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MARKET AN ALYSIS

Croatia Enterprise Application Softw are Market 20112015


Forecast and 2010 Vendor Shares
Ivan Juras

IDC OPINION

IDC Adriatics, Srednjaci 8, 10 000 Zagreb, Croatia

Tel. +385 1 30 40 050 www.idc-adriatics.com

The enterprise application software (EAS) market in Croatia decreased year on year
in 2010 to $37.54 million. The negative influence of the crisis that started in 2008 and
a lack of large projects were the main reasons for the decline.
Enterprise resource management (ERM) applications were the most popular
modules on the Croatian EAS market in 2010, followed by supply chain
management (SCM) solutions, and operation and manufacturing applications
(OMA). Business analytics (BA) applications was the fourth biggest functional
category on the Croatian EAS market last year, with customer relationship
management (CRM) remaining in last place.
The retail sector continued as the top vertical in terms of EAS license and
maintenance (L&M) revenue in Croatia in 2010. Wholesale jumped to second
position and was the only top five vertical to post growth, thanks to the strong
presence of leading EAS vendors Microsoft Hrvatska and IN2. Process
manufacturing, healthcare, and discrete manufacturing accounted for the rest of
the market L&M revenue in the country last year.
Organizations in the small and medium-sized business (SMB) segment remained
the country's top spenders in the EAS market in 2010 from the end-user
perspective. This market segment has the greatest potential to lead the recovery
and growth of the local EAS market over the forecast period.
Vendors and their partners should focus on new delivery models such as cloud
computing and should make a priority of offering extended functionalities to
existing clients. Maintenance revenues from existing installations became very
important during the crisis and will continue to record growth during the recovery
period. Customer satisfaction should be a key market strategy, followed by the
acquisition of new clients.

Filing Information: June 2011, IDC #ER02T, Volume: 1


Central and Eastern European Enterprise Application Software: Market Analysis

TABLE OF CONTENTS
P
In This Study

Methodology ............................................................................................................................................. 1
Executive Summary .................................................................................................................................. 1
S i t u a t i o n O ve r v i e w

Market Characteristics .............................................................................................................................. 2


Information Technology Market Overview ......................................................................................... 2
Drivers ........................................................................................................................................ 2
Inhibitors ..................................................................................................................................... 3
The Structure of the EAS Market in the Croatia ........................................................................................ 3
Overview of the EAS Market by Functional Area ...................................................................................... 8
Enterprise Resource Management .................................................................................................... 9
Supply Chain Management ............................................................................................................... 10
Operations Management Applications ............................................................................................... 11
Customer Relationship Management ................................................................................................ 12
Business Analytics............................................................................................................................. 13
Overview of EAS Sales by Operating Environment .................................................................................. 14
Overview of EAS L&M Revenue and Installed Base by Vertical Market ................................................... 15
Overview of EAS L&M Revenue and Installed Base by End-User Market Segment................................. 17
Future Outlook

19

Forecast and Assumptions ....................................................................................................................... 19


Top Three Key Forecast Assumptions .............................................................................................. 19
Key Forecast Assumptions ................................................................................................................ 20
Forecast ............................................................................................................................................ 23
Market Context ......................................................................................................................................... 24
Essential Guidance

25

Learn More

25

Related Research ..................................................................................................................................... 25


Definitions ................................................................................................................................................. 25
Functional Markets ............................................................................................................................ 26
General Functional Definitions ................................................................................................... 26
Applications Market Definitions.......................................................................................................... 27
Enterprise Resource Management Applications......................................................................... 27
Financial Accounting Applications ....................................................................................... 28
Human Capital Management............................................................................................... 29
Payroll Accounting............................................................................................................... 32
Procurement........................................................................................................................ 32
Order Management ............................................................................................................. 34
Financial Performance and Strategy Management Applications ......................................... 34
Project and Portfolio Management ...................................................................................... 35
Enterprise Asset Management ............................................................................................ 35
Supply Chain Management Applications .................................................................................... 36
Logistics .............................................................................................................................. 36
Production Planning ............................................................................................................ 36
Inventory Management........................................................................................................ 36
Operations and Manufacturing Applications ............................................................................... 37
Services Operations Management ...................................................................................... 37

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TABLE OF CONTENTS Continued


P
Manufacturing ..................................................................................................................... 37
Other Back Office ................................................................................................................ 37
Customer Relationship Management Applications ..................................................................... 38
Sales ................................................................................................................................... 38
Marketing ............................................................................................................................ 39
Customer Service ................................................................................................................ 40
Contact Center .................................................................................................................... 41
Data Access, Analysis, and Delivery Software ........................................................................... 41
End-User Query, Reporting, and Analysis........................................................................... 41
Advanced Analytics Software .............................................................................................. 42
Operating Environment Definitions .................................................................................................... 42
Methodology ............................................................................................................................................. 43
Introduction ........................................................................................................................................ 43
Dimension 1 Functional Market Classification ................................................................................ 43
Dimension 2 Competitive Market Classification .............................................................................. 44
EAS Criteria ....................................................................................................................................... 44
Research Sources and Methodology................................................................................................. 45
Research Sources ...................................................................................................................... 45
Notes on Forecasting ................................................................................................................. 46

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LIST OF TABLES
P
1

Vendor Market Share of EAS L&M Revenue in Croatia, 2010 .................................................... 7

Vendor Market Share of ERM L&M Revenue in Croatia, 2010 ................................................... 10

Vendor Market Share of SCM L&M Revenue in Croatia, 2010 ................................................... 11

Vendor Market Share of OMA L&M Revenue in Croatia, 2010 ................................................... 12

Vendor Market Share of CRM L&M Revenue in Croatia, 2010 ................................................... 13

Vendor Market Share of Business Analytics L&M Revenue in Croatia, 2010 ............................. 14

EAS L&M Revenue by Database Installation Environment in Croatia, 2010 ............................... 15

EAS L&M Revenue by Vertical Market in Croatia, 2010 ............................................................. 16

EAS Installed Base by Vertical Market in Croatia, 2010 .............................................................. 17

10 EAS Revenue by Market Segment in Croatia, 2010 ................................................................... 18


11 EAS Installed Base by Market Segment in Croatia, 2010 ........................................................... 19
12 Top 3 Assumptions for the Croatia EAS Market, 20112015 ....................................................... 20
13 Key Forecast Assumptions for the EAS Market in Croatia, 20112015 ....................................... 21
14 Forecast and Analysis of EAS L&M Revenue by Vertical Market in Croatia 20112015 ............ 23
15 Forecast Comparison of the EAS Market (US$M) in Croatia, 20112015 .................................. 24

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LIST OF FIGURES
P
1

Vendor Market Share of EAS L&M Revenue (US$M) in Croatia, 2010 ........................................ 2

EAS L&M Revenue (US$M) by Functional Area in Croatia, 2010 ................................................ 9

EAS L&M Revenue (US$M) by Operating System in Croatia, 2010 ............................................ 15

EAS L&M Revenue (US$M) by Vertical Market in Croatia, 2010 ................................................. 16

EAS L&M Revenue (US$M) by Market Segment in Croatia, 2010 ............................................... 17

EAS Installed Base by Market Segment in Croatia, 2010 ............................................................ 18

New 2010 EAS Installations by Market Segment in Croatia ......................................................... 19

Forecast Comparison of the EAS Market (US$M) in Croatia, 20112015 ................................... 24

IDC's Software Taxonomy, 2010 .................................................................................................. 27

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IN THIS STUDY
Methodology
See the Learn More section at the end of this document for information on the
methodology.

Executive Summary
In 2010, the EAS market in Croatia contracted 7.3% year on year to $37.54 million.
The negative influence of the financial crisis that started in 2008 and a lack of large
projects were the main reasons for the decline.
SAP remained the top vendor on the Croatian EAS market in 2010, although the
company's L&M revenue in the country decreased 29.4% year on year to $5.80
million, representing 15.5% of the EAS market. Microsoft held on to second position,
with EAS L&M revenue of $5.54 million and 14.8% share (compared with $4.99
million and 12.3% share in 2009). IN2 captured third place, with L&M revenue of
$3.63 million and 9.7% share. Laus CC was in fourth place, with 6.3% share, after its
EAS L&M revenue increased to $2.38 million in 2010. Oracle rounded out the top five
vendors, with revenue of $1.91 million and 5.1% EAS market share. Overall,
international vendors captured 39.7% of the total EAS L&M revenue on the Croatian
market in 2010, down 2.6 percentage points year on year, while local vendors
accounted for the remaining 60.3%.
The retail sector remained Croatia's largest vertical market in terms of EAS spending,
accounting for $8.47 million and 22.6% share. The wholesale sector leapt to second
place after spending $5.07 million in 2010 to claim 13.5% share. Process
manufacturing dropped to third position, with organizations in this sector spending
$3.60 million to represent 9.6% share. Discrete manufacturing again ranked fourth,
generating EAS L&M revenue of $2.91 million for 7.7% share. The healthcare sector
jumped to fifth place in 2010 and reached $2.90 million, just a shade behind the
discrete manufacturing vertical.
ERM remained the leading segment in Croatia's EAS market in 2010, valued at
$24.48 million and constituting 65.2% of the total market. SCM was second, capturing
13.0% of the EAS market, with a value of $4.88 million, while third-ranked OMA held
11.4% share, at $4.26 million. The BA and CRM markets were valued at $2.25 million
and $1.66 million for the year, respectively.
The negative influence of the financial crisis hit all sectors in Croatia hard in 2010,
mostly in the form of cancelled or postponed projects. The first signs of recovery are
not expected to appear before the second half of 2011, and the Croatian EAS market
will not rebound to pre-crisis levels before 2012.
IDC expects the Croatian EAS market to expand at a compound annual growth rate
(CAGR) of 9.5% over the 20112015 forecast period to reach a value of $59.19
million in 2015.

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FIGURE 1
Vendor Market Share of EAS L&M Revenue (US$M) in Croatia,
2010

Source: IDC, 2011

SITUATION OVERVIEW
Market Characteristics
Information Technology Market Overview
In 2010, the Croatian IT market totaled $1.06 billion, down 5.3% year on year in U.S.
dollar terms. Measured in local currency, the market declined 1.3% from the previous
year. Hardware accounted for 49.6% of the total market, while software made up
15.3% share, and IT services 35.1%.
IDC expects IT spending in Croatia to be nearly flat, rising only 0.1% year on year in
2011. However, growth will accelerate to a CAGR of 8.2% across the five-year
forecast period. Expenditures on IT products and services are expected to total $1.56
billion in 2015.
Drivers

EU Accession: Croatia is expected to complete EU accession negotiations in


June 2011 and become an EU member in 2013. Considerable pre-accession
projects and initiatives have driven IT investments in the country, directly in the
public sector, and in the business sector (all businesses) through the
improvement of the competitive environment. EU membership is considered an
important driver for IT spending in the country.
Broadband on the Rise: At the end of December 2010, the number of
broadband users in Croatia reached 1,132,312, an increase of 20.8% compared
to 2009.

