Enterprise Asset Management to Grow to $1.8 Billion in 2006.

Business Editors

DEDHAM, Mass.--(BUSINESS WIRE)--June 5, 2002

The worldwide market for Enterprise Asset Management (EAM) and Computerized Maintenance Management Systems (CMMS) was $1.2 billion in 2001 according to a new ARC Advisory Group study. It is expected to grow at the Compounded Annual Growth Rate (CAGR) of 5.3% over the next five years and reach $1.8 billion in 2006. According to ARC Director of Consulting and author of the study, Houghton LeRoy ([e-mail]), "The majority of the EAM market growth will come from Application Service Provider (ASP) web hosted solutions and electronic Maintenance, Repair, and Operations (eMRO) procurement. The EAM market has matured causing software license sales to decline and customers to request more services for better performance and continuous improvement."

Factors Contributing to Growth

Customer service and support expectations in asset intensive industries has increased, requiring more consulting and continuous improvement services from suppliers. Companies that have seen good benefits are expanding EAM functionality to other groups and facilities. Companies with little or no payback justifications are looking for help establishing key performance indicators to measure ROI. Some are even outsourcing the problem to service providers who offer performance guarantees.

Several EAM suppliers are realizing the strong growth potential for outsourced services such as ASP web hosting and eMRO procurement. Web hosting is a very attractive and cost effective approach for asset management and other enterprise applications. It permits faster implementation, simplifies support, integrates distributed operations, facilitates collaborations, and reduces Total Cost of Ownership (TCO). Customers pay only for needed functionality and can accurately determine their annual costs.

eMRO procurement is also a very beneficial service with strong growth expectations for enterprise suppliers. Companies can significantly reduce purchasing costs and acquire needed equipment and materials much quicker using eMRO. However, EAM suppliers are not alone in this very lucrative market space and will probably not be the dominant players over time. eMRO will continue to generate additional revenues for EAM suppliers but strong competition from other enterprise solution suppliers will prevent it from becoming a major EAM market growth catalyst.

TEAM Evolution

In the search for stronger revenue growth, many suppliers have adopted a Total Enterprise Asset Management (TEAM) model that addresses asset management for all hardware and software assets from shop floor to top floor. This approach requires collaboration between operations, maintenance, financial, and IT groups within a company. It promotes sharing of best practices and important asset information for optimizing performance, availability, and quality. TEAM provides EAM suppliers with many new opportunities for revenue growth in management of infrastructure, software, service, and condition monitoring. It demands closer attention to strategic partnerships, acquisitions, and mergers to provide a comprehensive solution. It also opens the door to new competition from service providers and suppliers of process automation, condition monitoring, mobile solutions, IT, and other enterprise solutions. The EAM market will evolve to a TEAM market over the next few years. Look for the first TEAM Study from the ARC Advisory Group this summer.

ARC Advisory Group provides strategic planning and technology assessment services to leading manufacturing companies, utilities, and global logistics providers, as well as to software and solution suppliers worldwide. From Global 1000 companies to small start-up firms, ARC has the strategic knowledge needed to succeed in today's technology driven economy. Further information can be obtained from ARC, Three Allied Drive, Dedham, MA 02026, 781-471-1000, Fax [phone], E-mail [e-mail], Web ARCweb.com.