ARC Sees ERP Market Turning Positive with Expanding European Union.

Business Editors

DEDHAM, Mass.--(BUSINESS WIRE)--April 26, 2004

The European Union, previously known as the European Community, is currently comprised of fifteen countries and some 370 million people with 11 official languages, and share the common institutions and policies that have brought EMEA to be the leading geographical region implementing ERP solutions. The worldwide market for ERP was $9.10 billion in 2003 and is forecasted to be over $12 billion in 2008, growing at a Compounded Annual Growth Rate (CAGR) of 5.7 percent over the next five years, according to a new ARC Advisory Group study (www.arcweb.com).

The European Union, created after World War II to unite the nations of Europe, economically surpassed North America as the leading ERP region in 2002, and it continues that trend in 2003. "The European Union is the largest economic entity in the world and it is now solidified even further by the single currency, the euro. The European Union will become even a larger economic entity in 2004, and it is a key element of the growing ERP market," according to ARC Analyst Steve Clouther ([e-mail]), the principal author of ARC's "ERP Software and Services Worldwide Outlook."

European Union, a Major Economical Force

In 2004, Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Cyprus and Malta will all become members of the European Union. This 40 billion euro expansion will push Europe's borders to Russia and the Middle East. It will open up the markets of Eastern Europe and inevitably lead to more manufacturers requiring ERP solutions in these countries over the forecast period of this study.

The European Union is working out trade agreements with Mercosur -- an economic entity comprised of Argentina, Brazil, Paraguay, and Uruguay -- which represents the fourth largest economic entity worldwide. It has more than 200 million consumers and boasts a combined GDP of more than $1 trillion. "Mercosur is now among the fastest growing markets in the world, and any trade relationship with the European Union will be a definite win-win situation for both entities," continued Clouther.

Process Industries, an ERP Market Waiting to Happen

While process industries have lacked ERP solutions designed for the idiosyncrasies of the process environment, this sector remains relatively strong in its adoption of ERP. This sector will see strong growth in excess of 5 percent CAGR over the forecast period as solutions become more robust and vendors develop and support more vertical solutions for the critical process industries. Particularly strong areas of growth will be in the food & beverage and pharmaceutical industries. The consumer packaged goods and food & beverage industries, as they expand to serve the global market, will leverage ERP solutions for better brand management, regardless of where product is manufactured.

Services, a Dominate Factor in ERP Solutions

Revenues from ERP related services (consulting, implementation, training, and maintenance) represent 70 percent of the total ERP revenues in 2003, and this will continue to drive the successful growth of the ERP market. While Maintenance/Support services account for a large percentage of the service revenues, more value-added services for the solution will kick in over the period of the report. In conjunction with the potential growth within the process industries, value-added services play a key role in vertical process industry solutions and fast track implementations.

Note to Editors: This document can be used with attribution to ARC Advisory Group. For a graphic containing "Enterprise Resource Planning Business Worldwide in $ Billions", please contact [e-mail].

Founded in 1986, ARC Advisory Group has grown to become the Thought Leader in Manufacturing and Supply Chain solutions. No matter how complex your business issues, our analysts have the expert industry knowledge and first-hand experience to help you find the best answer. We focus on simple yet critical goals: improving your return on assets, operational performance, total cost of ownership, project time-to-benefit, and share-holder value. Further information can be obtained from ARC, Three Allied Drive, Dedham, MA 02026, 781-471-1000, Fax [phone], E-mail [e-mail], Web www.arcweb.com.