Www.idc.com Taiwan Market Summary 2H 2005 Enterprise Applications Tracker IDC Asia/Pacific Prepared for Oracle

www.idc.com

Taiwan Market Summary 2H 2005Enterprise Applications TrackerIDC Asia/Pacific

Prepared forOracle

Source: IDC A/P Semi-Annual Enterprise Applications Tracker, April 2006

AgendaAgenda

Market Review and Drivers

Market Trends and Challenges

Competitive Landscape

Market Forecast

Summary Outlook

www.idc.com

ERM Applications Market Summary, 2H 2005Taiwan


Taiwan ERM Applications 2H 2005 ReviewTaiwan ERM Applications 2H 2005 Review

Enterprise Asset

Management18%

Financial Applications

28%Human Capital

Management14%

BPM & Financial Analytics

3%

Project and Portfolio

Management6%Procurement

7%Payroll

16%

Order Management

8%

Total Size US$22.17 M

Note: Numbers refer to software license revenue and maintenance revenue only

ERM Marketing Activities in 2H 2005 SAP User Forum (June). SAP Summit '05 Taiwan (Aug). SAP NetWeaver Technical Forum (Nov). Oracle Using Information Technology to

enhance the efficiency of HR Breakfast Summit (July)

Oracle Perfect Solution to Manufacturing Breakfast Summit (Aug)

Oracle SMB Applications Day (Aug) Oracle Enterprise Resource Planning Solutions

Conference (Aug) Oracle Financial Service Manager Breakfast

(Oct). Oracle Technical and Developer Summit (Nov). Oracle Information Architecture Day (Nov). Oracle Year-End Professional Conference –

Grid Computing and RFID (Dec). Oracle Financial Service Manager Breakfast

(Dec). SAS Enterprise Solution Demos for Partner

Recruiting

Source: IDC A/P Semi-Annual Enterprise Applications Tracker, April 2006Taiwan ERM Applications 2H 2005 Key DriversTaiwan ERM Applications 2H 2005 Key Drivers

Accelerators Domestic and international policies are

driving some IT spending, including Basel II, CMMI certification, and Article 7, 34 and 35 in Taiwan.

It is more important for application vendors to provide integrated platform solutions. Such platform could enable enterprises to achieve higher ROI.

Since ERM applications are unique in requirements by verticals, ERM vendors have invested to provide integrated solutions based on vertical needs.

Innovative pricing regime or fresh functionalities can spur replacement or new licenses purchase in the market.

Vendors' investments on marketing and sales activities will stimulate demands. Local channel partners would received improved support from vendors on marketing and sales initiatives.

Inhibitors Constrained budget consumption will delay new

enterprise application investments, companies instead rely on existing resources or alternative tools as short term plans.

Slow economic recovery results the tight budget, and the tight budget results the delay of new purchase or upgrade. However there are significant variances by vertical.

Many Taiwanese businesses have relocated their investments to PRC or set up branches there. The financial budget for relocation to PRC would create a decline in domestic IT spending.

While profits from software licensing are reduced, both PSC vendors and local channels tend to transfer their focus on IT services. With more companies entering the services market, the competition between prices and services are getting tense.

The stock market in Taiwan is expected to remain static with little fluctuation. Rising stock prices increase business confidence while falling prices can drive lower economic expectations.


Taiwan ERM Applications 2H 2005 Industry TrendsTaiwan ERM Applications 2H 2005 Industry Trends

Discrete manufacturing and retail were the major industry buyers on ERM applications in the 2H05.

The percentage of revenue share: discrete manufacturing was the highest, 56.3%; retail was the second, 9.9%; and government was the third, 6.4%.

Government have increase ERM application spending over the last two years, since there were some IT infrastructure and content construction projects in Taiwan which started from 2005.

ERM vendors are dedicated to provide integrated solutions based on different vertical needs, to serve specific vertical demands better.



Taiwan ERM Applications 2H 2005 Company Size TrendsTaiwan ERM Applications 2H 2005 Company Size Trends

The main revenue stream of ERM was still came from large and medium large businesses which counted for 60.1% and 23.5% respectively.

As the figure shows, the revenue share of large business became smaller last year, because the market of large business was almost mature.

Although the income contribution from SMB was not large, but the adoption rate and revenue share of small and medium small business were expected to steadily grow every year.

Demand from upgrading existing ERM systems and implementing new applications are expected to affect the trend of buyer size in the next years.


Source: IDC A/P Semi-Annual Enterprise Applications Tracker, April 2006Taiwan ERM Applications 2H 2005 Other Key TrendsTaiwan ERM Applications 2H 2005 Other Key Trends

Key Trends on O/S Platform Windows was still the largest OS

platform for ERM applications in Taiwan, which accounted for 63.1% revenue share.

Unix was the second most popular operating system, with 34.6% revenue share.

Mainframe only had 0.3% because enterprises prefer to run the software on Unix or Windows and the cost factor is a major concern.

Compared with 1H, the adoption rate of Linux and other open source OS was growing, since Linux is perceived as economical alternative for small and medium business companies. Its share was 1.5% in 2H 2005.

The percentage of Solaris is expected to grow, since Sun has worked aggressively with many enterprise solution providers in the last two years.

Key Trends on Channel Distribution

74.5% of ERM application revenue was through direct channel sales in 2H 2005.

Foreign vendors often sell their products to global and large enterprise directly, and recruit partners to help them penetrate the SMB market.

Local vendors, such as DSC and FAST, has sufficient and capable manpower to deliver its ERM applications directly.

The other favorable sales channels were SI and VAR, which accounted for 11.3% and 11.1% respectively.

The share of ISV is expected to grow up, although it was still small in 2H 2005. ERM vendors are going to recruit more local ISVs to fulfill the demands from SMBs.

Source: IDC A/P Semi-Annual Enterprise Applications Tracker, April 2006Taiwan ERM Applications 2H 2005 Key ChallengesTaiwan ERM Applications 2H 2005 Key Challenges

Key Challenges faced by vendors Although Financial Application is still the

largest functional market in ERM market in Taiwan, but BPM and Financial Analytics is expected to pick up over the next years. Vendors should provide more functionalities to fulfill BPM needs from customers.

