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Business Trends

The ERP Market Is Quickly Growing

Industry experts identify several reasons why the ERP market is growing.

Digitalization

In recent years, the priorities and needs of many companies have shifted towards the digitalization of business processes. For decades, plenty of organizations worked with Microsoft Office documents and some even kept paper files.

Today businesses owners start to think about how to use data more effectively in order to better see their strengths and weaknesses and also to provide better services to their clients.

Staff shortages

This is one more issue that stimulates the growth of the ERP market. Shortage of staff influences the fast introduction of automation. Companies try to get rid of human labor where standardized operations are used.

At the same time, the introduction of new technologies removes situations when skilled workers do routine tasks. ERP systems free some of their workloads and allow employees to focus on solving only important and critical business problems.

Cost savings

The next important factor is the desire to reduce operational costs. Today, many businesses switch to cloud-based ERP solutions and save money on hardware and get access to their systems from any place.

Stats

Now, let’s take a look at the global market of ERP systems and find what systems are popular among company owners.

The consulting company Panorama published their report on the state of the ERP market. The company surveyed 237 organizations and found that the 2 most popular ERP solutions are SAP (used by 15%) and Oracle (16% of respondents).

According to the report, the most popular reason for buying an ERP system is the wish to increase the effectiveness of business processes – 64%.

Companies also want to expand their client base with the help of enterprise resource planning systems – 57% responders. 54% of responders want to improve the quality of their services.

As an example, thanks to the implementation of ERP from SAP, Skullcandy, a company that produces audio gadgets, was able to scale their business and better organize electronic document management.

ERP is about clouds

The vivid trend of the transition to the cloud is often marked by numerous experts around the world. Again, according to the Panorama study, in 2018, businesses preferred to deploy ERP systems mostly in the cloud, only 15% of respondents used on-premise solutions. 85% of responders used cloud-based ERP solutions.

This figure includes both SaaS products and solutions that companies use to deploy using the equipment of their cloud providers. In 2017, on-premise solutions were used by 67% of respondents, and cloud ERPs by 33%. So, things have changed here.

The growing popularity of cloud-based ERP solutions is due to the ease of their implementation and usage. These systems can be tested in real-life situations, prior to spending a lot of money for the actual introduction.

In case you select the on-premise model, you have to configure every aspect of the system yourself. You need to buy licenses for the operating systems, for the SQL servers, and for the ERP server itself. In addition, you need to regularly update software and upgrade equipment. All these huge expenses are not justified at the stage when you want to test the performance of the ERP system and understand how it can help you.

A virtual server is a different issue. Providers usually include the cost of the operating system in its rental plan. You can also find and rent the SQL server and actually many other licenses. But it is not the case with purchased licenses, money is gone but there is no need in them.

The great flexibility of virtual servers provides companies enough opportunities to evaluate the ERP system and do not spend money on expensive equipment. They can later select the best fit solution to continue running their business on an ongoing basis.

Evaluating the current trends, I can expect that we will see the increased number of cloud ERP system deployments in the coming years.

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