Topic 2: ERP Market

Kedareshwaran S
 ERP Market Place – Overall Trends (2021-30)

• According to Allied Market Research, the global ERP software market is valued at
$43 bn in 2020 and is projected to reach $117 bn by 2030, at a CAGR of 10% for the
period of 2021-30.

• Sectors that implement ERP are - (a) Manufacturing, (b) BFSI (c) Healthcare (d)
Retail & Distribution (e) Government & Utilities

• In terms of business functions: Finance, Human Resources, and Supply Chain

Management are three key drivers for ERP adoption.
 ERP Market Place – Overall Trends (2021-30)

• Deployment of ERP include all three scenarios - on-premise, cloud and hybrid.
• Currently on-premise continues to remain the most preferred choice for
deployment.

• However, with the growth in cloud, cloud ERP adoption is expected to have the
highest growth rate for the period 2021-2030.

• Region-wise, North America has the highest concentration of ERP implementations.

• However, Asia Pacific would be exhibiting the highest CAGR of 11.9% for the period
2021-2030.
 Cloud ERP Market Place

• Cloud ERP: According to Markets and Markets, the cloud ERP market size is estimated to
grow from $ 45 bn. in 2020 to $ 100 bn. by 2025 at an estimated CAGR of 17.4%.

• The major factors driving the growth of the cloud ERP industry include the following
o Growing demand among enterprises to improve operational efficiency and streamline
business processes
o Impact of COVID-19 pandemic, and
o Increasing adoption of cloud-based solutions.
 ERP Vendor Classification

Sr. Characteristic Tier – I Tier – II ERP Tier – III ERP

No

1. Annual revenue of > $250 mn. OR $25 - $250 mn. OR < $25 mn. OR
customer. > ₹ 2000 cr. ₹200 - 2000 cr. < ₹ 200 cr.
2. Complexity of processes High Medium Low

3. Total Cost of Ownership High Medium Low

4. ERP Vendor Industry Diversified Industry-specific Industry-specific

solutions
5. Multi-language & multi- Supported Few can support Not supported
currency capabilities
 ERP Tier 1 Vendors

• Key Tier 1 vendors include SAP, Oracle, & Microsoft. These vendors can manage
clients having multiple companies and multiple plants with international locations.

• Gartner Magic Quadrant for Cloud ERP for Product-centric (Manufacturing)

enterprises

• Gartner Magic Quadrant for Cloud ERP for Service-centric (Services) enterprises
 Tier 1 ERP Vendor - SAP

• In 1972, five former IBM employees launched the company, Systems, Applications &
Products in Data Processing (SAP) in Germany with a vision to develop standard
application software for real-time business processing.

• Today, SAP is the world leader in enterprise applications in terms of software and
software-related service revenue.

• Employs 105K employees from 140+ countries working in 100+ development

locations worldwide. It has more than 350K customers in more than 180 countries
and 22K+ partners companies globally.
 SAP Timeline (1972-2002)

❖ SAP joins the Internet 2002

❖ SAP R/3 can now be used ❖ 30th Birthday of SAP
online ❖ 3rd largest independent
1995/96 software provider
❖ Development SAP R/3 1993/94
❖ SAP presents at the ❖ Partnership with Microsoft → connecting
CeBIT Hanover SAP R/3 with Windows NT operating system
1986-89 ❖ IBM Corporation is now using SAP R/3
1981/82
❖ Introduction SAP R/2
1972
❖ Foundation of SAP
❖ Development of real-time
data application software
 Tier 1 ERP Vendor - SAP

• It is a global company with revenues across EMEA (Europe, Middle East & Africa) at
45% followed by Americas (N&S) at 40% and 15% from APJ (Asia Pacific Japan).

• Products such as SAP BusinessOne, SAP BusinessByDesign and SAP Business All-in-
One is for SME.

• In the recent times, SAP has acquired several products that include Business
Objects, Sybase, SuccessFactors & Ariba.

Source : SAP Corporate

Fact Sheet
 Tier 1 ERP Vendor – SAP – Revenues and Profitability

• In 2021, the company generated revenues of € 27.84 ($ 28.31) bn with an ↑ of 2%.