Vendors have to build and maintain the strong partnership with their services partners to offer their customers a reliable after-sales service.

Some vendors that dedicate themselves to one functional market should release more marketing information for customers to study their niche solutions.

Local vendors should expand their product scope and portfolio to compete with other foreign vendors. Although their product is sufficient for Taiwanese companies but it still lack depth for the international market..

Further downward price competition will be a challenge for vendors, especially for SMB solutions.

Key Challenges faced by end-users

Integration and application configurations in heterogeneous environments are always major concerns of end user companies

Some end user companies maintain very sophisticated database systems with scattering physical data sources, and they struggle to consolidate all databases into single repository

Companies who are trying to integrate ERM systems to CRM applications, encounter many technical burdens when doing so.

Companies still need to spend on internal training because of the changes in the business processes. .


Taiwan ERM Applications 2H 2005 Top 5 Vendor Revenue Performance (US$M)Taiwan ERM Applications 2H 2005 Top 5 Vendor Revenue Performance (US$M)

0 1 2 3 4 5 6 7 8 9

SAP

DSC

Oracle

FAST

Hyperion

2004 H2 2005 H1 2005 H2

Note: Numbers refer to software license revenue and maintenance revenue onlyRanking is based on 2H 2005 revenue

US$m


Taiwan ERM Applications 2H 2005 Competitive AnalysisTaiwan ERM Applications 2H 2005 Competitive Analysis

SAP

Market Share 35.9%

DSC

Market Share 34.7%

Oracle

Market Share 11.1%

FAST

Market Share 2.5%

Hyperion

Market Share 1.9%

Operational Structure

The breakdown between license, maintenance and services revenue of SAP is around 45%: 25%: 30%.

Besides manufacturing, SAP also focus on retail, services, food processing, and other industries..

The breakdown between license, maintenance and services revenue of DSC is around 55%: 20%: 25%.

DSC grabs SMB customers attention by launching its packaged industry applications for SMB market in 2H05. DSC is expected to gain more revenue from the specific industry applications..

DSC plans to expand its market into other countries in Southeast Asia.

The breakdown between license, maintenance and services revenue of Oracle is around 40%: 25%: 35%.

Oracle kept its acquisition momentum with the purchase of vertical software vendors to beef-up its industry specific applications.

The breakdown between license, maintenance and services revenue of FAST is around 50%: 15%: 35%.

FAST distinguished its implementation projects into two sections. The pre-consulting services, and software delivery phase. This provides their customers a clear plan on the services contribution to the project.

The breakdown between license, maintenance and services revenue of Hyperion is around 60%: 25%: 15%.

Hyperion expands its market share by engaging channel partners to sell to customers.

Partnering Strategies

Compared to the past, SAP places a lot of attention on its relationship with local partners. The strategy has manifested appropriately and contributed to SAP revenue gain.

SAP's consultant engages in the initial stage to lead the partners to implement SAP's products.

DSC adopts almost 100% direct sale of enterprise applications. But for its SMB product, DSC recruit a few small and medium sales partners from North Taiwan to South Taiwan.

DSC provided its partners only with training manuals, because its SMB products are considered to be simple to use.

Oracle's local delivery partners support Oracle with their own professional specialty (HR, CRM, ERM, SCM and database)

Oracle didn't invest much on partners last year, since their partnerships have been kept for years.

FAST is on 100% direct sales model of ERM solutions.

FAST has a consulting partner "eMO". FAST is also the largest stockholder of eMO. eMO could let FAST make more revenue from consulting projects, since FAST divided its projects into pre-consulting services and software delivery phase.

The partners of Hyperion could be categorized into “consulting” and “distributor”.

Hyperion wants to drive revenue through local partners' (personal) network. The partners it chose have broad experience in solution delivery for manufacturing or banking.



Taiwan ERM Applications 2H 2005 Competitive Analysis (continued)Taiwan ERM Applications 2H 2005 Competitive Analysis (continued)

SAP

Market Share 35.9%

DSC

Market Share 34.7%

Oracle

Market Share 11.1%

FAST

Market Share 2.5%

Hyperion

Market Share 1.9%

Marketing & Sales Effectiveness

Since SAP has been focusing strongly in the SMB market, SAP will partner with more local ISV to help SAP penetrate Taiwan's CRM market in the coming years.

The marketing messages of SAP are Netweaver and those applications developed on NetWeaver.

DSC has focused on its ERP II and packaged industry applications for SMB in 2005.

Advertising campaigns for its product or promotion are restricted to newspapers. Its advertisements appeared in the newspapers periodically.

Oracle is used to dealing with medium and large enterprises. It is weak in SMB market in Taiwan.

The main marketing theme of Oracle is on Fusion.

FAST's customers are in the large and medium enterprises. FAST did not target the SMB last year.

FAST only provides reference cases and detailed solutions information on its website.

The main marketing theme of Hyperion is consolidation and BPM applications.

Hyperion still targets at large enterprises in 2H05, and doesn't plan to focus at the SMB.

Product Differentiation

SAP has very strong brand equity in ERM solutions in Taiwan, which is a strength for SAP to perform in this market..

Unlike some local ERM software vendors that package their software and hardware together, DSC is a 'pure' software provider. Its goal is to be a pure product-based software provider in Taiwan

DSC changed its sales strategy from product-oriented to industry-oriented, so its sales can tailor the most suitable solution for its customers.

Oracle has been on the merger and acquisitions front. It enables Oracle to extend its scope quickly and provide industry specific applications for its customers for eg with i-flex, G-Log and Retek

FAST provides more customization services than other vendors.

The data consolidation applications of Hyperion are strong in the market. For consolidation solution, Hyperion's has developed a complete set of solutions.



Taiwan ERM Applications 2H 2005 Competitive Analysis (continued)Taiwan ERM Applications 2H 2005 Competitive Analysis (continued)

SAP

Market Share 35.9%

DSC

Market Share 34.7%

Oracle

Market Share 11.1%

FAST

Market Share 2.5%

Hyperion

Market Share 1.9%

Technology Capabilities

NetWeaver will be the key platform for SAP in the future. SAP wants to push its ERM/CRM software and extend its market (or other coming product) by this platform.

