Scribd
Upload
764 views

ERP Sandip V1

The global ERP software market grew nearly 8% in 2006 to $17.5 billion. Vendor revenue is projected to increase to $47.7 billion by 2011. Consolidation among the top vendors has increased their market share, with the top 5 accounting for over 70% of revenue. The mid-market and SMB segments are a key focus as ERP solutions targeting these customers at lower costs and complexity see increased adoption rates globally including in fast growing markets like India and the United Arab Emirates. New technologies like cloud/SaaS models and service-oriented architectures also present opportunities and challenges to the traditional ERP vendors.

Uploaded by

api-3716851
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
764 views

ERP Sandip V1

The global ERP software market grew nearly 8% in 2006 to $17.5 billion. Vendor revenue is projected to increase to $47.7 billion by 2011. Consolidation among the top vendors has increased their market share, with the top 5 accounting for over 70% of revenue. The mid-market and SMB segments are a key focus as ERP solutions targeting these customers at lower costs and complexity see increased adoption rates globally including in fast growing markets like India and the United Arab Emirates. New technologies like cloud/SaaS models and service-oriented architectures also present opportunities and challenges to the traditional ERP vendors.

Uploaded by

api-3716851
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOC, PDF, TXT or read online on Scribd
You are on page 1/ 4

ERP market facts

The global ERP software market grew 7.9% in 2006, leading to a market value of approximately
$17.5 billion in license and maintenance revenue. ERP vendor revenue across all segments is
expected to grow from $28.8B in 2006 to $47.7B by 2011. Core ERP license revenue grew to
$9.2B in 2006, an 18% increase over 2005.

While the ERP market has grown in revenue, consolidation continues to change the industry. In
1999, the top five vendors (J.D. Edwards, Baan, Oracle, PeopleSoft, and SAP) in the ERP market
accounted for 59% of the industry’s revenue. AMR Research expects the top five vendors in
2005 (SAP, Oracle, Sage Group, Microsoft, and SSA Global) to account for 72% of ERP
vendors’ total revenue.

The report revealed several trends that affected the ERP market in 2004, including:

• The ERP market is entering another major technology transition phase. Service Oriented
Architectures (SOA) may have the same disruptive effect that other technologies have
had on the market, such as the emergence of client-server systems had in the 1990’s.

• The pace of acquisitions shows no sign of slowing down. Oracle’s purchase of Retek and
vendors like Sage Group, SSA Global, Infor Global Solutions, and Epicor have all been
very active in the M&A space and have grown more rapidly than the overall ERP market.

• The midrange ($50M - $1B in annual revenue) and SMB (less than $50M in annual
revenue) markets continue to be a major focus area for many of the ERP vendors.
Midrange solutions and channels are critically important for penetrating China, India,
Eastern Europe, and Latin America.

• ERP buyers have moved away from large, upfront purchases. Now most tend to license
user seats and functional ERP modules incrementally as they deploy a product. Along
with widespread discounting, this has led to smaller average deal sizes.
1. India ERP market
• The Indian ERP market is expected to grow at a CAGR of 25.2% over the next five years.
According to the study, the market was $83 million in 2004, and is forecasted to be over
$250 million in 2009.
• The majority of Indian manufacturing companies are small by global standards, requiring
easy-to-use ERP solutions to meet their specific process requirements, including
localization needs to address the continually evolving tax and statutory requirements.

2. Singapore ERP market


• The enterprise resource planning (ERP) software market in Singapore is on a comeback
trail as small- and medium-sized businesses (SMBs) step up deployment of mid-market
ERP (MERP) solutions, specifically designed to suit their functional requirements. The
market has returned to growth mode after a brief lull caused by the demand saturation for
traditional ERP software among large organizations.

3. Dubai ERP market


• Market value increased from $134 million in 2003 to $155 million by end 2004. The
study forecast a compound average growth rate of 14 percent in the next five years,
which will see the region's ERP market touching the $300 million mark by end 2009.
• The largest spender on ERP in the GCC, Saudi Arabia, is responsible for almost 60
percent of the market, followed by the UAE and Kuwait.

ERP Market - Customer Segments

The ERP software market falls into three primary segments by customer size: large companies,
the midmarket, and small businesses.

ERP Market Segments By Customer Size


Market segment Size range Solution characteristics Representative vendors
(annual revenues)
Large companies $1 billion plus Global functionality, high SAP, PeopleSoft, Oracle
network and transaction
scalability, sophisticated
reporting and analysis
Upper midmarket $250 million to $1 Multinational functionality, Microsoft, Lawson, SSA
billion but less scalability. Often sold Global, Geac, SAP,
through channels rather than PeopleSoft Oracle
direct to customer
Lower $50 million to $250 Multinational functionality Microsoft, Epicor, Exacta,
midmarket million but significantly less Sage, NetSuite, SPA
scalability. Often solf through BusinessOne
channels rather than direct to
customer.
Smaller business Under $50 million Single location, country Sage, Intuit, ACCPAC,
specific, PC- or LAN-based. NetSuite
Standardized packages with
lower cost and complexity.

The Midmarket is the Battleground

SAP has been ramping up distribution of its lower midmarket product Business One as well as
refining its All-in-One offering for the upper midmarket. Big vendors are struggling to keep low
TCO (Total cost of ownership). Also a highly leveraged, indirect channel is needed to reach the
tens of thousands of midsize companies. Microsoft Business Solutions has built a vast indirect
partner channel that has proven successful in this market.

SMBs' Rising Backbone: The Global ERP Market

ERP traditionally has been sold to large organizations. That market is essentially totally
penetrated. To continue to be competitive you focus on the install base. They're selling more to
existing accounts. Sixty to 65 percent of SAP's revenue comes from existing accounts.

What's preventing SMBs from investing in ERP is the cost, paired with the risks involved
because the decision will affect their entire business, unlike enterprise companies that can try it
out in a particular division or region. Software-as-a-service is a way to manage that. Every
vendor needs to have a strategy around software-as-a-service, on-demand.

Challenges to ERP:

1. Service oriented architecture: SOA may not overcome ERP with one big swoop, but
through a dribbling of features toward the service layer, forestalling or reducing upgrades.
And, indeed, much of this work may go to lower-cost offshore development firms and
integrators. Ultimately, Richardson argues, it’s the integrators who will benefit from the
componentization and service-enabling of ERP.

2. Open source: There are other forces at work disrupting the ERP market as we now it. The
growing volume of open source offerings in this space, such as Apache OFBiz, SugarCRM,
Tiny ERP, and Compiere.

3. SaaS: Then there are the software-as-a-service offerings, from Salesforce.com for the CRM
aspect to Plexus. (Oracle and SAP are already active in the hosted/SaaS space as well.) The
Microsoft mass-market mid-market commodization threat also looms, via Dynamics GP/AX.

Salesforce as a ERP player?

Salesforce has released AppExchange OEM Edition. Salesforce will be the platform allowing
developers to develop and bolt on specialized on demand services; these services will be separate
from Salesforce CRM service. What is interesting is by using Salesforce small development
companies can write extremely specific functionality for micro markets e.g. an on demand eBay
management module. Salesforce users have delivered "over 43,000 custom objects and custom
applications". More than salesforce.com could ever deliver on its own.

References:

http://www.exforsys.com/tutorials/oracle-apps/erp-overview.html

www.cio.com

www.salesforce.com

You might also like