The eProcurement Services Market Has Confirmed Its Value as a Standalone Services Opportunity, According to IDC

FRAMINGHAM, MA – MAY 8, 2001 – eProcurement service vendors that responded to the hot eprocurement climate and sowed their seeds early are now reaping fruitful returns. According to IDC, some of the leading vendors in the management consultant and systems integration groups harvested up to half a billion dollars in eprocurement services revenue in 2000 and expect even greater returns in 2001. The market intelligence and advisory firm says exceptional eprocurement services growth in 2000 and the presence of pure play eprocurement service firms confirm this market’s value as a standalone services opportunity.

 

"A mere two years ago, eprocurement services did not exist," said Nelly Zaharinov, senior analyst for IDC’s Supply Chain Services program. "Since then, however, the argument in favor of eprocurement has become compelling. Looking forward, vendors who target indirect eprocurement services should expand their expertise beyond MRO goods to include a large spectrum of other indirect goods categories such as printing services, labor, and media to establish a firm position in the indirect eprocurement market. Broad product category expertise is emerging as an important success factor in indirect eprocurement."

IDC identifies four major types of players in the eprocurement services market: management consultants, systems integrators, pure-play eprocurement services firms, and selected software vendors. According to IDC, the revenue generated by consulting and implementation services far exceeds the revenue from other services lines. However, pure plays, which are newcomers to the market, come with a promising value proposition centered around affordable solutions and ease of use of their service.

Although the impressive financial results of the established eprocurement services firms signal opportunity for all players, several challenges exist. "Keeping abreast of software development becomes a very demanding task, even for large management consultants, while the first and most important challenge for pure plays is to build credibility, gain traction in the market, and achieve profitability," Zaharinov said.

According to IDC, both large and emerging eprocurement services vendors are primarily targeting large companies. However, some vendors are slowly developing lower-priced, less customizable solutions for midtier companies.

IDC’s recently published report eProcurement Services: Management Consultants, Systems Integrators, and Pure Plays Compete in a Developing Market (IDC #B24378) analyzes the eprocurement services market. Target markets and types of projects, number of customers and eprocurement services revenues, strengths and opportunities, challenges, and strategic direction are examined for each category. Additionally, industry trends and market metrics are discussed. Recommendations for vendors competing or thinking about competing in this market are provided.

To purchase this report, contact Jim Nagle at 1-800-343-4952, extension 4549, or at jnagle@idc.com.

About IDC

IDC delivers dependable, high-impact insights and advice on the future of ebusiness, the Internet, and technology to help organizations make sound business decisions. IDC forecasts worldwide markets and trends and analyzes business strategies, technologies, and vendors, using a combination of rigorous primary research and in-depth competitive analysis. IDC provides global research with local content through more than 700 analysts in 43 countries worldwide. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at http://www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

# # #

All product and company names may be trademarks or registered trademarks of their respective holders.