SAP offers its ESA architecture which is a SOA framework..

SAP supports Linux and MySQL

All solutions from DSC are deeply localized for Taiwanese business.

DSC released upgrades for some modules of its ERP II solution each year.

Oracle offers its solutions on a SOA architecture with Fusion.

With the acquisition of Innobase, Oracle plans to increase support for open source software. The adoption rate of Linux is relatively small.

FAST also supports Linux OS, but the adoption rate is very small.

Hyperion offers its solution on a SOA architecture, which is the Hyperion System 9 Foundation Services.

Hyperion supports Linux, but the adoption has been minimal.



Taiwan ERM Applications 2H 2005 Top 5 Vendor AnalysisTaiwan ERM Applications 2H 2005 Top 5 Vendor Analysis

Vendor IDC Analysis

SAP With strong awareness in the ERP market, SAP should leverage on its existing channel structure in Taiwan, and invest more efforts to educate the market on how SAP’s products can help customers to improve business operations. The collaborative synergy of ERP, CRM, BI, and together with the NetWeaver platform will increase IT efficiency for users.

DSC The vendors involved in the government sector is facing stiff competition in the tender market. This has threatened DSC’s overall profit margins as this sector is DSC’s largest revenue contributor. DSC needs to promote its image as an experienced professional advisor and consultant, rather than an alternate choice for price-sensitive companies.

Oracle Oracle focuses on its database and ERP solutions in 2005, because the sales volume in enterprise segment has been affected. Oracle’s ERP applications are part of the e-Business suite. It also offers PeopleSoft Enterprise and JDE Enterprise One for the mid-sized customers. However, its customers are predominantly large enterprises. Oracle should increase its partnership with more local ISV and services providers. These vendors have expertise in different verticals to help Oracle extend its market scope to medium and small enterprises

FAST FAST is shifting its business focus to BI related applications. FAST perceives the revenue from BI will grow at a faster rate than ERM applications. IDC recommend FAST to repackage its products, or offer its products with other vendors, such as Microsoft to maximize its market and technology know-how in the local environment.

Hyperion Hyperion’s BPM products did not perform as well as last year. Since Hyperion does not sell its products direct, they have to recruit more partners. However, it needs time to achieve the goal, as most capable SI, VAR, and ISV may have already signed up with other application vendors.


Taiwan ERM Applications 2006 ForecastTaiwan ERM Applications 2006 Forecast

0

5

10

15

20

25

30

1H 2005 2H 2005 1H 2006 2H 2006

BPM & Financial Analytics Enterprise Asset Management

Financial Applications Human Capital Management

Order Management Payroll

Procurement Project and Portfolio Management


US$m


Taiwan ERM Applications 2006 ForecastTaiwan ERM Applications 2006 Forecast


Assumptions Since the large enterprises market is saturated, the SMB space is being targeted by

ERM vendors. Vendors are expected to package their products for the SMB market. Many vendors have launched their SMB edition. Nevertheless, this may result in further downward spiral of pricing in this market; which will attract enterprises’ interest.

Since ERM applications possess distinctive processes for the verticals, ERM vendors have invested to provide integrated solutions with embedded vertical best practices. The best-of-breed industry specific solutions will encourage users' adoption.

The number of professionals and engineers in Taiwan is falling compared to PRC, HK, and Singapore. Professionals with specific talents are flowing out the country to other geographies.The labor migration will increase the overhead costs of finding, recruiting, and managing talents from global pools, but it also lower costs and may even lead to more innovation.

While profits from software licensing are getting smaller, both ERM vendors and local channels tend to redirect their focus on IT services, e.g. second-year and beyond maintenance supports, or consulting. With more companies entering the services market, the competition between prices and services are getting tense.

IDC expects dynamic IT will support business strategy and IT operational efficiency (from virtualization in database, data federation, software-as-a-service, and composite and rule-based application). Dynamic IT will add coherence to the enterprise usage of IT. However, confusing choices for enterprises and funding hurdles for new infrastructure will balance this impetus for market growth.

Source: IDC A/P Semi-Annual Enterprise Applications Tracker, April 2006Taiwan ERM Applications Summary OutlookTaiwan ERM Applications Summary Outlook

Top 5 upcoming trends to note in the next 12 months BPM and Financial Analytics are gaining stronger interests within the ERM space with healthy

growth, compared to others modules. As profits from software licensing are reducing, software services revenue is catching vendors

attention as a replacement source. Taiwan government had advised enterprises to adhere to the green supply chain management

regulations. The green supply chain applications will be the next implementation for enterprises in Taiwan

Industry-specific products are catching more attention, especially for traditional industries. For the saturated ERM market, SMB space would be the fresh war zone.

Top 5 most interesting opportunities based on the above trends Traditional ERM applications providers developing BPM applications as part of their offerings. Services-as-a-Software (SaaS) will become the trend in Taiwan, although there are few vendors

offering such services. ERM vendors could develop green supply chain management related applications and

collaborate with other applications players. This one-stop-shop approach may attract customers’ interests and demands.

Since vertical best practices for respective industry will attract greater attention in the market, it will be an opportunity for vendors to embed industry-specific best practices for small and medium business in Taiwan.

Vendors would package their products to meet the needs of SMBs.

www.idc.com

CRM Applications Market Summary, 2H 2005Taiwan


Taiwan CRM Applications 2H 2005 ReviewTaiwan CRM Applications 2H 2005 Review

Marketing31%

Customer Service

18%

Contact Center29%

Sales22%

Total Size US$6.35 M CRM Marketing Activities in 2H 2005 GD Year 2005 General Digital Channel

Conference (Sept). SAP User Forum (June). SAP Summit '05 Taiwan (Aug). SAP NetWeaver Technical Forum (Nov). Oracle Using Information Technology to

enhance the efficiency of HR Breakfast Summit (July)

Oracle Perfect Solution to Manufacturing Breakfast Summit (Aug)

Oracle SMB Applications Day (Aug) Oracle Enterprise Resource Planning Solutions

Conference (Aug) Oracle Financial Service Manager Breakfast

(Oct). Oracle Technical and Developer Summit (Nov). Oracle Information Architecture Day (Nov). Oracle Year-End Professional Conference –

Grid Computing and RFID (Dec). Oracle Financial Service Manager Breakfast

(Dec).



