Looking for a WMS? This could be the best time to buy. A mature but stable market, with falling prices and more feature-rich, reliable applications to choose from, has brought warehouse management systems into the limelight this year. A new report from ARC Advisory Group says that WMS sales grew 5% in 2002—a modest rate, but a standout in the otherwise beleaguered world of enterprise software. The recovery contrasts sharply with market performance between 2000 and 2001, when WMS sales fell by 6% worldwide and plunged nearly 12% in North America.

In 1998, the market for WMS applications and services totaled $659 million, an amount that rose to $737 million in 2002, making for a cumulative average growth rate of 4.1% for the four-year period. The market is forecast to be worth $831 million in 2004 and reach $962 million by 2007.

Although ARC analysts caution that WMS sales will post a cumulative average growth rate of under 5% in the next five years, they point to the market’s innate stability. Users need the core functions of warehouse management systems and are able to obtain significant ROI from these applications. Lower prices for WMS programs have led to their installation in a far wider variety of warehouses than in the past. According to the ARC report, among WMS suppliers with revenue of more than $10 million, 70% of implementations are at finished-goods distribution centers; 15% at warehouses that support factories; 8% at customer service warehouses; 4% at mixing centers; and 3% at merge-in-transit centers.