Since 2005, the supply chain management market has grown at a 7-percent compound annual growth rate.  And the growth rate would have been much higher were it not for the global economic downturn that started pinching in 2008 and hit with full force in 2009.  However, during that time frame, SaaS-based SCM solutions grew by a CAGR in excess of 20 percent.

By ARC's definition, the SCM market includes supply chain execution -production, warehouse, and transportation management - as well as supply chain planning - strategic, manufacturing, and inventory planning.

"Historically, SaaS has enjoyed a significant market presence only in the transportation management market," according to Steve Banker, service director for SCM at the ARC Advisory Group, "but that is changing.  SaaS solutions will grow significantly faster than traditional software and services." Banker is the principal author of ARC's  "Supply Chain Management Worldwide Outlook: Market Analysis and Forecast Through 2014."

Software-as-a-Service can encompass either multi-tenant solutions or hosted solutions particular to an individual customer.  The TMS market is the only SCE market where SaaS is well entrenched.  In TMS, SaaS solutions win not just because of lower price points, but also because they leverage the power of the network.  Transportation optimization has little value if companies can't successfully tender the optimized loads.  Networked SaaS TMS solutions have a key advantage in on-boarding new carriers and in the data quality of the messaging with those carriers.

But in 2008, SaaS emerged in the production management and supply chain planning markets.  In 2009, SaaS made significant progress in the warehouse management systems market. 

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