Taiwan CRM Applications 2H 2005 Key DriversTaiwan CRM Applications 2H 2005 Key Drivers

Accelerators Integrated platform applications could make

vendors offer new applications and functions to customers, and strain the legal and regulatory systems. It has also driven increased IT spending.

Vendors have package their products so as to cater to price concerns and other needs from the SMB market. Many vendors launched their SMB edition lately; however, this may result in further downward price competition in this market.

Vendors, such as SAP and Oracle, continued to invest in the market. While most of the key players have already built up their local offices in Taiwan, and have increased their headcount.

For most enterprises, the satisfactions toward existing solutions are still indistinct. According to a demand-side research, most of the enterprises have willingness to replace or upgrade the existing software.

Demands from government will continue to grow, and it will be a significant investments to related applications of this national project.

Inhibitors Constrained budget consumption will delay

new enterprise application investments, companies instead rely on existing resources or alternative tools as short term plans.

Slow economic recovery results in tight budget, and created delay in new purchases or upgrades. However there are significant variances in the verticals.

Many Taiwanese businesses have relocated their investments to PRC or set up branches there. The financial budget relocation to PRC would create a decline in domestic focus automatically - which will cause slowdown in market investments

While profits from software licensing are reduced, both CRM vendors and local channels tend to transfer their focus on IT services. With more companies entering the services market, the competition between prices and services are getting tense.

The stock market in Taiwan is expected to remain static with little fluctuation. Rising stock prices increase business confidence.


Taiwan CRM Applications 2H 2005 Industry TrendsTaiwan CRM Applications 2H 2005 Industry Trends


Like other enterprise solution markets, manufacturing and banking sectors contributed the most ERM revenue share.

In terms of percentage of revenue share - manufacturing was the highest, 26.7%; banking was the second, 17.1%; and media was the third, 13.3%.

Banks are willing to invest more in CRM solutions as their customer bases are getting larger and consumers’ behaviors become highly sophisticated, after the mergers and acquisitions

Telecommunication and services industries also showed demands in CRM solutions to fulfill and satisfy customers’ needs.


Taiwan CRM Applications 2H 2005 Company Size TrendsTaiwan CRM Applications 2H 2005 Company Size Trends


The major CRM application buyers are from large businesses, 68.5% of total revenue, since large enterprises usually maintain huge customer data repositories.

The market revenue share of second largest buyers - medium large business, was only 14.5%, but its revenue share is expected to grow in the coming years.

Like medium large business, the adoption rate and revenue share of small and medium small businesses are expected to pick up gradually.

Government has been increasing investments for CRM applications to build new communication mechanisms with citizens.


Taiwan CRM Applications 2H 2005 Other Key TrendsTaiwan CRM Applications 2H 2005 Other Key Trends

Key Trends on O/S Platform For cost consideration and

application environment requirement, most CRM solutions were operated on Windows platform, accounted for 58.5% in revenue terms.

The second OS was Unix, with 36.% revenue share.

Compared with 1H 2005, mainframe maintain the same revenue share, 1.9%.

The adoption rate of Linux and other open source OS is slowly growing. Its revenue share was 2.2% in 2H 2005.

The percentage of Solaris is expected to grow, since Sun has worked aggressively with many enterprise solution providers in the last two years.

Key Trends on Channel Distribution

57.4% of CRM applications are sold directly in 2H 2005. A major reason is because vendors service their large customers by themselves.

Around 24.2% of CRM applications are sold through SIs. The percentage is less than 1H 2005. SIs’ revenue was reduced because of the change in their business model during last year.

The third largest group was VAR, with 9.5% share.

The share of ISV is expected to grow despite it was small in 2H 2005. Many CRM vendors are recruiting more local ISVs to help them to penetrate the SMB market.


Taiwan CRM Applications 2H 2005 Key ChallengesTaiwan CRM Applications 2H 2005 Key Challenges

Key Challenges faced by vendors Vendors that provide contact center

applications should fasten its pace to provide analytics applications to fulfill market demands. Analytic CRM is capturing more interest when implementing CRM applications.

Vendors have to build and maintain the tight and strong partnership with their partners to provide customers with reliable after-sales service.

Local vendors need to expand their product scope and portfolio to compete with global vendors. Although their product is sufficient for local requirements but may not be compatible for international market.

Further erosion of pricing value is a challenge for vendors, especially for SMB solutions.

Vendors have to position themselves through branding and market awareness. Some CRM vendors have poor brand image and products marketing.

Key Challenges faced by end-users

After-sale service from vendors can not meet end-users’ anticipations and needs.

The information output from improper configured CRM applications can impact data accuracy. End users have to further invest in relevant tools to ensure data integrity.

The integration of data between different locations is not as efficient, end users have to ensure data management systems to be able to reap the benefits of CRM and analytic CRM investments.

The implementation period of some CRM solutions over took the project schedule.

Difficulties in attaching the planned ROI with the live project.


Taiwan CRM Applications 2H 2005 Top 5 Vendor Revenue Performance (US$M)Taiwan CRM Applications 2H 2005 Top 5 Vendor Revenue Performance (US$M)

0 0.2 0.4 0.6 0.8 1 1.2 1.4

Oracle

NCR

Avaya

SAP

GD

2004 H2 2005 H1 2005 H2


US$m


Taiwan CRM Applications 2H 2005 Competitive AnalysisTaiwan CRM Applications 2H 2005 Competitive Analysis

Oracle

Market Share 17.9%

NCR Teradata

Market Share 12.4%

Avaya

Market Share 12.3%

SAP

Market Share 9.3%

GD

Market Share 9.3%


The breakdown between license, maintenance and services revenue of Oracle is around 40%: 25%: 35%


The breakdown between license, maintenance and services revenue of NCR Teradata is around 35%: 25%: 40%.

NCR Teradata delivers its CRM solutions with NCR ATM or database (Teradata).

Avaya Taiwan is a sales office. There are 3 pre-sales and 4 sales in Taiwan.

