Shifting Tides in ERP Spending Focuses More On Customer Delight

ERP vendors come in different shapes and sizes. They offer applications vital for different business processes for small and mid-size as well as large enterprises.

The EPR market across different countries has observed an average of about 12% growth, each year since 2007. Current economic slowdown, will affect the growth pattern of this sector negatively. However, research analysts at Allied Market Research (AMR) reveal that investing in ERP would be a safe bet as the overall trend would sustain. For those worried about Eurozone crises will be glad to know that the EPR industry will bounce back surprising as soon as the quandary subsides, explain AMR researchers eyeing the growth, share and size of the sector.

Understanding the marketplace

The ERP market is growing exponentially. Players active in this sector have now identified the difference between the small and medium as well as large size enterprises. These ERP vendors are generally classified as Tier One, Two or Threebased on the type of client they serve. The three categories are undoubtedly distinct from one another.

Furthermore, the size and complexities involved in the solutions differ too. Vendors who sell solutions to companies generating over $1 billion are classified as Tier One. These vendors are mainly multinationals and have their offices in different regions. Besides this, Tier One products have a high price point, when it comes to ownership, due to their implementation strategy and customer support cost.

On the other hand, Tier Two vendors sell products that serve the requirement of the mid-sized business owners’. These mid –sized enterprises generate revenue anywhere between $50 million – $1 billion. The products offered by Tier Two vendors are particularly developed to serve either a single or multiple deployment location.

Tier Three solution providers eye companies that have a turnover of $10 million – $50 million. The solutions offered by these vendors are not only simple to implement but their cost of ownership is comparatively less. Many solutions in this category are single location installation and developed for a particular business vertical.

ERP vendor by Industry

ERP solutions fall under a specialized category. The importance of domain expertise and criticality of the products offered helps industry leaders to categorize vendors by business verticals. Moreover, each vertical has its own top players. Of course, many of the prominent leaders are common to all business verticals – For instance SAP, Microsoft and Oracle.

1.     Manufacturing and Distribution Sector

These players together occupy about 55% of the ERP market share. In addition, the Tier Two vendors also dominate a significant amount of the market share. The lower end of this sector is fragmented with about 25%, depending upon a large number of service providers each of whom occupies less than 2% share.

2.     Energy Sector

In this industry, the three vendors discussed above remain active. The market shares of these vendors had increased by 19% in 2015. As an outcome, Microsoft, SAP and Oracle had covered approximately 73% of the overall market in this business vertical. The remaining service provider share approximately 10% between themselves.

3.     Service Industry

The race to rank among the top three continues between SAP, Microsoft and Oracle. Moreover, the lower end of the ERP market is highly fragmented with vendors such as Epicor, NetSuite, Infor and others occupying a share of about 2%

4.     Retail Industry

The dominance of Oracle, Microsoft and SAP in the retail sector will continue. Microsoft is seen finally improving its hold in this industry, followed by Oracle. In the Tier three vendor lists, we can also expect some new entrants or small service providers taking up about 10% of the complete market space.

Major Vendors Operating in the Market

Oracle – The Company has been preferred for its relational database. Business owners have invested in this database, especially for SAP ERP apps. It was in 2004 that the company actually started focusing on developing its own ERP products. It was in the same year SAP began offerings its ERP products on the SQL Server database platform.

Oracle Financials was the first ERP product offered by the company. The product was introduced in 1989. But, post 2004 the company became serious about its business strategy in the ERP market. This has helped Oracle rank among the well –established Tier One market, securing a second place. In a recent incident, Oracle has reported its earnings for the 4th quarter for fiscal 2016. The report shows continuous momentum, when it comes to cloud sales.

While company’s on premise solution generated a flat $8.4 billion, its cloud SaaS and PaaS garnered $690 million. Commenting on the performance Mark Hurd, the Chief Executive Officer at Oracle said “In Fusion ERP alone, we added more than 800 new cloud customers”. Hurd explained “Today, Oracle has nearly 2,600 Fusion ERP customers in the Oracle Public Cloud — that’s ten-times more cloud ERP customers than Workday.”

SAP – This foundation stone of the company was laid down by five former engineers of IBM. SAP has been an undisputed performer in the ERP market and occupies a third place among the largest software enterprise in the world. The recent version of the company has over 30,000 database tables that enable it to manage highly complicated business scenarios. For those owning a small and medium enterprise, the products offered by SAP are probably more than what these enterprises can potentially handle.

Microsoft – Microsoft Dynamics focuses on Tier Two companies in the ERP market. Moreover, the company provides solutions in an array of business vertical such as CRM domain. A great benefit of solutions from Microsoft is their ease of use.

Infor – This privately held enterprise has grown exponentially, particularly in the Tier Two, service provider space since 2002. The forerunners of Infor have adopted an aggressive acquisition and merger route to further its growth. It all began in 2011 with the acquisition of ENXSUITE. Today, the company has a global presence that matches the footprint of the top performers and has customers in about 194 countries. Infor offers ERP solutions in as many as 14 business verticals and has a good presence in retail, service and manufacturing sector.

Astute Electronics made headlines when it decided to deploy a cloud–based ERP platform from Infor. Commenting on the new implementation Geoff Hill, the managing director, at Astute Electronics said “We have a diverse range of offerings, from component sourcing and supply, including counterfeit mitigation, to logistics solutions and new-design support.” Hill explained “This range of services has driven rapid growth and we now need a system that can offer standardized processes, designed specifically for the needs of our company to support our targeted growth.”

The truth is ERP products can be extremely difficult to implement and result in considerable disruption when used. Therefore, a customized product from a reputed service provider will not only lower disruptions but also assure greater chance of profit and success. The service providers discussed in the blog are experienced and choosing one of them that serves your requirements would be a sensible approach.

Digvijay Deshmukh is associated with Market Research industry for more than 4 years and works as a Team Lead at Allied Analytics LLP, a global market research and consulting firm. The company develops and sells highly scrutinized market research reports that enables technology providers, semiconductor manufacturers, consumer electronics product manufacturers, telecom service providers, and others to take informed business decisions and sustain competition. As a Team Lead, Digvijay possess strong expertise in market assessment, forecasting and consulting in ICT and Semiconductor, Software and Service and Security industry. With his skilled proficiency in market research, he is actively involved in providing critical insights on business research to clients with his subject matter expertise. Various other sub-markets analyzed include media and entertainment, HVAC, process control and automation, display technologies, telecom and IT, service industry, and power electronics among others. Digvijay is a part of multiple consulting assignments and is actively involved in commissioning, planning, execution, and delivery of projects to client’s expectations. His forte lies in business consulting, building analytical models, and trend analysis and forecasting. Digvijay holds a Master’s degree in Electronic Science from University of Pune.