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Regulatory Compliance: Numerous regulatory compliance requirements,


backed by IT solutions, have been driving the Croatian IT market. These include
adjustments to a new EU-mandated payments system that entered into force at
the beginning of 2011; surveillance and statistics reporting to regulators like the
Croatian National Bank, HANFA, and the Telecom Regulating Agency; BASEL II
and III regulations (for banks); solvency alignments (for insurance houses)
including risk management solutions (scoring models); FMC Public Internal
Financial Control (INTOSAI); and PCIDSS (security standards in the credit card
industry). Likewise, voluntary compliance with ITIL, COBIT, and ISO 9001 norms,
introducing best practices and enhancing the quality of IT services provisioning,
goes hand in hand with these objectives.
eBusiness Proliferation: The introduction and promotion of electronic business,
particularly the use of e-invoices, has been supported by the document
eBusiness Development Strategy in Croatia, 20072010. The new 20112013
strategy was adopted in 2010, under the auspices of the Trade Department of
the Ministry of the Economy.
Inhibitors

Falling CAPEX: CAPEX in the most intensive IT spending verticals telecom


and finance decreased in 2010, reflecting declining turnovers and eroding
margins in those industries.
State Cuts in IT Spending: IT projects financed from the state budget declined
in 2010 due to governmental budgetary constraints.
Adverse Investment Climate: Despite the efforts of the government (largely
influenced by EU accession), Croatia still suffers from corruption, an inefficient
legal system, slow resolution of land registry issues, and a non-transparent
administration. This makes the Croatian investment environment uncertain and
unstable compared with those of some other transitional countries.
Worsening Illiquidity: Overdue payments reached EUR 5.21 billion by the end
of March 2011. The practice of not paying current obligations among economic
entities has been a serious handicap to business activity in the country.
Tough Economic Circumstances: Croatian gross domestic product (GDP)
contracted 1.2% in 2010, down from the 6.0% growth recorded the previous year.
A number of jobs have been lost in the business sector due to the persistent
recessionary environment. The unemployment rate rose from 16.1% in
December 2009 to 18.3% in December 2010, and a further increase is expected.

The Structure of the EAS Market in the


Croatia
In 2010, the Croatian EAS market contracted 7.3% year on year to $37.54 million,
mainly due to the crisis and postponed and/or cancelled large public projects in 2009.
Due to a strengthening of the Croatian kuna against the U.S. dollar in 2010, in local
currency terms the value of the total EAS market decreased 3.4% year on year.
As a segment, ERM held on to first position, with value of $24.48 million and 65.2% of
the total EAS market. SCM placed second, capturing 13.0% of the EAS market based
on value of $4.88 million, while third-ranked OMA took 11.4% share, with $4.26

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million. In 2010, the BA and CRM markets were valued at $2.25 million and $1.66
million, respectively. All market segments declined in 2010 compared to 2009.
Although dropping 29.4% in revenue terms, SAP was again the leader on the
Croatian EAS market, reporting L&M revenue of $5.80 million for 15.5% share. The
decrease in revenue was caused by a lack of new, large EAS projects, leading the
vendor to focus on BI tools and tools used for optimization and systems upgrade at
existing SAP clients. In 2010, SAP increased its installed base through three new
clients The Fund for Professional Rehabilitation, Pharmas, and Piramida to make
a total of 106. The vendor's Croatian partner network included 17 companies in 2010,
compared to 12 in 2009. SAP employs a staff of 19 and has more than 300 certified
consultants in the country. In 2011, it will focus on informatization of the public sector
and the development and usage of mobility solutions.
Microsoft held on to its second position on Croatia's EAS market in 2010, reaching a
value of $5.54 million for 14.8% share. The company's revenue grew by 11.0% year
on year and it increased its share on the total EAS market by 2.4 percentage points.
The company's EAS revenue increased due to the acquisition of 33 new clients in
2010, most of them SMBs. The largest EAS customers last year were Auto Kreso,
Puris, and Petrokov. Through its well-developed partner network, Microsoft
maintained installed base of 245 companies. With the Stratus solution, developed by
local partner Fortempo and based on the cloud concept, Microsoft wants to fortify its
position in the SMB segment. Besides EAS solutions in the cloud, Microsoft will also
concentrate on Dynamics AX solutions in the healthcare vertical.
IN2 Group was in third position on the Croatian EAS market in 2010, reporting EAS
revenue of $3.63 million for 9.7% share. The leading local vendor, IN2 Group has
traditionally focused mainly on Oracle's EAS solution. In 2007, it acquired two local
EAS companies, Info Opus and Grad, and developed its EAS model specialized for
the retail vertical. IN2 Group will strengthen its position in the healthcare vertical by
offering Dynamics AX solutions on the local market.
Laus CC remained in fourth place on the local EAS market last year, with revenue
approaching $2.38 million and 6.3% share of the overall market. Laus CC gained only
one new client in 2010 and the bulk of its EAS revenue came from the renewal of its
maintenance contracts with existing customers. With installed base of 23 companies,
Laus CC will focus on low-cost specific solutions for particular market segments in the
future as a supplement to existing EAS solutions.
Oracle retained fifth place in 2010, recording $1.91 million in EAS revenue for 5.1%
share on the overall EAS market. The company acquired no new EAS clients in
Croatia in 2010, but carried on some implementations that had started the previous
year. Oracle focused on providing ERM and BI and was mostly present in the
government sector. It is expected to increase its installed base in the SMB segment
and should remain strong competition for other international vendors by offering its
eBusiness Suite.
The top five vendors together captured 51.3% of the Croatian EAS market in 2010,
down from 50.4% in 2009. The bulk of local vendors with revenue over one million
U.S. dollars led by POINT, PIS, and Enel-Split together recorded $10.66 million
and accounted for 28.4% share on the overall market.
Times Computers, a local EAS vendor specialized in the retail and wholesale
verticals, merged with ITSM Partner in July to form one company, ITS Partner.

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In 2010, Alfatec Group, a distributor for global software vendors, acquired the local
company MIPS, which has its own IT system, Apropos, for the medium-sized and
large business segment and EAS solutions specialized for the transportation and
logistics sector.
The retail sector was again the biggest spender on Croatia's EAS market in 2010,
with $8.47 million and 22.6% share. This sector declined 12.2% year on year and lost
1.3 percentage points in overall market share, despite some new installations in the
SMB segment and a sizable installed base. In the retail sector, there were no large
projects in 2010, and EAS vendors focused on maintenance. IDC expects EAS
spending in the retail sector to increase at a CAGR of 9.3% over the five-year
forecast period to reach $13.22 million in 2015.
In 2010, the wholesale sector jumped from third to second position on the Croatian
EAS market, accounting for $5.07 million of revenue and 13.5% share (up from
10.5% share the previous year). Spending in this segment grew 13.5% year on year.
This was due to Microsoft EAS implementation at the company Petrokov and local
vendors' implementations: Spin Informatika and POINT sold their own EAS solutions
to Agrokor and Roto Dynamic, respectively. IDC believes that EAS spending in the
wholesale sector in Croatia will increase at a CAGR of 8.8% over the five-year
forecast period to reach $7.74 million in 2015.
The process manufacturing sector dropped to third place, spending $3.60 million on
EAS solutions in 2010 and recording a year-on-year decline of 17.3% (after a plunge
of 33.6% in 2009) to account for 9.6% of the Croatian EAS market. The influence of
the crisis and a high base year were the main reasons for the steep decline. IDC
predicts that EAS spending in the process manufacturing sector will rise at a CAGR of
10.7% over the five-year forecast period to reach $5.98 million in 2015.
The discrete manufacturing sector in Croatia spent $2.91 million on EAS in 2010,
which was 10.8% less than the year before. This sector captured 7.7% share of the
overall EAS market, down 0.3 percentage points from 2009. Reduced IT consumption
in the discrete manufacturing sector was the major factor behind the decline. IDC
believes that EAS spending in the discrete manufacturing sector will increase at a
CAGR of 9.9% over the five-year forecast period to reach $4.65 million in 2015.
The healthcare sector in Croatia switched positions with transportation to become the
fifth vertical by spending on EAS solutions in 2010, with $2.90 million and 7.7%
market share. Growth of 16.6% year on year can be attributed to SAP EAS
implementation at the company Pharmas and the maintenance of installed EAS
applications in HZZO by leading local vendor IN2, which specializes in the healthcare
vertical through its firm Grad. IDC believes that EAS spending in the healthcare
sector will increase at a CAGR of 11.7% over the five-year forecast period to reach
$5.05 million in 2015.
The local government sector registered strong growth of 37.5% in 2010 to total $0.9
million. This uptick can be attributed to the constant presence of Laus CC, the fourth
biggest vendor on the Croatian EAS market, in this vertical. Laus CC, based in
Dubrovnik, is constantly improving its EAS solutions and enjoys stable cooperation
with local government offices in the city.
In 2010, medium-sized organizations remained the largest source of EAS L&M
revenue on the Croatian market, investing $12.92 million, a decline of 9.5% year on
year. The combined spending of small businesses and small offices reached $9.71

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million although recording a drop of 1.6% from 2009. The large business segment
ranked third, with EAS spending of $8.76 million, growing 11.1% year on year. The
very large business segment again spent the least on EAS solutions in Croatia last
year ($6.15 million), decreasing 27.1% compared with the previous year. Despite a
decline in spending, the SMB sector remained the largest spender in 2010, due to the
strong presence of leading EAS vendors like SAP, Microsoft, and Oracle. IDC
believes that the unsaturated SMB segment still has good potential for growth in the
forecast period.
In terms of the number of installations, the small office and small business segments
together accounted for 3,040 active EAS users in Croatia, down 2.3 percentage
points in the total market in 2010. Medium-sized organizations' share rose 1.3%,
while the large and very large organization segments together accounted for 284
installations among the country's active EAS users.
IDC believes that vendors on the Croatian EAS market will focus on expanding their
offerings and upgrading their existing systems in 2011. In currently deployed IT
systems, significant progress is expected in BI tools, risk management, and document
management applications.