The breakdown between license, maintenance and services revenue of Avaya is around 55%: 30%: 15%.

Avaya bundles its contact center applications with its IP telephony products.


SAP Taiwan has no dedicated staff on its CRM software sale. Its solutions sales cover the entire ERM, CRM and platform product.

The breakdown between license, maintenance and services revenue of GD is around 60%: 20%: 20%.

Competitive pricing is the key strategy of GD to extend its market share.



Oracle didn't invest much on partners last year, since their partnership have been kept for years.

NCR Teradata adopts direct sales model, but has partnership with local SI vendors, e.g. Systex, Stark Tech, and Concord, to work on coding or the delivery support.

NCR Teradata intend to recruit more partners in 2006 to drive more revenue from product selling and promoting by the partners.

Avaya has 4 major agents, there are tsti, NSE, Baud, GL-Telecom. They deliver Avaya's appliance, infrastructure and software to customers.

The manpower and relevant skill sets of local partners could help Avaya penetrate the market.

There are 5 major solution partners of SAP Taiwan. The partners have their own pre-defined packages, so they can quickly and easily sell and deliver A1 or B1 to businesses.


GD sells direct and delivers its product to customers. GD has allied with 18 partners till the end 2005. Because the alliance length is short and the cooperation with both sides is not tight, it still adopts the direct sales model now. As its sales grew and partners no. increased, it has to adjust itself to a new go-to market model.



Taiwan CRM Applications 2H 2005 Competitive Analysis (continued)Taiwan CRM Applications 2H 2005 Competitive Analysis (continued)

Oracle

Market Share 17.9%

NCR Teradata

Market Share 12.4%

Avaya

Market Share 12.3%

SAP

Market Share 9.3%

GD

Market Share 9.3%


Oracle is used to dealing with medium and large enterprises. It is weak in SMB market in Taiwan. Oracle does not place a heavy emphasis on the CRM SMB market, since the revenue is relatively minimal.


BI related applications will be another theme in 2006.

The target markets of NCR Teradata are the large enterprises in government, banking, insurance and financial industries.

Analytic CRM remains to be the major products of NCR Teradata. NCR Teradata is targeted at its data warehouse customers to extend its sales on CRM market. It expected the demand to grow in banking and financial markets.

In the industry, Avaya focuses on banking, telecom and insurance industries.

For product, Avaya focus on CTI IVR, outbound services and telemarketing in 2006.

The CRM module from B1 can be sold separately as SAP intends to extend its market share. SAP promotes (through partners) the CRM module to SMBs. The default price is 20% of B1, to encourage adoption in SMBs in the industries.

Since SAP has been focusing strongly in the SMB market, SAP will partner with more local ISV to help SAP penetrate Taiwan's CRM market in next years.

GD's marketing strategy includes telemarketing, direct interview, sponsoring other vendors' conference, and advertisement on the web. This advertisement has attracted a lot of interest on its product.

GD has a promotion solution for SMB market in 2005, the suite version that motioned in "Price". The low price attracted many SMBs to buy the GD-CRM.



Taiwan CRM Applications 2H 2005 Competitive Analysis (continued)Taiwan CRM Applications 2H 2005 Competitive Analysis (continued)

Oracle

Market Share 17.9%

NCR Teradata

Market Share 12.4%

Avaya

Market Share 12.3%

SAP

Market Share 9.3%

GD

Market Share 9.3%


Oracle has been on the merger and acquisitions front. It enables Oracle to extend its scope quickly and provide industry specific applications for its customers.

NCR's CRM applications integrate with its database and ATM system. NCR CRM has leveraged on its successes in the ATM market to up-sell to the banks. NCR CRM specialized in credit card and customer value analysis, it is popular in the banking industry.

Avaya's CRM application integrates with its IP telephony products.

SAP has strong brand equity in ERM solutions in Taiwan, which is an advantage for SAP when selling to the CRM market.

GD's solution is cheaper than its competitors. Its price is very competitive in Taiwan's CRM market.


With the acquisition of Innobase, Oracle plans to increase support for open source software. The adoption rate of Linux is quite quite small. Adding Siebel CRM into its applications suite, Oracle has now a stronger propositions for banks, telcos and manufacturers in Taiwan.

NCR Teradata's CRM applications could support Mainframe, UNIX, Windows, and Linux platforms.

Avaya's CRM applications support Windows, Solaris and Linux. Avaya expects the adoption rate of Linux will increase in the coming years.

NetWeaver will be the main platform for SAP in the future. SAP intends to market its ERM/CRM software and extend its market (or other product) on this platform.

SAP offers its ESA architecture which is a SOA framework.

CRM applications from GD are all localized for Taiwanese business, since GD is a Taiwanese vendor.

GD-CRM only supports Microsoft Windows 2000 Server, Microsoft Small Business Server 2000, Microsoft Internet Information Server 5.0, Microsoft SQL Server 2000, and Oracle Database 9i and 10g now.



Taiwan CRM Applications 2H 2005 Top 5 Vendor AnalysisTaiwan CRM Applications 2H 2005 Top 5 Vendor Analysis

Vendor IDC AnalysisOracle Oracle has alliance with other local ISVs and services providers, which have various specialties in

different vertical industries. Therefore, those ISVs and services providers can help Oracle to sell its solutions to the medium enterprises.

Oracle focuses on its database and ERP solutions in 2005, because the sales volumes are much less than before. Oracle intends to grow its market share from the technology and applications products, and it seems Oracle is regaining its market share in Taiwan.

NCR Teradata NCR Teradata has partnership with BI software vendors, such as Cognos, BO, and MicroStrategy, to deliver its end-to-end solutions. NCR Teradate tries to expand it market by allying with other applications vendors. This is considered as effective strategy because NCR Teradata won several major deals from banking and telecommunication industries as a result from this new initiative.

Avaya Since the contact center market for large enterprise is getting mature, Avaya plans to enhance its CTI, outbound services and telemarketing products in 2006. It wants to gain more revenue from providing value added application and services in 2006.

SAP The replacement demands bring new market opportunity for SAP. Companies adopt global vendors products which can provide advanced functions with industry processes that local products cannot provide.

