Large Installments Drive Spending on EAS in Israeli While Growth Shifts to the SMB Segment, say IDC | About IDC | IDC CEMA

The Israeli enterprise application software (EAS) market expanded by 12.5% to reach $52.14 million in license and maintenance (L&M) revenue in 2004 and is expected to grow by another 7.4% in 2005. According to a new IDC study, although enterprise-level organizations (including government) still drove spending, small and medium business accounted for 45.1% of total revenue last year. With new installations on the rise in 2004 (17.7% over the previous year), L&M revenue should continue growing moderately, reaching $67.34 million in 2009.

SAP again dominated the EAS scene in Israel in 2004. Having amassed L&M revenue far ahead of its nearest competitor, SAP is likely to remain the leading player on the market for at least the next few years. Nevertheless, Oracle and local player Eshbel made strong showings. Together, these three vendors secured almost three quarters of market revenue last year. "The lion's share of the large business segment belongs to the international players Oracle and SAP," says Efrat Drori, Research Analyst, IDC Israel. "But that doesn’t mean competition isn't fierce. With the large enterprise market already saturated, the SMB sector will become a battleground for securing new customers, with both Oracle and SAP introducing solutions specifically aimed at this segment. Moreover, Microsoft and established local players operating mostly in the manufacturing segment have revealed their intentions to enter the mid-market with ERP solutions."

Accounting generated the greatest percentage of L&M revenue for EAS vendors in Israel in 2004. Customer relationship management (CRM) and process and sales order management were a distant second and third. Together, these three areas accounted for 58.4% of market value. "Accounting will likely maintain its place as the most popular EAS module as it is the core of any implementation," says Drori. "But the real hotspot was the re-emergence of CRM. The improving economy liberated budgets, and Microsoft's entry into the market will raise the profile of CRM and boost sales for all vendors."

Discrete manufacturing was the largest single vertical segment in the Israeli EAS market in 2004. Process manufacturing followed in second place while communications and broadcasting and central government were the third and fourth largest markets. These verticals represented just over 60% of EAS L&M revenue last year. "The telecommunications industry in Israel is actually only represented by a handful of companies and only around ten percent of these have more than 500 people," says Drori. "Nevertheless, their massive customer bases and the rapid pace of technological development within the vertical market mean they are constantly investing in the most advanced information systems as their competitiveness rests on the supply of reliable state-of-the-art service."

IDC's Israel Enterprise Application Software 2005-2009 Forecast and 2004 Vendor Shares provides a detailed overview of the Israeli market for high-end integrated EAS packaged software products. The study includes detailed qualitative and quantitative information, analyses, and forecasts. It delineates the defining characteristics of the Israeli EAS market, shows which segments are investing in EAS solutions, and notes how future spending will affect market development. The study covers the primary EAS operating environments and explains how sales will affect third-party hardware and software vendors, and how vendors across the IT spectrum (hardware platform vendors, database vendors, operating system vendors, and enterprise application vendors) can capitalize on the continued expansion. In addition to noting how political and economic conditions specific to Israel will affect the market, the study also tracks and analyzes the leading players.

For more information about this study, please contact Asaf Lev (+972 3 561 1660, alev@idc.com) or Tatiana Hinova (+420 221 423 140 or at thinova@idc.com).