Growth in sales to medium sized companies will fuel worldwide packaged accounting software revenue, which is expected to grow at a 15 per cent compound annual growth rate, to $US10.4 billion by the year 2002, according to new research from IDC.
The "small enterprise" market, which means companies with revenue of $US250 million to $US1 billion, is expected to remain the largest of five company segments within the worldwide packaged accounting software market, according to IDC.
Meanwhile, the "corporate or middle-market" segment, including companies with revenue of between $US20 million to $US249 million, will outpace the "enterprise" sector, with companies greater than $US1 billion, to become the second largest revenue-generating segment.
The figures are from IDC's "1997 Accounting Software: Worldwide Market and Trends by Mid-Market and Other Segments," report.
Vendors traditionally offering low-end products and companies traditionally providing higher-end products will vie for the growing business in the middle market, said Judy Hodges, IDC research manager, for cross-industry applications, in a statement.
Attracting good value-added resellers will be the key for success in this area, she said.
"The limited number of capable VARs is inhibiting market expansion," said Hodges, in her statement.
In terms of competition, JD Edwards leads in the middle market segment based on 1997 revenue, but will have to fend off SAP AG, which holds a close second place. SAP, developer of the R/3 software package, is the leader in enterprise resource management for large companies.
Oracle, Baan, and PeopleSoft, also will be vying for the attention of users in the middle tier of the accounting market, IDC said.
The traditional vendors with products focused on the middle market include Great Plains Software, Solomon Software, and Computer Associates International.
The IDC report also noted that NT appears to be the platform enterprise applications vendors are planning to ride into the middle-market segment. A flood of NT products became available and began selling very successfully in 1997, the report said.
Overall, SAP dominates the worldwide accounting software market with worldwide revenue of $US944.9 million and also leads in the enterprise and small enterprise segments.
However, PeopleSoft showed the greatest overall accounting software market growth in 1997 with a 127.7 per cent increase.