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TABLE 1
Vendor Market Share of EAS L&M Revenue in Croatia, 2010

SAP d.o.o.
Microsoft Hrvatska
IN2
LAUS CC d.o.o.
Oracle Hrvatska
POINT d.o.o.
PIS d.o.o.
Enel-Split d.o.o.
Datalab
Spin Informatica
LASER LINE
Login
Omega software
Istra informatiki ininjering
INFOMARE d.o.o. Zagreb
D.A.M.
SVAM plus d.o.o.
ITS Partner
Infodesign d.o.o.
ININ
Infosistem d.d.
MIPS d.o.o.
Infor
TIRON
N-Lab
Azelija
Epicor Scala
Mesonic
Others
Total

Value (US$M)

Share (%)

5.80
5.54
3.63
2.38
1.91
1.84
1.56
1.53
1.37
1.35
1.18
1.09
1.09
1.02
0.80
0.54
0.53
0.49
0.39
0.34
0.29
0.27
0.17
0.16
0.16
0.10
0.06
0.06
1.90

15.5
14.8
9.7
6.3
5.1
4.9
4.1
4.1
3.7
3.6
3.1
2.9
2.9
2.7
2.1
1.4
1.4
1.3
1.0
0.9
0.8
0.7
0.4
0.4
0.4
0.3
0.2
0.2
5.0

37.54

100.0

Source: IDC, 2011

Important factors that affected EAS sales in 2010 and which are likely to influence the
market in the future are listed below.
Financial Crisis: The economic crisis and shrinking demand intensified
competitive pressures on the Croatian EAS market. New and planned software
purchases were postponed or narrowed in scope with the aim of optimizing
costs. Faced with declining business, payment problems, and more available
time, numerous EAS vendors reassessed their value chain and marketing mix,
carried out necessary restructuring and cost optimization, while acquiring new
skills and competencies to prepare for the expected market recovery.
Lack of High Profile Implementations: Starting from a high base year, the
2010 EAS market declined because there was a lack of the high-profile
implementations seen in 2009, which were carried out despite the crisis.

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Greater Involvement by International Vendors: Major international vendors


lost some share (2.6%) on the Croatian EAS market in 2010. However, this is
just a temporary effect caused by a high base year in 2009 that was fueled by
some significant implementations. SAP and Oracle have mainly addressed the
large-business segment in the past few years, while Microsoft has focused more
on SMBs. The coming period, however, should see all vendors on the market
increasingly involved in SMB implementations. In addition to educating their
partners and end users, SAP and Microsoft are constantly increasing their
partner networks and number of skilled consultants.
Local Vendors Expanding to Adriatic Region: Domestic vendors continued
their expansion into the region, specifically into Bosnia and Herzegovina, Serbia,
Montenegro, Macedonia, Albania, and Kosovo. Among the vendors to take this
route have been Laus CC, Point, Datalab, PIS, LogIN, Spin Informatika, Laser
Line, and N-Lab.
Cloud Potential in the SMB Segment: The unsaturated SMB segment has a far
lower penetration rate than does the large business segment, and it also has
obvious budgetary constraints. Unlike the large and very large business
segments, the Croatian SMB segment still offers significant room for growth in
EAS uptake. Microsoft, the second-ranked vendor on the Croatian EAS market,
is focusing on cloud concepts in the SMB segment.
Growth Potential in Process Manufacturing Vertical: Microsoft and partner
Adacta announced the largest implementation in the region in 2011. They are
supplying Nexe Grupa, a leading regional manufacturer of building materials,
with a Dynamics Navision business system, worth $3.27 million.
Installed Base Gaining Importance: In Croatia, EAS vendors generate a
substantial share of their L&M revenue from existing clients. In 2010, 66.0% of
the $37.54 million in EAS revenue derived from sales within the installed base.
The importance of selling add-ons and upgrades to existing clients will increase
in the coming years.

Overview of the EAS Market by Functional


Area
In addition to sizing the overall EAS software market, IDC has segmented EAS into
the secondary markets of enterprise resource management (ERM), supply chain
management (SCM), operations and manufacturing applications (OMA), customer
relationship management (CRM), and business analytics (BA).
Please note that this chapter does not size the entire market for a specific functional
area (i.e., the entire Czech accounting or CRM market) but measures the amount of
revenue that EAS vendors earned in each extended functional area.

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FIGURE 2
EAS L&M Revenue (US$M) by Functional Area in Croatia, 2010

Source: IDC, 2011

Enterprise Resource Management


The enterprise resource management secondary software market includes the
functional markets of financial accounting applications, human capital management,
payroll accounting, procurement, order management, financial performance and
strategy management applications, project and portfolio management, and enterprise
asset management.

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TABLE 2
Vendor Market Share of ERM L&M Revenue in Croatia, 2010

SAP d.o.o.
Microsoft Hrvatska
IN2
LAUS CC d.o.o.
POINT d.o.o.
Oracle Hrvatska
PIS d.o.o.
Datalab
Omega software
LASER LINE
INFOMARE d.o.o. Zagreb
Enel-Split d.o.o.
Login
Spin Informatica
Istra informatiki ininjering
D.A.M.
ITS Partner
Infodesign d.o.o.
SVAM plus d.o.o.
MIPS d.o.o.
Infosistem d.d.
ININ
Infor
Azelija
TIRON
N-Lab
Mesonic
Epicor Scala
Others
Total

Value (US$M)

Share (%)

4.93
3.49
1.94
1.88
1.62
1.43
1.00
0.92
0.87
0.83
0.72
0.66
0.62
0.41
0.31
0.25
0.23
0.20
0.20
0.16
0.15
0.14
0.09
0.08
0.07
0.05
0.03
0.01
1.19

20.2
14.3
7.9
7.7
6.6
5.9
4.1
3.8
3.6
3.4
2.9
2.7
2.5
1.7
1.3
1.0
0.9
0.8
0.8
0.7
0.6
0.6
0.4
0.3
0.3
0.2
0.1
0.1
4.9

24.48

100.0

Source: IDC, 2011

Supply Chain Management


The supply chain management secondary software market includes the functional
markets of logistics, production planning, and inventory management applications.

10

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TABLE 3
Vendor Market Share of SCM L&M Revenue in Croatia, 2010
Value (US$M)

Share (%)

Microsoft Hrvatska
Enel-Split d.o.o.
IN2
PIS d.o.o.
Login
LAUS CC d.o.o.
POINT d.o.o.
Spin Informatica
ITS Partner
SAP d.o.o.
Omega software
SVAM plus d.o.o.
Oracle Hrvatska
Istra informatiki ininjering
Infosistem d.d.
ININ
N-Lab
D.A.M.
Infodesign d.o.o.
MIPS d.o.o.
INFOMARE d.o.o. Zagreb
Infor
Epicor Scala
TIRON
Mesonic
Others

0.94
0.52
0.47
0.39
0.31
0.24
0.22
0.20
0.20
0.17
0.11
0.10
0.10
0.09
0.08
0.07
0.06
0.06
0.05
0.05
0.04
0.04
0.03
0.02
0.01
0.32

19.3
10.7
9.7
8.0
6.3
4.9
4.5
4.2
4.0
3.6
2.2
2.0
2.0
1.9
1.7
1.4
1.3
1.2
1.1
1.1
0.8
0.7
0.5
0.5
0.1
6.5

Total

4.88

100.0

Source: IDC, 2011

Operations Management Applications


The operations management applications secondary software market includes the
functional markets of services operations management, manufacturing operations
management, and other back-office applications.

2011 IDC

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11

TABLE 4
Vendor Market Share of OMA L&M Revenue in Croatia, 2010
Value (US$M)

Share (%)

IN2
Istra informatiki ininjering
Spin Informatica
Microsoft Hrvatska
Enel-Split d.o.o.
Datalab
LAUS CC d.o.o.
D.A.M.
SVAM plus d.o.o.
SAP d.o.o.
PIS d.o.o.
ININ
Infodesign d.o.o.
ITS Partner
Infosistem d.d.
TIRON
Infor
MIPS d.o.o.
Azelija
Mesonic
Epicor Scala
Others

1.15
0.42
0.34
0.28
0.28
0.26
0.24
0.22
0.13
0.12
0.11
0.08
0.08
0.06
0.05
0.05
0.04
0.04
0.03
0.01
0.01
0.27

27.0
9.8
7.9
6.5
6.5
6.1
5.6
5.3
3.1
2.7
2.6
2.0
1.9
1.5
1.3
1.1
0.9
0.9
0.6
0.2
0.1
6.3

Total

4.26

100.0

Source: IDC, 2011

Customer Relationship Management


The customer relationship management secondary software market includes the
functional markets of sales, marketing, customer service, and contact center
applications.

12

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2011 IDC

TABLE 5
Vendor Market Share of CRM L&M Revenue in Croatia, 2010
Value (US$M)

Share (%)

Microsoft Hrvatska
SAP d.o.o.
Oracle Hrvatska
Spin Informatica
Istra informatiki ininjering
LASER LINE
ININ
SVAM plus d.o.o.
PIS d.o.o.
N-Lab
MIPS d.o.o.
Infodesign d.o.o.
Epicor Scala
TIRON
Mesonic
Others

0.50
0.29
0.19
0.14
0.13
0.12
0.05
0.05
0.05
0.03
0.01
0.01
0.01
0.01
0.01
0.07

30.0
17.4
11.5
8.1
7.9
7.1
3.0
2.9
2.8
1.9
0.8
0.7
0.6
0.5
0.3
4.4

Total

1.66

100.0

Source: IDC, 2011

Business Analytics
The business analytics (BA) secondary software market includes the functional
markets of end-user query, reporting and analysis tools, data mining, data marts, data
warehousing tools, and analytical application software.

2011 IDC

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13

TABLE 6
Vendor Market Share of Business Analytics L&M Revenue in Croatia, 2010
Value (US$M)

Share (%)

Microsoft Hrvatska
SAP d.o.o.
Spin Informatica
LASER LINE
Datalab
Oracle Hrvatska
Login
Omega software
Enel-Split d.o.o.
IN2
Istra informatiki ininjering
SVAM plus d.o.o.
INFOMARE d.o.o. Zagreb
Infodesign d.o.o.
LAUS CC d.o.o.
TIRON
N-Lab
PIS d.o.o.
Epicor Scala
Mesonic
Others

0.33
0.29
0.27
0.24
0.19
0.19
0.16
0.11
0.08
0.07
0.06
0.05
0.04
0.04
0.02
0.02
0.02
0.02
0.01
0.01
0.04

14.8
12.9
12.0
10.5
8.6
8.5
7.3
4.8
3.4
2.9
2.7
2.4
1.8
1.7
1.1
0.7
0.7
0.7
0.4
0.3
1.9

Total

2.25

100.0

Source: IDC, 2011

Overview of EAS Sales by Operating


Environment
The data in this chapter illustrates EAS license sales by operating system and
database platform. The data does not reflect revenue generated from hardware, nonEAS license sales, or professional services related to EAS implementations.

