealistic expectation that the software will cure all ills in IS departments is an inhibitor to growth in this market. The software is only a gateway for diagnosis; the cure will come from the execution,'" said El-Gabri.

Source: "Gartner Says Worldwide PPM Software Market On Pace for 18 Percent Growth in 2003," July 9, 2003

Economic conditions continued to take a toll on the supply chain management (SCM) software industry in 2002, as the market declined 20.5 percent, according to Gartner, Inc. Worldwide SCM new license revenue totaled $2.1 billion in 2002, down from 2001 revenue of $2.7 billion.

"'Economics, user behavior and pressure from ERP and smaller niche players provided serious challenges to SCM providers,'" said Chad Eschinger, principal analyst in Gartner's worldwide software applications research group. "'In this depressed selling environment, Oracle, ARIBA and Manugistics staved off market share advances from vendors within the top 10 in market share such as Freemarkets, JDA, J.D. Edwards and Retek.'"

The sourcing and procurement segment experienced the steepest decline over the last two years with 28 percent negative growth in 2002. The segment declined 23 percent in 2001. Market saturation, continued effects of the dot-com fallout and stalled resurgence of marketplaces continues to inhibit this segment's growth.

Source: "Gartner Says Worldwide SCM New License Software Revenue Declined 21 Percent in 2002," June 23, 2002

As enterprises become much more conservative in spending their IT dollars, worldwide enterprise resource planning (ERP) new license software revenue suffered a 9 percent decline in 2002, according to Gartner, Inc. (NYSE: IT and ITB). In 2002, worldwide ERP new license software revenue totaled $5 billion, down from $5.5 billion in 2001.

While 2002 was not a successful year for software providers, Gartner analysts said ERP application providers were able to reign in what could have been a potentially disastrous year.

"'A shift in buyer behavior, due in part to users' past experiences of software failing to meet expectations, has created a more cautious buyer that seeks smaller, less-expensive pieces of software to quickly drive positive bottom-line results,'" said Chad Eschinger, principal analyst for Gartner's worldwide software applications research group. "'Yet the market performed better, given the current state of world economies, merger and acquisition activity, and the change in buyer behavior. The increased strength of the euro also aided in bolstering what could have been a more serious decline.'"

Source: "Gartner Says Worldwide ERP New License Revenue Decreased 9 Percent in 2002," June 18, 2003

"'Only three of the top 10 vendors were able to grow software revenue in a very challenging year,'" said Carolyn DiCenzo, vice president for Gartner's storage group. "'Hitachi/Hitachi Data Systems, which sells its storage array software directly, and through Hewlett-Packard and Sun Microsystems, saw 77 percent growth in 2002.'"

"'The depressed economy, resulting in tight spending and pressure on product pricing, has finally taken its toll on the storage software market,'" DiCenzo said. "'Infrastructure and data management software will remain under pressure as long as server and array sales are depressed. Device and storage resource management tools continue to report growth.'"

Source: "Gartner Says Worldwide Storage Management Software Market Recorded its First Ever Revenue Decline in 2002," April 15, 2003