 SAP Timeline (2005-2015)

2015
❖ Implementation of 1st SAP
in-memory computing product
2013
→ SAP HANA platform
❖ SAP Business Suite moves to SAP
❖ Data access possible in seconds HANA
2011
2009
❖ Launching Business Suite 7
→ optimization of business
2005/06 performance
❖ Announcment of → reduce IT costs
release SAP ERP
 SAP S/4 HANA (2015 onwards)

SAP S/4HANA …
• Column Store
In-Memory • In-Memory Processing
Database • Compression
… works with in-memory
• Parallel Processing

Fiori • Hardware independence

… has a new and modern design • Mobile devices

• Real-time analytics on current

data
OLAP + OLTP •
… works with new technology Consolidated forecasts
together including actual and planned
cash data
 On-Premise vs. Cloud Deployment
Subscription Licensing
→ Deployment in the private cloud,
maintained by SAP
• SAP provides system and controls
maintenance
• Automatic participation in quarterly
innovation upgrades
• In-App extensibility with limited ABAP
• Current release cycles
• SAP ERP embedded
Traditional licensing
→ Traditional licensing with customer
control of deployment and maintenance
• Private control of deployment and
maintenance
• Hardware at companies' location
• Privately controlled data
• Fewer release cycles
• Individual requirements possible
• Traditional ABAP extensibility up to
core modification
 Tier 1 ERP Vendor - Oracle

• Founded in 1977 in California, USA with revenues of

$42 bn. (2022), the company offers its database,
tools and applications products along with related
consulting, education and support services.

• Oracle has acquired PeopleSoft, J.D. Edwards,

NetSuite, Siebel & Hyperion and offers more than 10
comprehensive product lines designed to meet
specific business needs in areas such as sales, BI, E-
Commerce and more.
 Tier 1 ERP Vendor – Oracle E-Business Suite
• It is the most
comprehensive suite of
integrated, global business
applications spanning ERP,
CRM and SCM.

• Oracle Siebel CRM: It

covers combination of
transactional, analytical
and engagement features
to manage all customer-
facing operations.
 Tier 1 ERP Vendor – Oracle Cloud

• Oracle ERP Cloud: It is a SaaS ERP with suite of cloud

applications for finance, project management,
procurement, risk management and other day-to-day
activities.

• It is connected with all Oracle enterprise cloud applications

and scales to support added users, transactions and sites.

• Oracle Cloud Fusion ERP

https://www.youtube.com/watch?v=zRyWO3SB1sY
 Tier 1 ERP Vendor - Microsoft

• Headed in Washington, USA with

revenue of $ 168 bn (2021), Microsoft
is one of the world’s largest software
company.

• Dynamics 365: It is a cloud-based

business applications platform that
combines ERP and CRM.
 Tier 1 ERP Vendor - Microsoft

• Combining ERP and CRM

enterprise applications
natively gives users a
connected view of data
intelligence on
o Customer records,
transactions, behaviors and
preferences,
o Information about orders,
inventory and shipping, &
o Predictive tools for decision
makers.
 Tier 1 ERP Vendor – Microsoft Product Family

• For companies that rely on Office 365 and

Outlook, or run applications on Azure, Dynamics
365 provides more beneficial integration with
these products through the MS Appstore .

• The common user-interface throughout MS

suite of business applications reduces learning
curve and widespread adoption

• It has capabilities across different industry

sectors such as manufacturing, retail & finance.
 Tier – II ERP Vendors

• According to TEC, this Tier consists of (customer) companies with annual revenues
in range $ 25-250 Mn.
• Tier – II vendors offer an alternative to Tier 1 ERP vendors in terms of price,
ease/speed of implementation, and/or focusing on a particular industry segment.
• Often, these ERP vendors are niche players that specialize in a particular industry.
• The ERP vendors in this tier make up largest segment in terms of number of clients.
• Some of the ERP vendors in Tier II include Sage Group, QAD, RAMCO.
 Tier – III ERP Vendors & Indian Context

• Tier III ERP vendors cater to single-site customers with revenues.

• Indian SME segment has been one of most aggressive adopters of ERP software
(Tier II and Tier III) with more than 60% SME have already implemented ERP.

• Indian SME ERP adoption for Tier II and Tier III ERP vendors has grown at a rate of
70% in the period 2008-2018.

• Some of the widely used Tier-III ERP vendors

include Tally ERP and ZOHO ERP&CRM.
 References

• Textbook, Chapter 11 : ERP Market

• https://www.alliedmarketresearch.com/ERP-market
• https://www.marketsandmarkets.com/Market-Reports/cloud-erp-market-
190169866.html
• https://www.gartner.com/doc/reprints?id=1-27AOG1O3&ct=210826
• https://www.gartner.com/doc/reprints?id=1-2AKU8TE9&ct=220713
• https://i3solutions.com/dynamics-365/