14

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2011 IDC

FIGURE 3
EAS L&M Revenue (US$M) by Operating System in Croatia,
2010

Source: IDC, 2011

TABLE 7
EAS L&M Revenue by Database Installation Environment in Croatia, 2010
Value (US$M)

Share (%)

Microsoft
Oracle
IBM
Sybase
Progress
Other

17.04
14.80
2.87
0.57
0.45
1.80

45.4
39.4
7.7
1.5
1.2
4.8

Total

37.54

100.0

Source: IDC, 2011

Overview of EAS L&M Revenue and Installed


Base by Vertical Market
The figure and tables in this chapter track EAS L&M sales by vertical market. IDC's
set of vertical markets is a compilation of the standard NACE categories.

2011 IDC

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15

FIGURE 4
EAS L&M Revenue (US$M) by Vertical Market in Croatia, 2010

Source: IDC, 2011

TABLE 8
EAS L&M Revenue by Vertical Market in Croatia, 2010

Agriculture, Mining and Construction


Discrete Manufacturing
Process Manufacturing
Transportation
Communications & Broadcasting
Utilities
Retail
Wholesale
Banking
Insurance
Other Financial Services
Business Services
Local Government
Central Government
Healthcare
Education
Other
Total

Value (US$M)

Share (%)

2.05
2.91
3.60
2.08
1.91
1.80
8.47
5.07
0.40
0.49
1.07
1.63
0.34
1.85
2.90
0.97
0.00

5.5
7.7
9.6
5.5
5.1
4.8
22.6
13.5
1.1
1.3
2.8
4.3
0.9
4.9
7.7
2.6
0.0

37.54

100.0

Source: IDC, 2011

16

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2011 IDC

TABLE 9
EAS Installed Base by Vertical Market in Croatia, 2010
All Customers
Number (#)

Share (%)

Agriculture, Mining & Construction


Discrete Manufacturing
Process Manufacturing
Transportation
Ccommunications & Broadcasting
Utilities
Retail
Wholesale
Banking & Finance
Business Services
Government
Healthcare
Education
Other

277
421
341
48
31
47
1,024
897
90
352
346
63
32
66

6.9
10.4
8.5
1.2
0.8
1.2
25.4
22.2
2.2
8.7
8.6
1.6
0.8
1.6

Total

4,035

100.0

Source: IDC, 2011

Overview of EAS L&M Revenue and Installed


Base by End-User Market Segment
The figures and tables in this chapter track EAS L&M revenue and installed base by
end-user market segment. IDC's five market segments are based on headcounts at
end-user organizations.

FIGURE 5
EAS L&M Revenue (US$M) by Market Segment in Croatia, 2010

Source: IDC, 2011

2011 IDC

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TABLE 10
EAS Revenue by Market Segment in Croatia, 2010
Value (US$M)

Share (%)

Small Office (<10 Employees)


Small Business (1099 Employees)
Medium Business (100499 Employees)
Large Business (500999 Employees)
Very Large Business (1,000+ Employees)

2.23
7.48
12.92
8.76
6.15

5.9
19.9
34.4
23.3
16.4

Total

37.54

100.0

Source: IDC, 2011

FIGURE 6
EAS Installed Base by Market Segment in Croatia, 2010

Source: IDC, 2011

18

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2011 IDC

FIGURE 7
New 2010 EAS Installations by Market Segment in Croatia

Source: IDC, 2011

TABLE 11
EAS Installed Base by Market Segment in Croatia, 2010
All Customers
Number
Share (%)

New (2010) Installation Customers


Number
Share (%)

Small Office (<10 Employees)


Small Business (1099 Employees)
Medium Business (100499 Employees)
Large Business (500999 Employees)
Very Large Business (1,000+ Employees)

1,870
1,170
711
213
71

46.3
29.0
17.6
5.3
1.8

97
69
64
8
1

40.6
28.9
26.8
3.3
0.4

Total

4,035

100.0

239

100.0

Source: IDC, 2011

FUTURE OUTLOOK
Forecast and Assumptions
Top Three Key Forecast Assumptions

2011 IDC

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TABLE 12
Top 3 Assumptions for the Croatia EAS Market, 20112015
Market Force

IDC Assumption

Significance

Changes to This
Assumption That
Could Affect Current
Forecast

Comment

GDP
Development

GDP contracted 1.2%


in 2010 following a
6.0% slump in 2009. A
mild recovery of
around 1.3% is
expected in 2011,
followed by slightly
higher growth rates in
the following years.

There is a strong
correlation between
economic conditions
and IT spending.

Much depends on the


implementation of
needed structural
reforms, economic
strategy, and policy
shifts. The ability of a
new government to
undertake effective
measures will be
crucial.

The key unknown is


the likelihood of real,
effective measures to
shift the country's
development paradigm
from an importoriented economy to
an export-oriented
economy.

Crisis Duration

Croatia's main
challenge will be
financing public
consumption and
servicing external
debt, in the
atmosphere of an
anemic economy, an
environment of
illiquidity, and major
unemployment. These
factors make Croatia's
medium-term future
uncertain.

The fear of a
prolonged recession
affects business and
consumer confidence
and the willingness to
invest.

The needed structural


reforms, expected in
the first year following
the appointment of the
next government, will
be crucial to the
further development of
the country.

IDC considers the


signals to be mixed as
to whether the
economy is going to
recover; the impact of
expected food and
energy price hikes
remains to be seen.

EU Membership

As of May 2011, 30
out of a total of 35
negotiating chapters
have been closed. The
negotiating process is
expected to be
completed in June
2011. The earliest
likely date for EU entry
is 2012.

The inflow of capital


from regulatory
compliance programs
and adjustments to
meet EU standards
involve massive
technology spending.

The ratification
process by EU
member countries
could delay accession
until 2013 or even the
beginning of 2014.

The degree to which


EU membership would
be a driver of IT
spending in Croatia
depends on the pace
of accession.

Source: IDC, 2011

Key Forecast Assumptions


IDC's forecast of the Croatia EAS market is based on the following assumptions:

20

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2011 IDC

TABLE 13
Key Forecast Assumptions for the EAS Market in Croatia, 20112015
Market Force

IDC Assumption

Impact

GDP contracted 1.2% in 2010


following a 6.0% slump in 2009.
A mild recovery of around 1.3%
is expected in 2011, followed by
slightly higher growth rates in the
following years.

High. IT spending correlates


to the state of economy. The
predicted recovery from 2012
onwards will drive IT spending
in the country.

FDI slumped 79% in 2010 to


EUR 440 million (and 90% from
the 2008 level). Rising
investment risks due to
unfavorable economic conditions
could hamper FDI inflow in the
medium term.

Low. There is a generally


positive correlation between
IT services spending and
growth in FDI, but a moderate
or low correlation with decline
in FDI.

Croatia's main challenge will be


financing public consumption
and servicing external debt, in
the atmosphere of an anemic
economy, an environment of
illiquidity, and major
unemployment. These factors
make Croatia's medium-term
future uncertain.

High. Uncertainty and


budgetary constraints are
reducing (delaying) IT
demand.

As of May 2011, 30 out of a total


of 35 negotiating chapters have
been closed. The negotiating
process is expected to be
completed in June 2011. The
earliest likely date for EU entry is
2012.

High. Adjustments to meet


EU standards will involve vast
technology investment,
particularly in the government
sector.

Parliamentary elections to be
held at the end of 2011 or early
2012 will further impede public IT
investments.

In line with new global trends,


vendors will be focused on the
development and usage of
mobility solutions.

Accelerator/
Inhibitor/
Neutral

Certainty of
Assumption
(Very High,
High, Medium,
Low, Very
Low)

Macroeconomics
GDP Development

Foreign Direct
Investment

Crisis Duration

EU Membership

Parliamentary
Elections









High. Public IT procurement


accounts for about a third of
the total IT spending in the
country.



High. End users prefer to


have most applications
available on a single handheld
device and the ability to have
data access to each platform.



Technology/
Service
Developments
Mobility Solutions

2011 IDC

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21

TABLE 13
Key Forecast Assumptions for the EAS Market in Croatia, 20112015
Accelerator/
Inhibitor/
Neutral

Certainty of
Assumption
(Very High,
High, Medium,
Low, Very
Low)

Market Force

IDC Assumption

Impact

Software as a
Service

The SaaS model is gaining in


importance as an effective tool
for EAS deployment.

High. SaaS will make it easier


for end users to reach
applications located on
software manufacturing
companies' servers. On-line
software is also making it
possible to share one
application among many
potential buyers.



Demand for EAS in Croatia is


maturing, with a transition from
basic infrastructure to more
advanced systems that feature
extended functionalities such as
CRM, BA, and geographic
information system (GIS)
assisted logistics.

High. Implementations
comprising more advanced
functionalities (that provide for
significant and regular
maintenance-derived
revenues) are sustaining
value growth on the EAS
market.



SMBs are gaining access to


more affordable high-quality EAS
solutions tailored to their needs.
This development is set to
continue.

High. As Croatia is a small


country and a small market,
the majority of local
companies fall into this enduser segment.



As the Croatian IT market


expands and project values rise,
global vendors will continue to
increase their direct local
presence.

High. Global vendors will


pursue policies aimed at
educating the market and will
also offer innovative financing
options.



The retail sector will keep its


leading position in Croatia. In
addition to the maintenance of
existing accounts, some new
retail chains will enter the
market.

High. Both existing players


and new entrants will invest in
EAS.



The manufacturing sector has


been seriously hit by the crisis of
2009 and 2010. After the
announcement of the largest
project in the region, moderate
recovery, especially in process
manufacturing sector is expected
in 2011-2012.

Moderate. Qualitative
solutions based on new EAS
installations will have a
positive influence on
efficiency, production, and
ROI.



A large number of smaller


projects performed by several
EAS vendors propelled healthy
growth of the healthcare vertical
in 2010.

Moderate. This sector will


increase its spending in 20112012.



EU-related reforms, adjustments,


and egovernment projects have

High. Government spending


on IT will be tailored in



Market
Characteristics
Maturing EAS
Market

Increased EAS
Spending by SMBs

Penetration of
Global Vendors

Vertical Markets
Retail

Manufacturing

Healthcare

Public Sector

22

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2011 IDC

TABLE 13
Key Forecast Assumptions for the EAS Market in Croatia, 20112015
Market Force

Accelerator/
Inhibitor/
Neutral

IDC Assumption

Impact

momentum and will continue. A


large portion of these will be
funded by the EU.

accordance with overall


budgetary conditions, so a
mild rise in such investments
can be expected over the next
23 years.

