The market will grow at an 11 percent compound annual growth rate over the next 5 years reflecting economic growth, industry dynamics, and private equity investments.
Software suppliers such as Dakota Software, DNV GL, EtQ, Gensuite, Mitratech, SAI Global and thinkstep are positioned to benefit from this growth trend, the report says.
The report comes as EHS software and services providers thinkstep and Anthesis announced a strategic alliance to expand both companies’ global presence.
“In the last 2 years the EH&S software market has changed from a sleepy, cottage industry into a booming growth segment,” said Jordan Nadian, Verdantix industry analyst. “Growth equity investors such as Battery Ventures, Genstar and JMI as well as trade buyers such as UL and Wolters Kluwer have collectively invested more than $500 million into the EH&S software market in the last 18 months. Investment capital is now a major driving force in the growth of the sector.”
Just this month Wolters Kluwer completed its €250 million ($275 million) acquisition of EHS software provider Enablon.
Report highlights include:
- North America accounts for 58 percent of the market with spend of $493 million in 2016. Europe makes up 30 percent of the market with spend of $252 million. South East Asia will experience the highest annual growth rate over the next five years at 14 percent. Russia will see growth of just 7 percent per annum.
- Oil and gas investment in EHS software continues to dominate with spend on new software licenses, maintenance, and subscription fees of $342 million in 2016 — 37 percent of the entire global market. The chemicals industry accounts for 13 percent and mining 10 percent.
- In 2016, 39 percent of the 312 EHS buyers surveyed by Verdantix in 18 countries said they plan to increase spend on EHS software with only 2 percent forecasting a reduction.
“The broad acceptance that better information management systems deliver better EH&S results is an essential ingredient in the growth of the market,” Verdantix CEO David Metcalfe said. “And because the market is driven by hundreds of regulations, a wave of investment, and growing demand for integrated EHSQ platforms, we see few downside risks. But vendors who do not raise capital in 2016 will find the competitive environment increasingly difficult as multiple vendors breach the 500 employee mark.”