ERP Software

ERP software market

The 2010 ERP software market is a much different market than what it appeared to be at the start of the decade.

ERP, or enterprise resource planning, refers to the software system that businesses often decide to install in order to streamline and make more effective system usage and database management across a large and diverse organization that operates with varying software functionalities.

Without ERP software solutions, many modern businesses, whether large, mid-sized, or small, software applications and database access is controlled within individual departments. Usually, IT systems are legacy systems without the capability to intersect, precluding the data from being effortlessly shared between departments. With the right ERP software, a business can store and manage all data, from every department, on a single service, by using standardized front and back office applications. The advantage of such a system is that it optimizes the usage of data and facilitates its flow in real time throughout the business operations, creating a more efficient and, therefore, effective company.

In 1999, businesses hoping to survive competition –as well as the Y2K threat- began to replace legacy systems with ERP solutions.  In consequence, the ERP software market began to grow by leaps and bounds.  At that time, five leading ERP vendors controlled 62 percent of the market.  These were SAP of Germany; Oracle; J.D. Edwards; People Soft; and a company from the Netherlands, Baan. The remaining share of the ERP software market was made up of small vendors not really posing much competition.

By 2006, a myriad of enterprise software companies had put application systems on the market and ERP software total revenue grew by more than ten percent. Soon, however, experts began to question if these types of growth numbers in the ERP market could be sustained.  Enterprise resource planning has greatly contributed to the growth of many companies, yet within the past few years, ERP itself has undergone tremendous changes. And, it is a well known fact that the volatile IT market tends to discard previous products as soon as something ‘better’ comes along.

As a result, the decade is ending with depressed revenues for many ERP vendors.  The days of unbridled spending by businesses in the hopes of realizing even a small gain in performance have ended.  The current hesitancy to invest in unproven software systems is likely to continue, and the ERP software market is most likely to move closer to the Software as a Service model. Businesses have, in fact, already begun to look towards SaaS ERP software as a way to help minimize the huge up-front cost of more traditional ERP software solutions.
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Written by :

Amy Cruz