The warehouse management system (WMS) market may provide a ray of sunshine in an otherwise cloudy enterprise software sector. According to data released last month by Massachusetts-based ARC Advisory Group, the WMS market grew by close to 5 percent in 2002.
The recent past was not so good. Between 2000 and 2001, WMS sales worldwide shrank by 6 percent, while falling by almost 12 percent in North America. WMS applications faced a natural downturn in sales following the surge of buying from the e-fulfillment "boomlet" a few years back. Adding to the downward pressure on the WMS market was the slowdown in the global economy. Says ARC's Steve Banker, service director, supply chain management, "The bounce-back in revenues this year is not a harbinger of fast growth in the future. We are forecasting a cumulative average growth rate of under 5 percent for the coming five years. This is a mature overall market."
Though WMS vendors may not view it in the same light, analysts believe that this projection for relatively slow growth represents good news for software buyers. Typically, vendors in a mature market are forced to reduce prices and add new product features in order to compete." We have seen prices fall significantly in this market," says Banker. "We are also seeing evidence that the falling prices are leading to the implementation of WMS across a broader spectrum of distribution centers than has historically been the case."