ARC Advisory Group conducts an annual analysis of the global trade management (GTM) market. The research process includes the analysis of large amounts of information and interviews with executives from numerous GTM software companies. The process concludes with the publication of ARC’s GTM Global Market Research Study, which analyzes the market shares across numerous categories of the leading GTM suppliers. Aside from the market share analysis, the study looks at the trends that are driving and/or inhibiting growth in the GTM market, industry and regional trends, as well as strategies for success.
Over the next couple of weeks, I will include an article about the growth factors and key trends driving the GTM market. However, today, I want to take a closer look at what we’ve outlined as the key strategies for success in the GTM market.
Take an Integrated Approach and Platform Strategy
Many GTM suppliers stated that the benefits customers obtain from purchasing an integrated suite of solutions are contributing to the growth in overall GTM sales. ERP providers and large GTM providers state that customers are considering to replace multiple country-specific compliance solutions with a corporate-wide GTM solution that can be managed centrally and can be adjusted to support regional requirements. Also, GTM vendors that offer compliance, visibility, and global execution are promoting the benefits that can be obtained by acquiring a GTM solution that provides all of these functions. Similarly, larger enterprise software providers are promoting the benefits from native integration of GTM software with complementary solutions such as the procure-to-pay process in ERP and transportation execution in TMS.
GTM solutions are predominantly sold to large multinational corporations that utilize corporate-wide enterprise software. In addition, the GTM market has matured to a point where customer requirements extend beyond support for specific countries. Customers now consider to include integration that offers a holistic view of the enterprise and technology standardization at a lower total cost of ownership. ARC recommends that niche providers extend their capabilities to support a wider range of functionality and geographic coverage. It is also recommended that large vendors with limited country-specific functionality develop, partner, or acquire a full suite of GTM solutions that provide the above-mentioned integration and standardization benefits.
Invest in Global Expansion
Currently, most suppliers sell their solution predominantly in the United States and regions of Europe, but GTM by definition is global, so suppliers need to look outside their legacy markets and toward the expanding markets. GTM solutions have a global appeal, and there are significant opportunities in the rest of the world, particularly in Asia, which includes three of the top 10 exporting countries: China, Japan, and South Korea.
Many GTM suppliers are headquartered primarily in the United States and Europe, but the suppliers should invest in the countries where their customers do business. This goes with investing in new sales and support offices in these regions, which will build on the existing user base.
Extend the GTM Footprint
The GTM market is split almost equally between the two high-level solution categories: Trade Compliance, and International Trade Visibility and Execution. There are development synergies to offering both solution categories on a single platform to customers. And, there are integration benefits to the customers that obtain both sets of application functionality from a single provider. With that in mind, expanding the GTM footprint to cross over into the Trade Compliance, and International Trade Visibility and Execution category may offer opportunity to expanding one’s customer base, GTM revenues, and market share. This could be done by strategic acquisitions or through organic product footprint expansion.
Expand Strategic Acquisitions
Strategic acquisitions represent an opportunity for most suppliers to augment their solution capabilities and sales team. The GTM solutions market is fragmented. There are some suppliers that have best-of-breed solutions to meet specific needs, such as those that address trading requirements of a specific country or trading region. The acquisition of a regional niche solution offers a means by which an existing GTM provider can expand the solution portfolio with region-specific functionality that can benefit its existing client base.
At the same time, the acquisition of a foreign GTM provider can provide the acquiring firm with an effective and established sales force in the market that understands local business customs and is experienced at selling the product.
Get More Interoperability into Solution
Interoperability is a very important aspect of global trade management. Because of traditional functional silos within organizations, many businesses endure poor performance in their global operations. The comprehensive nature of GTM is an advantage for businesses that fully embrace the cross-functional, system-wide view of global trade.
However, suppliers need to have this interoperability in their solution to offer a comprehensive answer to the user organizations. Through investments in new systems that communicate with each other and share information needed to react in time, businesses can add flexibility to the delivery process and provide shipment information that customers want.
For more information on the market study, check out the brochure.