Peoplesoft leapfrogged Oracle in the corporate applications market last year to take second place behind SAP for the first time.
Although SAP remains dominant in the enterprise resource planning sector, which includes financial, human resources and manufacturing applications, Peoplesoft saw 76.2 per cent growth in 1997, according to new figures from IDC.
IDC analyst Clare Gillan attributes Peoplesoft's success to a new push into non-US markets - it has traditionally had little presence outside its home territory - and to the addition of a manufacturing application, which has allowed it to compete with as broad a range as Oracle and SAP.
However, the effects of these new directions was only starting to be felt towards the end of the year, she said, and most of the growth came form better sales of its core financial and HR products. Gillan believes the redesign of these applications around a three-tier architecture last year was significant because it allows companies more flexibility in how they mix and match different modules.
Peoplesoft's growth rate dwarfed Oracle's 42.4 per cent increase in its ERP applications business, although the difference in revenues was far less marked - $705 million compared to Oracle's $699 million.
Both were completely overshadowed by SAP, whose sales of $2.25 billion gave it a 15.6 per cent market share, compared to Peoplesoft on 4.9 per cent and Oracle on 4.8 per cent.
The rest of the total sector of $14.4 billion is taken up by players with three per cent or less in market share and the highest growth is in the top three, suggesting further consolidation to come. The three main players all outperformed the sector's overall revenue growth of 20.2 per cent - SAP was up by 32.2 per cent.
Oracle did not comment on the report but IDC did point out that it uses a narrower definition of ERP than some other surveys. It includes applications that automate and integrate corporate functions - HR, payroll, materials management, manufacturing and accounting. Had it included other applications that Oracle offers, such as salesforce automation, the company would have held on to its second place, IDC said.
But Gillan said that did not alter the fact that Peoplesoft had had a successful year while Oracle "has some work to do". Analysts believe Peoplesoft could widen its lead this year as Oracle has various issues that will take more than 12 months to sort out - conflict with Vars, migration paths to Euro-compliant systems and a consistent sales strategy were factors mentioned by analysts at the Yankee Group and Meta Group.
The rest of the ERP top 10 according to IDC were Computer Associates, Baan, JD Edwards, SSA, Geac, IBM and JBA Holdings in that order, with revenues ranging from $435 million to $248 million and market shares between three and 1.7 per cent. The top 10 as a whole saw sales growth of 32.9 per cent last year.
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