Certainty of
Assumption
(Very High,
High, Medium,
Low, Very
Low)

Legend:  very low,  low,  moderate,  high,  very high
Source: IDC, 2011

Forecast
Table 13 below provides a forecast of EAS software revenue by vertical market
through 2015. Based on the assumptions outlined above, IDC expects the EAS
market to expand at a CAGR of 9.5% across the five-year forecast period.

TABLE 14
Forecast and Analysis of EAS L&M Revenue by Vertical Market in Croatia
20112015

Agriculture, Mining, and Construction


Discrete Manufacturing
Process Manufacturing
Transportation
Communications & Broadcasting
Utilities
Retail
Wholesale
Banking
Insurance
Other Financial Services
Business Services
Local Government
Central Government
Healthcare
Education
Total

2010

2011

2012

2013

2014

2015

CAGR (%)

2.05
2.91
3.60
2.08
1.91
1.80
8.47
5.07
0.40
0.49
1.07
1.63
0.34
1.85
2.90
0.97

2.20
3.06
3.89
2.15
2.04
1.92
8.95
5.40
0.44
0.52
1.10
1.74
0.35
1.85
3.21
1.01

2.41
3.39
4.34
2.31
2.20
2.10
9.89
5.95
0.49
0.55
1.23
1.95
0.43
2.32
3.70
1.19

2.64
3.77
4.85
2.48
2.36
2.32
10.94
6.53
0.54
0.59
1.39
2.20
0.47
2.60
4.16
1.34

2.88
4.25
5.45
2.71
2.54
2.56
12.11
7.14
0.60
0.63
1.54
2.47
0.53
2.88
4.64
1.51

3.10
4.65
5.98
2.90
2.70
2.76
13.22
7.74
0.65
0.66
1.67
2.74
0.58
3.13
5.05
1.65

8.7%
9.9%
10.7%
6.9%
7.1%
8.9%
9.3%
8.8%
10.1%
6.2%
9.4%
11.0%
11.6%
11.1%
11.7%
11.2%

37.54

39.83

44.46

49.20

54.44

59.19

9.5%

Source: IDC, 2011

2011 IDC

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23

Market Context
IDC's 20112015 forecast for the Croatian EAS market study differs from the 2010
2014 forecast published in last year's study of this market. The forecast for the
coming five years has been revised downwards as a result of a larger decline in 2010
than previously anticipated due to the financial crisis. Table 14 and Figure 8 below
illustrate the change between last year's forecast and the current forecast.
The forecast was changed due to the following factors:
Although the recession negatively impacted the EAS market in 2010, mild
recovery is expected in 2011 in nearly all sectors. Parliamentary elections
announced for the end of 2011, will hamper significant growth of IT consumption.
Healthy growth is expected in the 20122014 period.
Closing negotiating chapters and EU accession projected for 20122013 will
positively influence the Croatian IT market and, consequently, EAS spending
over the forecast period. The inflow of capital from regulatory compliance
programs and adjustments to reach EU standards will drive technology spending.

FIGURE 8
Forecast Comparison of the EAS Market (US$M) in Croatia,
20112015

Note: 20072009 = historic data.


Source: IDC, 2011

TABLE 15
Forecast Comparison of the EAS Market (US$M) in Croatia, 20112015

Old Forecast (20102014)


New Forecast (20112015)

2007

2008

2009

2010

2011

2012

2013

2014

2015

35.75

45.52

42.01

38.42
37.54

40.87
39.83

45.72
44.46

45.72
49.20

55.43
54.44

59.19

Source: IDC, 2011

24

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2011 IDC

ESSENTIAL GUIDANCE
The growing EAS installed base is becoming more important as a revenue
stream (from add-ons and maintenance). Vendors should tend to their existing
clients by providing affordable add-ons and upgrades.
The ongoing crisis period should be used by EAS vendors for restructuring,
developing new delivery methods, and making channel improvements, as it will
be difficult to find time for such undertakings once Croatia's economy has begun
to recover.
In order to stay competitive, local vendors should develop products for specific
niche markets and then target them proactively, not least because international
vendors will continue to adapt their solutions to meet local needs.
New delivery models like SaaS will increase demand in the medium to long term,
due to ease of use and cost savings for end users.
CRM and BA modules will gain in popularity among smaller organizations in the
coming years. Vendors capable of providing affordable solutions for business
performance tracking and user-friendly CRM will have a clear advantage in the
increasingly competitive Croatian market.

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Definitions
IDC maintains a rigorous and consistent classification system, or taxonomy, for
packaged software. The functional software markets defined by the taxonomy
represent a collectively exhaustive and mutually exclusive view of the worldwide
software marketplace.
Currently, the taxonomy includes 80 individual markets grouped within three primary
segments: 1) applications, 2) application development and deployment software, and
3) system infrastructure software.

2011 IDC

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25

The software taxonomy is composed of functional markets. Functional markets are


defined in terms of the features, functions, and attributes of the software package and
not the problem being solved or the industry in which the software is deployed.
Additionally, IDC defines a wide range of competitive markets. Competitive markets
are combinations of whole or fractions of functional markets.
This section includes a general definition of terms, functional market definitions and
descriptions, and a discussion of the relevant competitive market definitions.

Functional Markets
IDC divides packaged software into three primary markets: 1) applications, 2)
application development and deployment software, and 3) system infrastructure
software. Each of these primary markets is subdivided into 19 secondary markets;
these are further subdivided into 80 markets.
General Functional Definitions

Packaged Software: These are programs commercially available through sale,


lease, rental, or as a service. Packaged software revenue includes fees for initial
and continued right-to-use packaged software licenses. These fees may include,
as part of the license contract, access to product support and/or other services
that are inseparable from the right-to-use license fee structure. Upgrades may be
included in the continuing right of use or may be priced separately. Packaged
software revenue excludes revenue from training, consulting, and systems
integration that is separate (or unbundled) from the right-to-use license, but it
includes the imputed value of software that is a part of a service offering (as
described above).
Independent Software Vendors (ISVs): These include companies that
manufacture software but do not manufacture computer hardware. ISVs may,
however, resell system vendors' hardware.
International Vendors: These are companies whose worldwide headquarters
are located outside of the country studied.
System Vendors (SVs): These are companies that manufacture hardware.
These vendors may also manufacture software and provide other services.
Worldwide Software Market: This constitutes all packaged software revenue
across all markets or market aggregations.
Primary Software Markets: These are aggregation markets for applications,
application development and deployment software, and system infrastructure
software. The three primary markets together make up the worldwide software
market.
Secondary Software Markets: These are 19 important aggregation markets, as
described in IDC's software market taxonomy. These secondary markets are
defined as follows:


26

Applications: Consumer applications, collaborative applications, content


applications, enterprise resource management applications, supply chain
management applications, operations and manufacturing applications,
engineering applications, and CRM applications.

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2011 IDC

Application Development and Deployment Software: Structured data


management software, application development software, quality and
lifecycle tools, application server middleware, integration and process
automation middleware, other application development and deployment, and
data access, analysis, and delivery software.

System Infrastructure Software: System and network management


software, security software, storage software, and system software.

FIGURE 9
IDC's Software Taxonomy, 2010

Worldwide Software Marketplace


Primary Market I:
Applications

Primary Market II:


Application Development & Deployment

Primary Market III:


System Infrastructure

8 Secondary Markets

7 Secondary Markets

4 Secondary Markets

33 Markets

23 Markets

24 Markets

Source: IDC, 2011

Applications Market Definitions


Packaged application software includes consumer, commercial, industrial, and
technical programs and codesets designed to automate specific sets of business
processes in an industry or business function, to make groups or individuals in
organizations more productive, or to support entertainment, education, or data
processing in personal activities. The packaged application market includes the
consumer, collaboration, content, and enterprise applications sub-segments; the
enterprise applications market, in turn, is made up of the enterprise resource
management, supply chain management, operations and manufacturing, engineering,
and CRM application markets.
The following section provides definitions for each of the functional markets relevant
to EAS software.
Enterprise Resource Management Applications

Enterprise resource management applications are designed to automate and optimize


business processes related to resources required to meet business or organizational
objectives but are not customer or prospect facing or specialized to various types of
engineering. The resources automated include people, finances, capital, materials,
and facilities. The resulting applications forecast, track, route, analyze, and report on
these resources. The market includes software that is specific to certain industries as
well as software that can handle requirements for multiple industries.

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Definitions of the relevant functional application segments are presented in the


following sections.
Financial Accounting Applications

Financial applications are designed to support accounting, financial, and treasury and
risk management functions. The financial applications market consists of the
submarkets discussed in the following sections.
Accounting software supports general financial management business processes
such as accounts payable, accounts receivable, general ledger, and fixed asset
accounting, as well as more specialized functions such as credit and collections
management and automation, dispute resolution, enterprise spend management,
project accounting and costing, tax and revenue management and reporting, nonprofit
fund accounting, point of sale, invoicing, electronic bill presentment and payment, and
transactional financial reporting and business intelligence embedded into accounting
applications. The following are representative vendors and products in this
submarket:
Epicor (Epicor Financials Suite)
Microsoft (accounting modules in Dynamics GP, AX)
Oracle (E-Business Suite Financials)
Sage Group (FAS Fixed Assets)
SAP (financials modules in SAP ERP 6.0)
Treasury and risk management applications support corporate treasury operations
(including the treasuries of financial services enterprises) with the corresponding
financial institution functionality and optimize related cash management, deal
management, and risk management functions as follows:
Cash management automation includes several treasury processes involving
electronic payment authorization, bank relationship management, cash
forecasting, and others.
Deal management automation includes processes for the implementation of
trading controls, the creation of new instruments, market data interface from
manual or third-party sources, and others.
Risk management automation includes performance analysis, Financial
Accounting Standard (FAS) 133 compliance, calculation of various metrics used
in fixed-income portfolio analysis, market-to-market valuations, and others.
The following are representative vendors and products in this submarket:
IRIS Riskpro
Sophis Risque and Value
SunGard eTreasury eXchange (eTx) with AvantGard enterprise applications
Wall Street Systems Treasury

