Executive Briefings

Recession 'Brutally Pummels' Warehouse Management System Market

We first saw signs of the recession emerging in 2007. In 2008, warehouse management system market revenues shrank slightly year over year. However, implementations can take several months; backlog projects protected many suppliers' revenues in 2008.  By 2009, the backlog was gone.  The global recession brutally pummeled the WMS market in 2009.

According to Steve Banker, service director for supply chain management at the ARC Advisory Group, and the principal author of ARC's Warehouse Management Systems Worldwide Outlook Study, "The market has lost five years of market growth. The global 2005 WMS market was bigger than the market in 2009."

Expected Market Consolidation Fails to Occur
Despite the woeful performance of the WMS market, there was little consolidation in the market.  Maintenance revenues served as a key firebreak in this market, helping to keep the market afloat.  For a software company, the largest costs are in labor.  The combination of maintenance revenues, downsizing, and wage reductions kept suppliers financially solvent.

SaaS Continues to Grow
Even in bad markets, it is often possible to find segments that are continuing to grow.  In the WMS market, SaaS (Software as a Service) multi-tenant and hosted solutions continue to be an area of growth.  This niche is experiencing double digit growth, albeit from a small base.

Can the WMS Market Resume Growth?
The good news is that the global recession is coming to an end.  But much uncertainty remains.  Will we have a double-dip recession? Will growth return to prerecession levels or will it remain lower than the global growth we saw before the recession for the foreseeable future? Will there be a surge in pent-up demand? ARC is forecasting growth in this market, although at lower than average historical rates.

Source: ARC Advisory Group

We first saw signs of the recession emerging in 2007. In 2008, warehouse management system market revenues shrank slightly year over year. However, implementations can take several months; backlog projects protected many suppliers' revenues in 2008.  By 2009, the backlog was gone.  The global recession brutally pummeled the WMS market in 2009.

According to Steve Banker, service director for supply chain management at the ARC Advisory Group, and the principal author of ARC's Warehouse Management Systems Worldwide Outlook Study, "The market has lost five years of market growth. The global 2005 WMS market was bigger than the market in 2009."

Expected Market Consolidation Fails to Occur
Despite the woeful performance of the WMS market, there was little consolidation in the market.  Maintenance revenues served as a key firebreak in this market, helping to keep the market afloat.  For a software company, the largest costs are in labor.  The combination of maintenance revenues, downsizing, and wage reductions kept suppliers financially solvent.

SaaS Continues to Grow
Even in bad markets, it is often possible to find segments that are continuing to grow.  In the WMS market, SaaS (Software as a Service) multi-tenant and hosted solutions continue to be an area of growth.  This niche is experiencing double digit growth, albeit from a small base.

Can the WMS Market Resume Growth?
The good news is that the global recession is coming to an end.  But much uncertainty remains.  Will we have a double-dip recession? Will growth return to prerecession levels or will it remain lower than the global growth we saw before the recession for the foreseeable future? Will there be a surge in pent-up demand? ARC is forecasting growth in this market, although at lower than average historical rates.

Source: ARC Advisory Group