Large projects main influence on EAS spending in the Arab Middle East and North Africa in 2003

According to a new IDC study, this moderate growth reflects an unusually large project carried out in Saudi Arabia in 2002. It also reflects increasing saturation of basic or core EAS/ERP modules at the upper end, which will require vendors to start tapping the small and medium-sized business segment for new clients. Nevertheless, the total MENA EAS market will continue to expand, with annual growth across the region expected to be almost double that of 2003 over the next few years.

As might be expected, there was considerable variation in the individual EAS markets of MENA in 2003. For instance, Saudi Arabia accounted for more than 30% of spending in the region last year but had almost flat growth. The UAE represented 19% of the market and witnessed a jump of 27.2% in EAS investments. By contrast, EAS spending contracted in both the Levant and Maghreb regions, the latter being due to completion of a major project in Algeria the previous year. And despite its economic difficulties, Egypt saw a slight increase in EAS spending in 2003. "This reminds us of the diverse nature of the markets," says Torben Pedersen, Senior Analyst, IDC Middle East & North Africa. "Although most vendors in the region operate from a central hub, often in Dubai, they have to adjust their products and services to the needs of companies and environments that can be very different."

SAP continued to generate the most license and maintenance revenue from EAS software in MENA in 2003. The vendor's solid presence in the area's biggest EAS market, Saudi Arabia, was in large part responsible for SAP's top ranking. Oracle held second place thanks to a well-established indirect sales-channel network and aggressive marketing and sales efforts throughout the region. Oracle has also established an extensive installed base of customers in the mid-market. Third-placed PeopleSoft continued to display strong growth in MENA in 2003. During the last two years, the vendor has been rapidly gaining share and is close to overtaking Oracle as the second-largest EAS vendor in the region. "The international players that have been willing to establish a local presence have the upper hand," says Jyoti Lalchandani, Regional Director, IDC Middle East & North Africa. "Whether a representative office or an indirect sales channel, this presences has proven essential to being competit ive, as clients tend to favor those who show a commitment to the region."

Core EAS/ERP functionalities dominated the MENA EAS scene in 2003, accounting for the lion's share of spending. In individual county markets, core EAS investments were at least double and in most cases four or five times higher than the combined investments for extended functional areas, like customer relationship management (CRM) and supply chain management (SCM). Nevertheless, CRM in particular proved to have a solid customer base, especially in the countries with greater exposure to foreign competition. By contrast, the market for ecommerce software fell off considerably while spending on SCM was relatively insignificant. "A number of key ecommerce software vendors shut down shop in the region last year," says Pedersen. "With regards to SCM, most users are reluctant to invest in complex solutions as the standard material management modules included in classic EAS/EPR suites are proving adequate at the moment."

Oil and gas was the largest vertical purchasing EAS in MENA in 2003. Discrete manufacturing was second and wholesale third. These top three sectors accounted for more than 40% of EAS investments across the region last year. For extended functionalities, spending on CRM software was more consistent with worldwide trends, with communications, banking/financial services, retail, and oil and gas being the leading areas for sales. "Although oil and gas will remain the largest individual vertical sector in the future," says Pedersen, "the communications and broadcasting sector is growing fast. With a number of new licenses and deregulations expected to take effect in MENA in the next few years, investment in complex software solutions should shoot up as competition becomes more intense."

IDC's Arab Middle East and North Africa Software Solutions 2004-2008 Forecast and 2003 Vendor Shares provides a detailed overview of the market for high-end integrated package software products. This study provides an understanding of the size and dynamics of four major solution areas - ERP/EAS, CRM, SCA, and ecommerce - in specific Arab countries in the Gulf and North Africa (Saudi Arabia, United Arab Emirates, Egypt, Morocco, Algeria, Tunisia, Bahrain, Kuwait, Oman, Qatar, Jordan, Syria, Lebanon). The study includes detailed qualitative and quantitative information, analysis, and forecasts by functional group, vendor market share, and vertical sector. It delineates the defining characteristics of the market, shows which segments are investing in EAS solutions, and notes how future spending will affect market development. The study examines the political and economic conditions specific to the UAE, KSA, Egypt, Bahrain, Oman, Qatar, Kuwait, Morocco, Tunisia, and Algeria and the effects these will have on the respective IT markets. The study also provides an overview of international and local vendors, profiling and analyzing the major software solutions players in the area's countries and sub-regions.