IDC recommends SAP to place more focus on its CRM products if it want to extend its market share in CRM field, it will be the short cut to make revenue in the short term.

GD Since the company size of GD is relatively small, GD has limitation in many areas. The shortage of manpower will bind its development even on marketing, sales or R&D operations. GD should expand its product scope and portfolio to compete with international vendors. GD should make more efforts to develop its application modules to comply with new technology such as SOA or wireless/mobile capabilities.


Taiwan CRM Applications 2006 ForecastTaiwan CRM Applications 2006 Forecast

0

1

2

3

4

5

6

7

8

1H 2005 2H 2005 1H 2006 2H 2006

Contact Center Customer Service

Marketing Sales


US$m


Taiwan CRM Applications 2006 ForecastTaiwan CRM Applications 2006 Forecast


Assumptions Since the large enterprises market is saturated, the SMB space is becoming the target

for CRM vendors. Vendors are expected to package their products for the SMB market. Many vendors have launched their SMB edition; however, this may result in further downward price competition in this market.

While profits from software licensing are getting smaller, both CRM vendors and local channels switch their focus to value-added IT services, e.g. after first year maintenance supports, or consulting. With more companies entering the services market, the competition between prices and services are getting tense.

Enterprise profit in 1H 2006 is expected to be weaker than 2H 2005. Constrained budget consumption will delay new enterprise application investments, companies instead rely on existing resources or alternative tools as short term plans.

CRM vendors would continue to recruit more channel partners to increase market opportunities, and continue to improve their collaboration with their partners in supporting consulting and after-sales service. The major vendors possess strong partnership with their distributors, channels, and other system integrators to support their consulting and after-sales service. So it is much hard for competitors or the local vendors to break in.

IDC expects dynamic IT will both support business strategy and IT operational efficiency (from virtualization in database, data federation, software-as-a-service, and composite and rule-based application). Dynamic IT will add coherence to the enterprise usage of IT. However, confusing choices for enterprises and funding hurdles for new infrastructure will balance this impetus to market growth.


Taiwan CRM Applications Summary OutlookTaiwan CRM Applications Summary OutlookTop 5 upcoming trends to note in the next 12 months Analytic CRM applications will be implemented more in the coming years. Enterprises will outsource their contact center business to independent contact

center services companies. Customer support is increasing in important for businesses, despite of its low

revenue share. SMB space will be the next war zone. CRM technology with industry specific processes to gain demand in the industries.

Top 5 most interesting opportunities based on the above trends Significant opportunity for CRM vendors to increase revenues and customer

satisfaction by offering analytic CRM application and tools. Contact center outsourcing will become the new trend in the near future. Vendors

could provide their software with services for customers. There will be some opportunities on customer support market. Companies will be

concern with related industry functionalities. Vendors would repackage their products to cater the needs from SMBs. It is important for vendors to have and launch their total solution and integrated

platform applications.

www.idc.com

PSC Applications Market Summary, 2H 2005Taiwan


Taiwan PSC Applications 2H 2005 ReviewTaiwan PSC Applications 2H 2005 Review

Logistics Applications

0%

Manufacturing

Applications31%

Other Operations

Applications0%

Inventory Managemen

t51%

Wholesale Distribution Applications

1%

Retail Applications

6%Production

Planning11%

Total Size US$7.18 M


PSC Marketing Activities in 2H 2005

SAP User Forum (June). SAP Summit '05 Taiwan (Aug). SAP NetWeaver Technical Forum

(Nov). Oracle Financial Service Manager

Breakfast (Oct). Oracle Technical and Developer

Summit (Nov). Oracle Information Architecture

Day (Nov). Oracle Year-End Professional

Conference – Grid Computing and RFID (Dec).

Oracle Financial Service Manager Breakfast (Dec).


Taiwan PSC Applications 2H 2005 Key DriversTaiwan PSC Applications 2H 2005 Key Drivers

Accelerators It is more and more important for

application vendors to provide integrated platform solutions. Such platform could enables enterprises to achieve higher ROI.

Demands from government continue to grow, and it will be a significant investments to related applications of this national project.

Since PSC applications varies across verticals, PSC vendors are dedicated to provide integrated solutions based on vertical needs.

Innovative pricing regime or fresh functionalities can spur replacement or new licenses purchase in the market.

Vendors' investments on marketing and sales activities will stimulate demands. Local channel partners would received improved support from vendors on marketing and sales initiatives.

Inhibitors Constrained budget consumption delayed

new enterprise application investments. Companies would relied on existing resources or alternative tools as short term plans.

Slower economic recovery drove down IT budgets, and will delay new purchases or upgrades.

Many Taiwanese businesses have relocated their investments to PRC or set up branches there. The financial budget for relocation to PRC would create a decline in domestic IT spending.

While profits from software licensing are reduced, both PSC vendors and local channels tend to transfer their focus on IT services. With more companies entering the services market, the competition between prices and services are getting tense.

The stock market in Taiwan is expected to remain static with little fluctuation. Rising stock prices increase business confidence.


Taiwan PSC Applications 2H 2005 Industry TrendsTaiwan PSC Applications 2H 2005 Industry Trends

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004H1

2004H2

2005H1

2005H2

Vertical Others

Communications &MediaInsurance

Financial Markets

Transportation

Education

Banking

Government

Retail/Wholesale

ProcessManufacturingDiscreteManufacturing


Discrete manufacturing was the major industry buyer on PSC applications in the 2H05, which accounted for 68.3%.

Discrete manufacturing enterprises have the highest enterprise solution adoption rate in Taiwan. The complexity in the production environment such as scarcity of resources, have pushed manufacturers to automate their plant processes.

Process manufacturing accounted for the second largest share with 10.7%; follow by retail at 6.7%.

Vertical Others are wholesale, health care, and services.


Taiwan PSC Applications 2H 2005 Company Size TrendsTaiwan PSC Applications 2H 2005 Company Size Trends

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004H1

2004H2

2005H1

2005H2

Government

Education

Home Office (1-9)

Small Business (10-99)

Medium SmallBusiness (100-249)

Medium LargeBusiness (250-499)

Large Business (>500)


The main market for PSC were large and medium large businesses which accounted for 73.1% and 17.8% respectively.

