Dedham, Massachusetts; February 28, 2007: The European Collaborative Production Management (CPM) software market is in flux. Over the next five years, the market is expected to grow at a compounded annual growth rate (CAGR) of 12.7%.
In 2006, the CPM software and service market was worth $889.6 million and is forecasted to exceed $1.6 billion by 2011 according to a new ARC Advisory Group study. Beneath the steady growth lies turmoil. Traditionally, the European market was supplied by small companies employing 20 to 30 people that sold point solutions to plant managers within a particular industry.
“Different, disparate, and dysfunctional point solutions aren’t working for the leading manufacturers,” according to European Research Director Simon Bragg, the principal author of ARC’s “Collaborative Production Management Systems Outlook for Europe.” To improve supply chain performance, leading manufacturers have already implemented enterprise-wide ERP and supply chain solutions. Today’s global manufacturing enterprise must coordinate production and distribution across multiple plants. These manufacturers want a standard CPM suite in every plant that interoperates with their enterprise systems. Such systems improve enterprise-wide supply chain performance, enhance return on assets, support continuous improvement programs, and simplify regulatory compliance.
User’s Selection Criteria Is Changing
Leading manufacturers want suppliers offering global support, financial stability, technology that their IT department can maintain, interoperability with existing ERP and supply chain systems, and appropriate functionality for every plant. Instead of selling point solutions to plant managers and automation engineers, leading manufacturers are assembling a selection team of senior managers from their head office and from multiple plants. More often than not, the CIO is part of the selection team, demonstrating that CPM is becoming “enterprise software” rather than an automation solution.
The European CPM Market Is Consolidating
The European market is highly fragmented. There are over 110 suppliers active in the market, which are profiled in the study. However, 17 suppliers account for about 60% of the total software and service market, and further consolidation and concentration is expected. The leading suppliers are now the major automation and ERP suppliers, instead of point solution providers. Nevertheless, most of the other suppliers are leaders in particular regions and industries, and should not be ignored.
User’s purchasing requirements will drive consolidation, as relatively few suppliers can meet these requirements. These purchasing requirements are also driving differential rates of growth across industries, platforms, and functionality. For instance, the Tier 1 segment will see above average growth, and J2EE platforms will gain increased traction. Analytics that support continuous improvement programs will become “must have” functionality.
Wide Diversity in Regional Growth Rates
Germany, Austria, and Switzerland are the homes of advanced manufacturing within Europe, and this region leads the adoption of CPM solutions. However, the concept of collaborative manufacturing and CPM is rapidly gaining traction in France and the Mid East.
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