Which vendors will lead the SCP market?
The turmoil that has hit the SCP market is reflected in our updated Magic Quadrant (see Note 1 and Figure 1). Many of the consumer-oriented SCP vendors, such as Manugistics, Logility and Numetrix, have suffered falling growth rates and financial difficulties due to a combination of internal execution problems and outside market conditions. ERP vendors likewise have seen growth rates tumble for their transactional functionality, with many looking to SCP as an important future revenue stream. Our new Magic Quadrant reflects the continuing execution challenges facing most vendors, but also, more encouragingly, an increase in visionary SCP products aimed at specific market segments.
The Magic Quadrant Process
To be included in the SCP Magic Quadrant requires a (believable) vision for a multiproduct SCP suite (e.g., products that may include network planning, capacity planning, demand planning, manufacturing planning and scheduling, distribution and deployment planning, or transportation planning) with an effective distribution channel. The Magic Quadrant is a graphical portrayal of vendor performance in a market segment. The analysis is focused around four major areas: viability, service/support, features/functionality, and technology. The ability-to-execute axis provides a GartnerGroup view of how well a vendor performs today. The vision axis provides a GartnerGroup view of how well a vendor will do in the future based on the GartnerGroup view of where a market is headed. The Magic Quadrant is a means to understand vendor positioning and to set performance expectations for vendors. Recommended vendors might be found in all quadrants, not simply in the leaders box, and vendors may be appropriate for only specific vertical markets. We can describe each Magic Quadrant sector as follows:
Niche quadrant: Either focuses on a small segment of the market and does it well, or is unfocused and does not out-innovate or outperform others.
Challengers quadrant: Executes well today, may dominate large segments, but is not in synch with market direction.
Visionaries quadrant: Understands where the market is going or has vision of changing market rules, but does not execute well yet.
Leaders quadrant: Executes well today, well-positioned for tomorrow.
The Leaders Quadrant: Manugistics has departed the leaders quadrant, and is now positioned in the visionaries quadrant. Manugistics, which earned slightly more than $200 million in 1998 calendar year revenue, is the second-largest SCP vendor. However, it has had major execution problems since spring 1998 because of a lack of sales execution and a lack of corporate focus on its core markets at a time of increasing ERP competition. Manugistics has since returned its focus to consumer-oriented businesses. i2 is now the only vendor in the leaders quadrant. i2's vision rating has increased because of its "eBPO" initiatives; however, because of execution challenges around eBPO, its ability to execute rating has not increased (see Note 2).
At $362 million in revenue last year, i2 is clearly executing better than any other SCP vendor. In addition, with stated directions around its eBPO, we believe i2 continues to deliver a differentiated vision to the market. However, because eBPO by nature crosses multiple functional units (and thus buying centers and political power centers) in an enterprise, we believe that i2 will be challenged to sell and successfully implement eBPO in a mass market fashion for the next two years. As a result, it has not moved up significantly in ability to execute, but its vision rating has increased. i2's sweet spot remains discrete manufacturers, especially in high tech and electronics. i2 is also making progress in helping apparel and automotive customers address some SCP issues.
Chesapeake and Fygir: Process Manufacturing Experts
AspenTech/Chesapeake differentiates itself for process manufacturers through its deep domain expertise, its comprehensive toolkit of planning applications, and its vision for closed-loop interaction with process control systems. SCT/Fygir has been gaining momentum with its object-based process manufacturing scheduling, planning and distribution software.
The Visionaries Quadrant: Many vendors have moved into the visionaries quadrant, reflecting the overall maturing of product direction and business models in the SCP market. New entrants include AspenTech/Chesapeake, SCT/Fygir and SAP. Being acquired by larger, more-financially viable vendors has enhanced Chesapeake and Fygir's ability to compete in their process-manufacturing target markets (see Note 3). SAP moves into the visionaries quadrant because of its clear commitment to SCP, its disciplined product delivery organization, and functionality like Supply Chain Cockpit. Nevertheless, SAP remains an SCP novice. Its depth of functionality, scalability and performance, implementation methodology and training for APO remain immature, degrading its time-to-value proposition. Thru-Put, which specializes in solving complex manufacturing issues, especially ETO/MTO, has moved onto the visionary/niche dividing line due to its broader product suite (e.g., managerial analytical tools) and innovative customer support initiatives. Of existing visionaries, Logility has moved the most, falling in ability to execute because of financial difficulties.
The Niche Quadrant: With its innovative collaborative SCP strategy oriented toward its focused markets of electronics, aerospace and industrial manufacturers, WebPlan has made the most progress of any niche vendor. Numetrix, which is stabilizing its financial position, has moved up slightly in ability to execute. Baan's supply chain group rose slightly in ability to execute with its CAPS Logistics acquisition, but it remains constrained because of Baan's financial position and integration issues.
|APO Advanced Planner and Optimizer|
|CPG Consumer packaged goods|
|eBPO Electronic business process optimization|
|ERP Enterprise resource planning|
|ETO Engineer to order|
|MTO Make to order|
|SCP Supply chain planning|
Bottom Line: The SCP market will continue its chaotic ways in 1999. Expect more acquisition activity as ERP vendors jump-start their SCP capabilities. Stand-alone vendors must find market segments that they can dominate and defend. To increase the odds of project success, firms selecting SCP systems should continue to weigh heavily a vendor's expertise in solving supply chain issues for their particular industry. This may mean buying tactically from smaller vendors to achieve better time to value.
GartnerGroup's Integrated Logistics Strategies Research Note M-07-9005, 2 April 1999.