As the figure shows, the revenue share of large businesses shrunk in 2005. This is because the market has matured.

Although the income contribution from SMB was not large, the adoption rate and revenue share of small and medium small businesses are expected to grow steadily in the coming years.

Government have increased more PSC application spending than last two years, since there were some IT infrastructure and content construction projects in Taiwan which started in 2005.

Demand for upgrading on existing PSC systems and implementing new applications are expected to affect the trend of buyer sizes in the short term.


Taiwan PSC Applications 2H 2005 Other Key TrendsTaiwan PSC Applications 2H 2005 Other Key Trends

Trends on O/S Platform Windows was still the major OS platform

for PSC applications in Taiwan, which contributed for 55.4% revenue share.

Unix was the second most adopted operating system, with 40.9% revenue share.

OS 400 only had 1.1% revenue share, and the adoption rate decreased every year.

The revenue share of Linux was 2.2% in 2H 2005. Compared with 1H, the adoption rate of Linux and other open source OS was growing, since Linux is perceived as economical alternative for small and medium business companies.

Trends on Channel Distribution 66.9% of PSC application revenue was

from direct channel sales in 2H 2005.

The other sales channels were SI and VAR, which accounted for 19.8% and 12.0% respectively.

Global vendors often sold their products to international and large enterprises directly, and engage partners to target the SMB market.

Local vendors, such as DSC and Shinewave, has sufficient and capable manpower to deliver its PSC applications directly.

The share of ISV is expected to grow, although it was still small in 2H 2005. PSC vendors are going to recruit more local ISVs to fulfill the demands from SMBs.


Taiwan PSC Applications 2H 2005 Key ChallengesTaiwan PSC Applications 2H 2005 Key Challenges

Challenges faced by vendors PSC vendors struggle to sell their

solutions, since the enterprises’ priority on PSC applications spending was low.

Vendors have to build and maintain the strong partnership with their services partners to offer their customers a reliable after-sales service.

Local vendors should expand their product scope and portfolio to compete with other foreign vendors. Although their product is sufficient for Taiwanese companies but it still lack depth for the international market.

Vendors that specialize in single functional market should increase their marketing efforts to generate more customers awareness for their niche solutions.

Further downward price competition will be a challenge for vendors, especially for SMB solutions.

Challenges faced by end-users Lack of PSC professionals within end

users organization to maintain systems internally.

Companies still need to spend on internal training because of the changes in the business processes.

After-sale service from PSC vendors can not meet end-users’ anticipations and needs.

Integration and application configurations in heterogeneous environments are always major concerns of end user companies.

Investment committee impose stringent ROI for IT spending.


Taiwan PSC Applications 2H 2005 Top 5 Vendor Revenue Performance (US$M)Taiwan PSC Applications 2H 2005 Top 5 Vendor Revenue Performance (US$M)

0 0.5 1 1.5 2 2.5

SAP

Oracle

DSC

i2

Shinewave

2004 H2 2005 H1 2005 H2


US$m


Taiwan PSC Applications 2H 2005 Competitive AnalysisTaiwan PSC Applications 2H 2005 Competitive Analysis

SAP

Market Share 31.1%

Oracle

Market Share 18.1%

DSC

Market Share 15.3%

i2

Market Share 6.5%

Shinewave

Market Share 6.3%



Besides manufacturing, SAP also focus on retail, services, food processing, and other industries.

The breakdown between license revenue of Oracle is around 40%: 25%: 35%.


.

The breakdown between license revenue of DSC is around 55%: 20%: 25%.

DSC grabs SMB customers attention by launching its packaged industry applications for SMB market in 2H05. DSC is expected to gain more revenue from the specific industry applications.

DSC plans to expand its market into other countries in Southeast Asia.

i2 Taiwan has around 10 staffs in 2H 2005.

i2 acquired the assets of RiverOne in Feb. 2006 RiverOne's multi-enterprise execution platform allows i2 to deliver enhanced supply chain management capabilities.

The total headcount of Shinewave is around 150 staffs. Shinewave was set up by a famous hardware vendor, ASUS. Most employees of Shinewave came from the semi government unit Industrial Technology Research Institute.



SAP's consultant engages in the initial stage to lead the partners to implement SAP's products.


Oracle didn't invest much on partners last year, since their partnerships have been kept for years.

DSC adopts almost 100% direct sale of enterprise applications. But for its SMB product, DSC recruit a few small and medium sales partners from North Taiwan to South Taiwan.

DSC provided its partners only with training manuals, because its SMB products are considered to be simple to use.

i2 has one key delivery partner, BroDigit, in Taiwan. i2 delivers its solutions with the foreign consultants.

i2 intends to recruit more partners in 2006.

Shinewave has several global partners such as IBM, Sun, and Oracle. It keeps a closed relationship with IBM.

Shinewave signed a partnership contract with Oracle in Aug. 2005. It will allow them to collaborate on server database.



Taiwan PSC Applications 2H 2005 Competitive Analysis (continued)Taiwan PSC Applications 2H 2005 Competitive Analysis (continued)

SAP

Market Share 31.1%

Oracle

Market Share 18.1%

DSC

Market Share 15.3%

i2

Market Share 6.5%

Shinewave

Market Share 6.3%


SAP will increase their partnership with local ISVs to penetrate Taiwan's PSC market in the coming years.

The marketing message of SAP are Netweaver and those applications developed on NetWeaver.

Oracle is used to dealing with medium and large enterprises. It is weak in SMB market in Taiwan.


DSC has focused on its ERP II and packaged industry applications for SMB in 2005.

Advertising campaigns for its product or promotion are restricted to newspapers. Its advertisements appeared in the newspapers periodically.

i2 Taiwan didn’t hold any event last year. But i2 will assist its partners if they have such activities.

Shinewave's vice president and general manager often published their insights in local dailies. This provided the exposure and awareness that Shinewave needed.


SAP has very strong brand equity in ERM solutions in Taiwan, which is a strength for SAP to perform in this market.

Oracle has been on the merger and acquisitions front. It enables Oracle to extend its scope quickly and provide industry specific applications for its customers for eg in PSC with G-Log and Retek.

.

