RM and HR are Fastest-Growing Enterprise Application Segments at 10%

The human capital management (HCM) market ties with customer relationship management (CRM) as the fastest-growing enterprise application segment, with 10% growth rates in 2006, reports AMR Research. The HCM market is fueled by interest in automating personnel-related processes and supporting strategic goals while the CRM market is growing as a result of new delivery models, such as software-as-a-service.  By comparison, the core enterprise resource planning (ERP) market is expected to grow at only 3%.

The HCM report ranks Oracle as the market leader in the space by revenue, overtaking SAP, after Oracle's acquisition of PeopleSoft at the end of 2004.  In 2005, Oracle held a 26% share in HCM revenue versus SAP’s 23%. This year that gap is expected to narrow significantly as Oracle’s revenue grows with the market at an estimated 10% and SAP’s revenue increases by 13%, which is a conservative estimate for SAP.

Kronos followed Oracle and SAP with a 10% revenue share. The top three vendors make up nearly 60% of the total HCM market, yet growth and consolidation amongst best-of-breed solution providers is driving advances in the industry to raise HCM to a more strategic level.

While Oracle’s acquisition of Siebel did not post until 2006, SAP remained at the top for the second consecutive year. AMR Research expects SAP to hold the number one spot in 2006 as Oracle moves to number two.

Hosted revenue, primarily from software-as-a-service, acted as the catalyst for the industry with 60% growth in 2005.  The poster child for this model, salesforce.com, moved from No. 12 in 2004 to No. 6 in 2005 and is expected to grow 52% in 2006.

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