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Human Capital Management

Human capital management (HCM) applications software automates business


processes that cover the entire span of an employee's relationship with the
corporation (as opposed to the department or group to which the employee belongs)
as well as management of other human resources used by the enterprise (e.g.,
contingent labor, contractors, and consultants), including increasingly human
resources employed by suppliers and customers. The center of the HCM applications
suite is designed for core HR functions such as personnel records, benefits
administration, and compensation. Increasingly, these functions are being delivered
as employee self-service or manager self-service in order to automate record keeping
and updating as well as consolidated reporting. The following are representative core
HR applications vendors and products:
Kronos Workforce HR, Employee, Manager
Lawson Human Capital Management
Oracle Enterprise HCM Suite
SAP Human Capital Management
Ultimate Software Ultipro
Globalization, flexible work rules, job mobility, and the strategic importance of people
assets have forced organizations to transform their human resources systems into a
more real-time, personalized, and operational intelligence business function that goes
beyond the traditional view of aggregating personnel data. Core HR functions are
being supplemented by extensions that form the basis of a new generation of HCM
applications framework. The extensions are categorized in four major segments or
submarkets: erecruiting, incentive management, performance management, and
workforce management. Increasingly, core HR applications are also adding selective
and functional-equivalent features of these HCM extensions to meet changing
customer requirements. The following sections describe the functional aspects of
these HCM extensions.
eRecruiting applications are designed to automate the recruitment process through
better tracking of applicants, screening and skills assessment, profiling and resume
processing, and identifying talents inside or outside the organization.
Key features include:
Managing skills inventories
Creating and managing job requisitions
Identifying appropriate employment candidates
Coordinating team collaboration within hiring processes
Facilitating resource planning
Deploying workers to appropriate jobs, projects, or teams
Representative erecruiting applications include:

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Kronos Workforce Acquisition


Peopleclick Recruitment Management
Taleo Enterprise Staffing Management
Incentive management applications are designed to automate the process of
providing cash and noncash incentives to employees, partners, and external users
through advanced modeling, reporting, and built-in interfacing to payroll accounting
systems.
Key features include:
Quota and territory management
Calculation and distribution of commissions, spiffs, royalties, and incentives to
employees and channel and business partners
Compensation analysis using internal and external data for retention risk analysis
Linking incentives cash and noncash to business objectives
Payroll and payment engine interfaces
Account payables integration
Representative incentive management applications include:
Authoria Compensation Advisor
Callidus TrueComp
Synygy EIM
HR performance management applications are designed to automate the
aggregation and delivery of information pertinent to the linking of job roles and the
mission and goals of the organization. More specifically, the system allows users to
automate the performance review process by using mechanisms such as training and
key performance indicators (KPIs) to constantly track and monitor the progress of an
individual employee, work team, and division.
Key features include:
Assessment of individual and organizational skills gaps that impede performance
and job advancement, as in ability testing
Continuous reviews and establishing milestones
360-degree evaluation and real-time feedback
Performance appraisal automation
Competency assessment and management
Goal setting and tracking
Employee surveys

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Alignment of human assets to corporate objectives


Learning development and career improvement programs
Fast tracks for top performers
Delivering training based on certification requirements
Succession planning
Representative performance management applications include:
Kenexa Career Tracker
SHL Group Objective Assessment
Witness Systems (now part of Verint) Equality Contact Store
Workforce management applications are designed to automate the deployment of
the workforce through workload planning, scheduling, time and attendance tracking,
resource management, and rules and compliance management. Increasingly,
workforce management applications are being integrated into customer relationship
management applications in a contact center environment. Through extensive use of
workforce management applications, organizations are also able to develop training
guidelines, career advancement plans, and incentive compensation programs to
improve, motivate, and sustain the quality of their employees.
Key features include:
Skills and certification tracking
Shift/vacation bidding
Workload planning, forecasting, and scheduling
Scheduling optimization
Customer wait-time forecasts
Coverage management
Absence management
Labor activity tracking
Rationalization of revenue per full-time equivalent
Cost of sales activities
Sales resource planning based on local and regional opportunities
Representative workforce management applications include:
Infor's Workbrain Enterprise Workforce Management
Kaba Benzing B-Comm for R/3, Enterprise Data Collection

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Kronos Workforce Central


Meditech's Integrated HCIS, Scheduling and Referral Management
Witness Systems (now part of Verint) Blue Pumpkin Director Enterprise, Activity
Manager, Advisor Express
Payroll Accounting

The functionality involves payroll accounting and other labor-related payments,


including tracking of stock-option compensation and other variable and nonvariable
payments. The following are representative vendors and products in this market:
Oracle Enterprise HCM and Global Payroll
Ultimate UltiPro Payroll Administration and Tax Management
Works Applications Financial Management for Personnel Administration
Procurement

Procurement applications automate business processes relating to purchasing


material (whether direct or indirect; raw, in process, or finished; as a result of or
flowing into a product supply chainspecific business process; or in support of
performing a service) and services (business or professional). With the advent of the
Internet, the procurement function is being expanded to cover Web-based sourcing,
procurement, transaction processing, and payment support, all of which are
connected to create a single view of the spending levels at a company. As a result,
purchasing activities are integrated into a supplier community that can be easily
tracked, benchmarked, and analyzed by both buyers and suppliers.
Existing and upcoming features of these procurement modules include:
eProcurement
Self-service requisitioning
Order entry (PO email)
Approvals, workflow
Transaction processing, EDI, EDI-INT
Procuring configurations
Global agreements, time-phased pricing, mass update price
eSourcing
Strategic sourcing
Dynamic pricing
eRFX
Product design management

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Commodity strategy, spot buying


Contract compliance
Contract library
Contract management, tracking, enforcement
Content management
Standardization, function equivalent
Consolidated buy/group purchasing organizations
Data synchronization and management
Item master cleansing
Category management for commodity buying
Catalog aggregation, syndication
Supplier performance management
Supplier enablement, portal
Vendor-managed inventory support
Supplier performance tracking
Supplier consolidation
Supplier satisfaction metrics
Machine-to-machine connection such as EDI exchanges
Electronic invoice presentment and payment/dispute resolution
Volume discount discovery
Consolidation of accounts
Invoice, PO, multiple document matching
Standard applications templates for exceptions handling
Procurement analytics
Integrated analytics
The following are representative vendors and products in this market:
Ariba (Enterprise Spend Management)
Infor (SmartStream Procurement)
Lawson (M3 Procurement)

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Oracle (Oracle Advanced Procurement)


SAP (SAP Supplier Relationship Management)
Order Management

Order management applications are designed to automate sales order processing


from capture to invoice and settlement as well as built-in features to handle order
planning and demand management capabilities. Item lookup and order placement are
the prerequisites of order management applications, followed by issuance of receipts
and advance shipping notices as well as payment processing functions. Increasingly,
Web-based order management applications are replacing legacy systems for faster
and more accurate order processing. Order and product configurations, as well as
pricing options, freight calculation, and credit checking, are being combined to form
an integrated order management application, regardless of the sales channels.
Other features include view price history, profit management, multiple order types
(including quotes and credit orders), blanket and release orders, direct ship and
transfer orders, kit processing, and product returns processing.
The following are representative vendors and products in this market:
Manhattan Associates (Distributed Order Management)
Oracle (Enterprise One Sales Order Management)
Sterling Commerce (Sterling Order Management)
Financial Performance and Strategy Management Applications

The financial performance and strategy management applications market consists of


cross-industry applications whose main purpose is to measure, analyze, and optimize
financial performance management processes using prepackaged applications that
include the following categories:
Budgeting and planning includes applications to support operational budgeting
processes, corporate budget consolidation and adjustment processes, and
planning and forecasting processes.
Financial consolidation includes applications that support both statutory and
management financial consolidation, reporting, and adjustment processes across
multiple entities and divisions.
Profitability management and activity-based costing applications include
packaged applications to support detailed cost and profitability measurement and
reporting processes.
Strategy management applications include those that support a closed-loop
performance management strategy such as the balanced scorecard. Strategy
management applications incorporate domain expertise across a range of
business processes, such as finance, human resources, operations, and CRM,
but enable strategic management processes rather than performance
management reporting processes of these functions.
The following are representative vendors and products in this market:

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Oracle (Enterprise Planning and Budgeting)


SAP (SEM)
SAS (Financial Intelligence and Performance Management)
Project and Portfolio Management

Project and portfolio management (PPM) applications are used for automating and
optimizing the initiating, planning/scheduling, allocation, monitoring, and measuring of
activities and resources required to complete projects. In addition, the portfolio
management capabilities enable the tracking of an aggregation of project, products,
programs, and/or initiatives to oversee resource allocation, for making ongoing
investment and prioritization decisions, and to track risks as part of an overall
portfolio. Ultimately, PPM applications help organizations manage the scope, time,
and cost of discrete sets of related people processes (projects) on an individual and
portfolio basis. IDC uses a wide definition of PPM to include the breadth of solutions
that use PPM features at their core, such as architectural/engineering/construction
management (AEC) or building infrastructure information management (BIIM),
asset/capital management (A/C), IT project portfolio management (ITPPM), new
product development/introduction management (NPDI), professional service
automation (PSA) or services resource planning (SRP), and other industry-oriented
solutions developed around the primary premise of successful "project" completion as
the main business purpose. The following are representative vendors and products in
this market:
CA Clarity Portfolio Manager and Clarity Project Manager
Deltek Vision
Meridian Proliance
Microsoft Office Project
Oracle Projects and Primavera Project Management
SAP xRPM (Resource and Portfolio Management)
Enterprise Asset Management

Enterprise asset management application software automates the many aspects of


asset management and maintenance, repair, and overhaul (MRO) operations (e.g.,
machinery and equipment, buildings, or grounds). The software generally includes
functionality for planning, organizing, and implementing maintenance activities,
whether they are performed by employees of the enterprise or by a contractor.
Typical features include equipment-history record management, descriptions of items
maintained, scheduling, preventive and predictive maintenance on the assets, work
order management, labor tracking (if integrated within the maintenance management
applications), spare parts management, and maintenance reporting. The following are
representative vendors and products in this market:
IBM Tivoli MAXIMO
Infor EAM (formerly Datastream)
Ventyx (Asset Suite and eSOMS Suite)

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Supply Chain Management Applications

Supply chain management application software automates supply- and demand-side


business processes that bring a product or service to market, including multisite
organizations involved in a complex supply chain process, including raw materials
suppliers, contract manufacturers, 3PL and 4PL providers, and individual
transportation and warehousing organizations. Definitions of the relevant functional
application markets are presented in the following sections.
Logistics

Logistics application software automates activities relating to moving inventory or


materials of any type. Examples include software that automates distribution resource
planning, warehouse management, and transportation planning business processes
not specific to an industry. (Logistics applications specific to the transportation
industry are included in the services operations management applications market.)
The following are representative vendors and products in this market:
Four Soft (4S Products)
Manhattan Associates (Transportation Lifecycle Management)
RedPrairie (Transportation Management, Global Trade Management, Fleet
Management, Optimized Planning and Execution)
Production Planning