Unlike some local PSC software vendors that package their software and hardware together, DSC is a 'pure' software provider. Its goal is to be a pure product-based software provider in Taiwan.

DSC changed its sales strategy from product-oriented to industry-oriented, so its sales can tailor the most suitable solution for its customers.

Unlike other vendors, i2 is a specialized supply chain management provider. Its brand on SCM is strong. Many companies used its FP modules instead of SAP MRP modules.

Shinewave delivers its products with competent customizations. This is one of its strength in the market.

Its PSC applications were partial to code for manufacturing industry.



Taiwan PSC Applications 2H 2005 Competitive Analysis (continued)Taiwan PSC Applications 2H 2005 Competitive Analysis (continued)

SAP

Market Share 31.1%

Oracle

Market Share 18.1%

DSC

Market Share 15.3%

i2

Market Share 6.5%

Shinewave

Market Share 6.3%


NetWeaver will be the main platform for SAP in the future. SAP intends to market its ERM/CRM software and extend its market (or other product) on this platform..

SAP offers its ESA architecture which is a SOA framework.

SAP supports Linux and MySQL

Oracle offers its solutions on a SOA architecture with Fusion.

With the acquisition of Innobase, Oracle plans to increase support for open source software. The adoption rate of Linux is relatively small.

All solutions from DSC are deeply localized for Taiwanese business.

DSC released upgrades for some modules of its ERP II solution each year.

i2 provides development and partial customization services. But the customization supports interface and reporting only.

Shinewave's system is proven on 3-tier architecture, especially for Windows and Unix base.



Taiwan PSC Applications 2H 2005 Top 5 Vendor AnalysisTaiwan PSC Applications 2H 2005 Top 5 Vendor Analysis

Vendor IDC Analysis

SAP With strong awareness and customer base in the ERM market, SAP has gained market share in PSC market. For the enterprise market, its SCM suite would meet most of the manufacturers requirements. However, at the execution level there is opportunity to explore in some manufacturing micro-verticals.

Oracle Oracle’s PSC applications are part of the e-Business suite. It also offers JDE Enterprise One for the mid-sized customers. However, its customers are predominantly large enterprises. Oracle should increase its partnership with more local ISV and services providers. These vendors have expertise in different verticals to help Oracle extend its market scope to medium and small enterprises.

DSC DSC is a popular local ERM provider in Taiwan. Its customers extend from large enterprise to small companies. That is a key reason why DSC has been successful in CRM and PSC markets. As the profits from software are shrinking, DSC needs to promote its image as an experienced professional advisor and consultant, rather than an alternate choice for price-sensitive companies.

i2 i2 Solutions are well designed to enable organizations to better manage key manufacturing variables, but maybe too complicated for most companies. i2 should encourage communications and feedbacks from its customers to understand their demands and challenges when using its products. It also needs to lift its profile in the industry.

Shinewave Shinewave is a local ERM and PSC vendors, and its major customers are medium businesses in Taiwan. Its market share has been encroached by the SAP, Oracle and other vendors that are targeting the SMB market. IDC suggests Shinewave to reorganize its business units and focus on product marketing to build awareness on the value of its products.


Taiwan PSC Applications 2006 ForecastTaiwan PSC Applications 2006 Forecast

0

1

2

3

4

5

6

7

8

9

1H 2005 2H 2005 1H 2006 2H 2006

Wholesale Distribution Applications

Retail Applications

Production Planning

Other Operations Applications

Manufacturing Applications

Logistics Applications

Inventory Management


US$m


Taiwan PSC Applications 2006 ForecastTaiwan PSC Applications 2006 Forecast


Assumptions Since the large enterprises market is saturated, the SMB space is being targeted by PSC vendors.

Vendors are expected to package their products for the SMB market. Many vendors have launched their SMB edition; however, this may result in further downward price competition in this market.

Major vendors would continue to recruit more channel partners to increase market opportunities.The leading vendors possess strong partnerships with their distributors, channels, and other system integrators to support the consulting and after-sales service.

The number of professionals and engineers in Taiwan is falling compared to PRC, HK, and Singapore. Professionals with specific talents are flowing out the country to other geographies.The labor migration will increase the overhead costs of finding, recruiting, and managing talents from global pools, but it also lower costs and may even lead to more innovation.

While profits from software licensing are getting smaller, both PSC vendors and local channels tend to redirect their focus on IT services, e.g. second-year and beyond maintenance supports, or consulting. With more companies entering the services market, the competition between prices and services are getting tense.

IDC expects dynamic IT will support business strategy and IT operational efficiency (from virtualization in database, data federation, software-as-a-service, and composite and rule-based application). Dynamic IT will add coherence to the enterprise usage of IT. However, confusing choices for enterprises and funding hurdles for new infrastructure will balance this impetus for market growth.


Taiwan PSC Applications Summary OutlookTaiwan PSC Applications Summary Outlook

Top 5 upcoming trends to note in the next 12 months Customers change their focus from supply chain to demand chain. As profits from software licensing are reducing, software services revenue is catching vendors

attention as a replacement source. Taiwan government had advised enterprises to adhere to the green supply chain management

regulations. The green supply chain applications will be the next implementation for enterprises in Taiwan.

Industry-specific products are catching more attention, especially for traditional industries. For the saturated PSC market, SMB space would be the fresh war zone.

Top 5 most interesting opportunities based on the above trends Demand chain management is critical for business. Vendors could place more marketing

resources on demand chain and repackage the solutions to product demand chain management.

Services-as-a-Software (SaaS) will become the trend in Taiwan, although there are few vendors offering such services.

PSC vendors could develop green supply chain management related applications and collaborate with other applications players. This one-stop-shop approach may attract customers’ interests and demands.

As the enterprises knowledge on IT continued to improve, this will provide a good opportunity for vendors to offer industry-specific products for the traditional businesses.

Vendors would package their products to meet the needs of SMBs.


Thank you

For any sales inquiry please contact Cara Tan at +65 6228 7783 or [email protected] and for research matter please contact Alan Tong at +603 2169 7519 or [email protected]

Documents

Www.idc.com Taiwan Market Summary 2H 2005 Enterprise Applications Tracker IDC Asia/Pacific Prepared for Oracle