The global market for supply chain management is expected to grow by nearly 50 percent over the next five years, according to a recent report.
Research firm Gartner estimated that total software revenue in the SCM market would climb to $13 billion this year — up 11 percent compared to 2016 — and grow to $19 billion by 2021.
Analysts attributed the growth primarily to software as a service offerings, which will be fueled by vendors moving to the cloud and end users embracing both SaaS solutions and the need for cloud security.
The report said that vendors are already incorporating mobile, machine learning, the Internet of Things and other technologies into their systems.
"The growing impact of digital commerce will drive greater investment in supply chain analytics, and the lure of faster decision making and eradicating inefficiencies will drive investment in smart machines and IoT and the associated SCM software," Gartner managing vice president Chad Eschinger said in a statement.
The Gartner forecast anticipated that SaaS would account for more than 35 percent of total spending on supply chain management in 2021, while on-premises applications would fall to 20 percent of the market.
Analysts noted that hybrid SCM systems are already increasingly commonplace. Information hubs and supplier networks are leading the embrace of cloud-based systems.
In addition, the study argued that the shift in spending from capital to operational expenditures is more likely to attract smaller businesses and companies in emerging markets.
"Digitalization is increasing demand for agility and forcing new business models, which is boosting spending in the SCM market," Eschinger said.