IDC estimates that the HCM market was worth US$1 billion in 2005 in western Europe, growing a healthy eight percent compared to 2004. The US$630 million payroll applications market grew at a moderate 4.1 percent during 2005.
According to the analyst firm, the combined market is led by SAP, Oracle, Northgate Information Systems, Sage Group and Datev.
Among the top 20 HCM vendors in Europe, specialists such as Bluegarden, Meta4, Jeppesen and HR Access had the highest relative growth, while the ERP giants SAP and Oracle continue to have the largest market presence.
SAP holds a third of the total HCM market in western Europe. The niche vendors excel in "strategic HR" applications to manage workforce planning and deployment, HR performance, recruiting and incentives and bonuses.
The more traditional applications for payroll processing and personnel administration continue to make up the bulk (73 per cent) of the European HCM and payroll applications market.
However, in terms of R&D investment focus, the market now revolves around strategic HR.
SAP and Oracle are investing aggressively in areas such as HR performance management, HR analytics and e-recruiting, with the aim of dominating these new segments.
The two vendors already dominate the traditional payroll and core HR segments, but the battle is much more open in the strategic HR segment, according to IDC's study.
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