Production planning (PP) applications software automates activities related to the


collaborative forecast and continuous optimization of manufacturing processes. PP
applications span supply planning, demand planning, and production planning within
organizations. These applications identify demand signals, aggregate historical data
that informs short- and long-term demand expectations, and provide supplier
capabilities across multiple manufacturing sites. Production planning application
software is key to any supply chain management initiative because supply and
demand planning dictates the rest of the supply chain activities. The following are
representative vendors and products in this market:
Aspen Supply Chain Planner and Aspen Plant Scheduler
Oracle Value Chain Planning
SAP Advanced Planning and Optimization (APO)
Inventory Management

Inventory management application software automates activities relating to managing


physical inventory, whether direct or indirect; raw, in process, or finished; as a result
of or flowing into a product supply chainspecific business process; or in support of
performing a service. This includes inventory control/materials management business
processes in any industry, not just in manufacturing. The following are representative
vendors and products in this market:
Catalyst (now part of CDC) CatalystCommand Warehouse Management
SAP Inventory Management
SmartOps Multistage Inventory Planning and Optimization

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Infor SCM Warehouse Management


Operations and Manufacturing Applications

Operations and manufacturing applications are enterprise applications that automate


and optimize processes related to planning and execution of services operations and
manufacturing activities, as well as other back-office activities. The resources
automated include people, capital, materials, and facilities. The applications track,
route, analyze, and report on these resources. The market includes software that is
specific to services, manufacturing, and other industries. Definitions of the relevant
functional application segments are presented in the following sections.
Services Operations Management

Services operations management applications support the services supply chain and
are unique to particular industries. These industry-specific applications cover a broad
range of activities such as automating claim processes (as applied to insurance
functions), automating admissions/discharges and transfers of patients (as applied to
healthcare functions), or automating energy trading (as applied to energy and utility
functions). Other examples of industry-specific applications are those that enable the
automation of real estate, business, legal services, banking and finance, education,
government, social services, and transportation. The following are representative
vendors and products in this market:
Cerner Corp. (Millennium)
McKesson ClaimsXten for insurance claims management
Oracle Utilities
Manufacturing

Functional applications in manufacturing include material and capacity requirements


planning (MRP), bills of materials (BOMs), recipe management, manufacturing
process planning and simulation, work order generation and reporting, shop floor
control, quality control and tolerance analysis, and other functions specific to
manufacturing execution (MES). The category does not include computer-aided
manufacturing (CAM) applications for NC and CMM machine programming.
(Advanced planning and scheduling applications are included in the supply chain
planning functional market.) Representative vendors and products in this market are:
Aspen Technology PIMS for production planning and optimization
Dassault/DELMIA production process planning and simulation applications
Siemens Tecnomatix's Assembly Planning and Validation
Other Back Office

Other back-office applications include various types of application automating


functions not otherwise covered previously, such as computer-based training,
elearning applications, speech and natural language, translation and globalization
software, and environmental health and safety applications. These applications also
cover a wide range of point solutions for product-related applications other than
services operations management and manufacturing. These applications have at their
core a product orientation focused on efficiencies related to item maintenance,

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replenishment, and site management. Among them are retail-specific and wholesalespecific applications. Representative vendors and products in this market are:
Epicor's Retail SoftwareSystems
JDA Trade Event Management for retail
Oracle Retail Merchandise Operations Management
SAP EH&S
Customer Relationship Management Applications

CRM enterprise applications automate the customer-facing business processes within


an organization irrespective of industry specificity (i.e., sales, marketing, customer
support, and contact center). Collectively, these applications serve to manage the
entire life cycle of a customer including the conversion of a prospect to a customer
and help an organization build and maintain successful relationships. The CRM
applications classified as collaborative provide functionality to enable two or more
individuals to share content to achieve a common goal. Definitions of the CRM
application segments are presented in the following sections.
Sales

Sales automation applications include both sales management applications and sales
force automation applications. Functionality includes the following:
Account/contact management
Lead tracking
List management
Mobile sales
Opportunity management
Partner relationship management (PRM)
Sales analysis and planning tools
Sales configuration tools
Sales history
Team selling
Telemarketing and telesales scripting
Territory management
The following are representative vendors and products in this market:
Oracle (Oracle Sales, Oracle's Siebel Sales, Oracle Sales Prospector, Oracle
CRM On Demand Sales)
Salesforce.com (Sales Force Automation)

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Sage (ACT! by Sage, Sage SalesLogix)


SAP (SAP Sales, CRM On-Demand)
Marketing

Marketing applications software automates a wide range of individual and


collaborative activities associated with the various dimensions of the marketing
process. These dimensions include the following:
Ad management/placement
Brand management
Campaign execution
Campaign planning and management
Collateral management/distribution
Database marketing
Direct marketing
Electronic catalog
Event/trade show management
Focus groups/media testing
Fulfillment status linkage
Lead qualification/distribution
List management
Marketing resource management
Media and analyst relations
Personalization
Primary research
Reactivation
Surveying
Upsell and cross-sell programs
Web activity analysis
Web advertising
The following are representative vendors and products in this market:
Infor CRM Marketing

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Oracle (Oracle Marketing)


Salesforce.com (Marketing)
SAP (SAP Marketing, CRM On-Demand)
SAS (Marketing Resource Management, Campaign Management, Real-Time
Decision Management)
Teradata (Teradata CRM)
Customer Service

Customer service applications provide customer/client (e.g., patient and student)


information management (CIM). Each application is designed to enhance the
management of relationships with existing customers. Customer service software is
used to support customers who are external to an organization.
Defining characteristics of the customer service category include problem tracking,
customer history, and incoming contact management. Functionality includes:
Case assignment and management
Self-service
Web chat
Live collaboration
Conferencing
Cobrowsing
Automated assistants
Email response management
Field service
IT help desk applications are covered under "problem management" in the system
management software category and are thus excluded from this market. The
following are representative vendors and products in the customer service application
market:
Amdocs (Contact Center, Smart Agent Desktop, Customer Service and Support)
Consona (Consona Service and Support)
Kana (E-Mail Response Management, Customer Self-Service)
Oracle (Oracle Service, Oracle CRM OnDemand, Siebel Contact Center and
Service)
RightNow Technologies (RightNow Service, Email Response Management, Web
Self-Service, Voice Self-Service)
Salesforce.com (Service)

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SAP (SAP Service, Interaction Center, CRM On-Demand)


Contact Center

Contact center applications automate functions relating to the operations of the CRM
installation. These applications, although enabling in function, do not have a desktop
end-user focus. Products included in this category are ACD, predictive dialing,
telephony integration, and universal queuing. The following are representative
vendors and products in this market:
Aspect (Call Center ACD, Unified IP)
Avaya (Call Center, Interaction Center, Contact Center Express, Customer
Interaction Express)
Genesys Labs (Customer Interaction Management Platform, Agent Desktop,
Proactive Contact, Voice Platform)
Data Access, Analysis, and Delivery Software

Data access, analysis, and delivery products are end useroriented tools for ad hoc
data access, analysis, and reporting as well as production reporting. Products in this
category are most commonly used by information consumers or power users rather
than by professional programmers. Examples include query, reporting,
multidimensional analysis, and data mining and statistics tools. The data access,
analysis, and delivery markets are defined in the following sections.
End-User Query, Reporting, and Analysis

Query, reporting, and analysis software includes ad hoc query and multidimensional
analysis tools as well as dashboards and production reporting tools. Query and
reporting tools are designed specifically to support ad hoc data access and report
building by either IT or business users. This category does not include other
application development tools that may be used for building reports but are not
specifically designed for that purpose. Multidimensional analysis tools include both
online analytical processing (OLAP) servers and client-side analysis tools that provide
a data management environment used for modeling business problems and analyzing
business data. Packaged data marts, which are preconfigured software combining
data transformation, management, and access in a single package, usually with
business models, are also included in this functional market. The following are
representative vendors and products in this market:
Actuate (Actuate BIRT, Actuate e.Reports)
IBM (IBM Cognos 8 Business Intelligence, IBM Cognos TM1)
Information Builders (WebFOCUS InfoAssist, WebFOCUS ActiveReports)
Microsoft (Microsoft SQL Server Reporting and Analysis Services)
MicroStrategy (MicroStrategy 9)
Oracle (Oracle Business Intelligence Enterprise Edition, Oracle Essbase)
SAP (SAP BusinessObjects Business Intelligence, SAP BusinessObjects Crystal
Reports)

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Advanced Analytics Software

Advanced analytics software includes data mining and statistical software (previously
called technical data analysis). It uses technologies such as neural networks, rule
induction, and clustering to discover relationships in data and make predictions that
are hidden, not apparent, or too complex to be extracted using query, reporting, and
multidimensional analysis software. This market also includes technical, econometric,
and other mathematics-specific software that provide libraries of statistical algorithms
and tests for analyzing data. Although statistics products vary in sophistication, most
provide base-level functions such as frequencies, cross-tabulation, and chi square.
This market also includes a specialized form of statistical software focused on
functional areas such as the industrial design of experiments, clinical trial testing,
exploratory data analysis, and high-volume and real-time statistical analysis. The
following are representative vendors and products in this market:
FICO (FICO Model Builder)
IBM (IBM SPSS Predictive Analytics Software)
KXEN (KXEN)
Oracle (Oracle Data Mining)
SAS (SAS Analytics, SAS Enterprise Miner)
TIBCO (TIBCO Spotfire S+)
Unica (Unica PredictiveInsight)

Operating Environment Definitions


All software revenues are allocated to operating environments. The preferred method
is to allocate revenue to operating environments based on from where the license
revenue derives (for platform-specific licenses). An alternative method is to allocate
revenue based on where the product is run (i.e., based on the percentage of
executables on various platforms). Operating environments include the following:
Mainframe Environments include IBM's z/OS, OS/390, VSE, VM, and z/VM that
run on IBM System z and zSeries hardware and other single-vendor mainframe
operating systems such as those from Unisys, Amdahl, Fujitsu, and Hitachi.
Single-vendor, non-Unix supercomputer and massively parallel processor
environments are also included in the mainframe category.
Unix includes all operating systems software that is based on Unix System V,
OSF/1, or Berkeley Software Distribution (BSD). This category would include
products such as AIX, HP-UX, Irix, Mac OS X, SCO Open Server, SCO
UnixWare, Solaris, Tru64 Unix, NetBSD, OpenBSD, and other operating systems
used primarily aboard RISC-based and Intel architecturebased servers,
workstations, minicomputers, and clients that are designed to run the Unix
operating system. Unix-based supercomputer and massively parallel processor
environments are also included in this category. Operating systems that are
based on other kernels are not included, even if they have passed the Unix
certification test from the Open Group. Note that non-revenue-producing versions
of Unix, including Solaris 10 for x86, OpenSolaris, FreeBSD, and other nonpaid
Unix derivatives, are classified as Unix operating systems by this taxonomy for
the purpose of allocating revenue-producing layered software by underlying
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Linux and Other Open Source environments include all operating systems
deployed aboard servers, workstations, minicomputers, and clients that are
based on Linux or other Unix-like open source operating environments. Typically,
this software is available both commercially with associated support and
maintenance costs and at little or no cost in source code form. Software of this
type is usually licensed under the Free Software Foundation's general-purpose
license (GPL) or other licensing that encourages free access to the source code
to these operating environments. Note that non-revenue-producing versions of
Linux are still classified as Linux operating systems by this taxonomy for the
purpose of allocating revenue-producing layered software by underlying
operating system.
Windows 32 and 64 include all operating systems that support the Win32 APIs
and Win64 APIs, including Microsoft's Windows 9x, Windows Me, Windows NT
Workstation, all versions of Windows NT Server, Windows 2000 Professional, all
versions of Windows 2000 Server, Windows XP Home, Windows XP Tablet PC
Edition, Windows XP Media Center Edition, Windows XP Professional, Windows
XP 64-Bit Edition, all versions of Windows Vista, and all editions of Windows
Server 2003, including the release 2 (R2) versions.
Information is collected about other operating environments but generally only
reported in the aggregate. These other operating environments include the
following:


i5 and OS/400

Other host/server environments

Embedded operating environments and related subsystems

Other single-user operating environments

Hardware appliances

Methodology
Introduction
IDC classifies software markets in two ways functional and competitive.
Software is grouped into one of 80 mutually exclusive functional markets, which are
defined by the features, functions, and attributes of software and not the problem
being solved or the industry in which the software is used. In addition, IDC recognizes
a range of competitive markets that are combinations of entire functional markets or
combinations of fractions of functional markets. For more information about IDC's
software taxonomy, please refer to the Definitions chapter above.
The specific software market segment covered in this study can be defined in the
context of the following dimensions:

Dimension 1 Functional Market Classification


IDC recognizes three primary functional markets in the software industry: 1)
applications, 2) application development and deployment, and, 3) system
infrastructure software. Each primary market is divided into secondary and tertiary

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market segments. The applications primary market is organized into eight secondary
markets, which are then subdivided into a further 33 markets (sub-segments).
This study covers certain functional markets within the applications primary market.
Within the secondary market of enterprise resource management (ERM) applications
are financial applications, human capital management, payroll, procurement, order
management, financial performance and strategy management applications, project
and portfolio management, and enterprise asset management. Within the secondary
market of supply chain management (SCM), applications are logistics, production
planning, and inventory management. Within the secondary market of operations and
manufacturing applications (OMA) are services operations management,
manufacturing, and other back office. Within the secondary market of customer
relationship management (CRM) are sales, marketing, customer service, and contact
center. Finally, within the application development and deployment primary market,
under the secondary market of data access, analysis and delivery are business
intelligence tools and analytical applications.

Dimension 2 Competitive Market Classification


In addition to being classified functionally, application software can also be classified
into competitive market segments, which are combinations of entire functional
markets or combinations of fractions of functional markets. Thus the EAS market can
be viewed as a combination of functional markets or as a competitive market.
IDC distinguishes between integrated EAS and standalone applications. The
distinction between the two categories is as follows:
Enterprise application suites are solutions that could, in theory, automate an
entire enterprise and include at least a mix of accounting, materials
management, and industry-specific modules. In wholesale distribution, materials
management modules serve as the industry-specific portion of the solution.
By comparison, standalone (so-called best-of-breed or best-of-class) applications
automate a specific enterprise need (or closely aligned needs) in manufacturing,
accounting, healthcare delivery, or other functional market areas.
Enterprise suites often automate human resource/payroll management and other
functions. Typically, they are architected with an integrated set of business rules and
metadata, accessing a single database (logical or physical) from a single consistent
user interface.
In addition to EAS software, SCM and BA applications are classified as competitive
markets under IDC's software taxonomy. The definitions of these markets can be
found in the Definitions section of the study.

EAS Criteria
IDC considers a software application to be EAS if it is characterized by the following:
Minimum Functionality: The suite contains the following four core functions:

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Inventory management

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Procurement

Order management

IDC considers an application to be EAS if it has the capability to automate an entire


enterprise. It is still considered EAS even if customers buy discrete modules/functions
rather than full suites.
Integration: Because EAS is built with an integrated set of business rules and
metadata, it offers customers the ability to access a single database (logical or
physical) from a single consistent user interface. Any user can access any
functional module via one interface and can save information to or access data
from one common, centralized, database.
Installation Size and License and Maintenance Revenue: Having in mind
local and regional market conditions, IDC has established filters based on the
number of users/installations and on annual license and maintenance revenues.
This minimum ensures the exclusion of very low-end software packages that are
billed as EAS but in reality are not at all competitive with even a mid-level
vendor's product, let alone software from market leaders like SAP and Oracle.
Software Sophistication: Software must be developed on multi-user platforms,
i.e., server and host and client/server environments. Consequently, the potential
integrated enterprise market, as outlined in this study, is a component of the
server and server/host application environments. IDC excludes software written
to single-user platforms.
Consistent with the report's explicit focus on the truly integrated marketplace, IDC has
excluded revenue from single-purpose application software (non-integrated software),
such as accounting packages. In addition, if a company offers more than just one kind
of software application but reports significant sales of standalone single-function
applications, IDC excludes that company's revenue.

Research Sources and Methodology


The following section outlines the major techniques used in IDC's standard research,
as well as those used in this study on the EAS software market, for revenue
determination and forecast work. All research in this study is based on the latest
available information.
Research Sources

Over the years, IDC has built up excellent relationships with most major IT vendors,
and generally the input we receive is substantial. Normally, some level of sales
activity is provided, and complete records are often made available. In addition, IDC
regularly meets throughout the year with many of the major suppliers, and our data is
often used and examined during such exchanges.
IDC conducted interviews with all major EAS software providers for this study. IDC
also examined the product portfolios of numerous local value-added resellers,
software development companies, and IT services providers to determine other
locally developed enterprise applications that would potentially meet the definitional
criteria established for an integrated EAS software application package. While a
number of firms offer some type of enterprise management software, few field a truly
integrated package covering the four core functional categories mentioned above.

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IDC has found in-depth personal interviews an effective and efficient means of
undertaking market research in Central and Eastern Europe and the Middle East and
Africa. This methodological approach is essential for a variety of reasons, the most
important of which include explaining the concepts encompassed in market research,
as well as IDC's survey research activities, and having sufficient opportunity to
discuss more detailed information on vendor operations and strategies. In addition,
the state of telecommunications in the region leaves the researcher with little choice
but to visit a company in person.
IDC also evaluated secondary source literature, academic texts, and publicly
available government information.
It is important to keep in mind that no one source is dominant. In each case, IDC
analysts weigh all sets of inputs and use their judgment as to which sources are more
likely to be accurate. The weight of any one variable will change according to the
revenues being evaluated, our relationship with the supplier, the detailed data
available through public sources, and other relevant factors.
Notes on Forecasting

By definition, the tools used for measuring past activities are inevitably more precise
than those used to predict the future. No one is more aware than IDC of the perils in
trying to forecast any market five years out. IDC uses surveys, technology
assessment, country demographics, and economic data to develop forecasts. All of
these factors were important in this study.
IDC is often asked about its economic assumptions and their relationship to spending
trends in the technology marketplace being examined. IDC usually takes a neutral
approach to the economy, essentially building into its forecasts an expectation based
on historical rates of economic growth. Generally, if clients want to assume a
recession during a certain stretch of time, they should factor our numbers down
somewhat. Neutrality is also the goal in our treatment of areas such as inflation and
currency effects, which are assumed to be zero in our forecast work. In estimating our
shipment value numbers, for example, inflation is considered to be zero or
insignificant, and currency rates are assumed to be equivalent to the average rates of
the preceding year. No effort is made to factor out inflation in an attempt to show
"real" growth. Moreover, data is presented for currency levels that existed at each
period of time, and no attempt is made to factor out exchange rate effects.
Nonetheless, in the case of Central and Eastern Europe and the Middle East and
Africa, some weight must be given to economic and technological factors in projecting
expenditures on computing technology. The drastic reforms that have been
undertaken in countries of the region, and the profound influence of reform on future
economic growth rates, have forced IDC to factor more economic assumptions into
the forecasting analyses than is typically the case in our standard research. As can
be expected, this process introduces higher levels of uncertainty in the data than in
counties in which economic factors play a lesser role. Some important variables
considered in IDC's forecast analysis include:
Economic growth rates
Pace of privatization
Market reforms

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Local currency convertibility


Availability of hard currency and debt structure
Foreign trade policies
Import restrictions
Technology trends
The exchange rate employed in this study for 2010 was HRK 5.513 to USD 1.

Synopsis
This IDC study provides a detailed overview of the Croatia market for integrated
enterprise application software (EAS) suites. EAS vendors tracked in this study
include SAP, Microsoft, IN2 Group, Laus CC, and Oracle.
This study provides detailed qualitative and quantitative information, analysis, and
forecasts that help to answer the following key questions:
What are the defining characteristics of the Croatian EAS market?
What is the current size of the EAS market in Croatia, and what is the forecast
potential of the market?
What is current spending on EAS software in Croatia in the various vertical
markets and end-user segments?
Who are the leading players in the EAS market in Croatia, and how are they
positioning themselves to capitalize on market potential?
Which industries are investing in EAS solutions, and how will future spending
patterns affect market development?
What are the defining characteristics of the EAS installed base in Croatia in
terms of vertical markets and end-user market segments?
How will the political and economic conditions specific to Croatia affect the
market?
"Both a lack of large projects and the financial crisis negatively influenced the
Croatian EAS market in 2010. Signs of recovery should become visible in 2011, and
to prepare for the expected market recovery EAS vendors should reevaluate their
marketing efforts and the strength of their sales channels, undertake necessary
restructuring and cost optimization, and acquire new skills." Associate Research
Analyst Ivan Juras, IDC Adriatics

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Copyright Notice
This IDC research document was published as part of an IDC continuous intelligence
service, providing written research, analyst interactions, telebriefings, and
conferences. Visit www.idc.com to learn more about IDC subscription and consulting
services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please
contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or
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purchase of an IDC service or for information on additional copies or Web rights.
Copyright 2011 IDC. Reproduction is forbidden unless authorized. All rights reserved.

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