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Enterprise resource planning (ERP) is no longer the exclusive domain of multinational corporations. Almost all modern businesses now need a robust system to manage various assets. It is difficult to monitor products and other resources without efficient tools. As your business grows, you’ll need a better way to track these. Also, you need a way to streamline your operations as your organization expands. ERP platforms answer that specific need.
But, even with more cheap cloud-based set-ups, ERP software can be quite expensive. As such, considering one should be treated as a long-term investment. Of course, you should ensure that there is a significant ROI once you subscribe to ERP services. What are the real benefits of ERP? What are the current market data? Are there any potential challenges?
In this article, we will answer these questions. We have gathered all the current and relevant ERP statistics and trends. They will show you how other businesses benefit from such solutions. Furthermore, we’ve also thrown in a quick list of the most popular ERP software in the market.
Key ERP Statistics Table of Contents
Current ERP Market Statistics
Originally intended as a solution for manufacturing operations, ERP systems have since expanded to serve a wide array of industries and businesses. As such, the global ERP market has continuously grown in the last few years. More enterprises are beginning to consider the benefits of having such a solution in place. Even small- and mid-level businesses are appreciating the versatility of ERP systems.
- In 2020, the global ERP software market is estimated at $94.71 billion, up from $94.05 billion in 2019, up 0.69%. (Apps Run the World, 2020)
- In 2021, the global ERP software market is poised to reach $95.37 billion up from $94.71 billion in 2020. This represents a 0.7% percent YoY growth rate. (Apps Run the World, 2020)
- For 2022 to 2024, the global ERP software market values are projected to reach $96.04 billion, $96.71 billion, and 97.15 billion respectively. CAGR over the indicated period is 0.7% (Apps Run the World, 2020)
- For its part, Reportlinker indicates that the global ERP software would reach $145.2 billion in 2020 from $147 billion in 2019, down at CAGR of -1.2%. It attributes the decline to the COVID-19 outbreak and the measures to contain it. (Reportlinker, 2020)
- Reportlinker expects the global ERP software market to rebound at CAGR of 8% from 2021 and reach $181.5 billion in 2023. (Reportlinker, 2020)
- The top consumers of ERP software include the following (Panorama Consulting Group, 2020):
- 33.66% – manufacturing
- 14.85% – information technology (IT)
- 13.86% – professional or financial services
- 9.90% – distribution and/or wholesale
- 6.93% – public sector and nonprofit
- 4.95% – healthcare
- 3.96% – retail
- 3.96% – utilities (oil, gas, electric, etc.)
- 1.98% – construction
- 1.98% – mining
- 0.99% – education
- 0.99% – transportation
ERP Implementation and Application Statistics
Just like any business solution, implementing an ERP system takes considerable technical skills, preparation, onboarding, and training. So, one should expect to face challenges as you adapt to a different workflow. Consequently, you have to balance the possible risks and potential benefits of adopting ERP software in your operations. To help you, we listed some industry trends and how ERP affects various businesses.
Reasons to implement ERP
- The top reasons why organizations implement ERP solutions: (Panorama Consulting Group, 2020)
- 34.24% – shift away from legacy systems
- 23.32% – upgrade
- 14.14% – shift within Tier I (ERP vendors with 750 million annual revenue)
- 13.13% – shifting to Tier II (ERP vendors with 250–750 million annual revenue)
- 7.07% – shift within Tier II
- 4.04% – shift within Tier III (ERP vendors that serve mostly SMEs)
- 4.04% – shifting to a lower Tier
- All organizations that communicated with employees before ERP implementation consider their projects a success. Only 86% of organizations that began communication during or after selection of ERP software and implementation consider their project a success. (Panorama Consulting Group, 2020)
- Timing of employee communication for ERP implementation (Panorama Consulting Group, 2020)
- 56.70% – during selection/implementation
- 30.00% – before selection
- 13.30% – right before going live
- While 30% of organizations developed a resistance management plan and 30% built feedback loops, these activities were less common among organizations replacing legacy systems: only 17% of them developed a resistance management plan and 17% built feedback loops. (Panorama Consulting Group, 2020)
- How satisfied are organizations with their ERP system implementation? (Panorama Consulting Group, 2020)
- 52.66% – satisfied
- 38.14% – neutral
- 6.54% – dissatisfied
- 2.66% – very dissatisfied
- What are the top ERP implementation approaches of organizations? (Panorama Consulting Group, 2020)
- 29.70% – hybrid approach
- 24.75% – Big Bang approach (all business units use the same modules)
- 19.80% – phased approach by module
- 12.88% – phased approach by location
- 12.87% – phased approach by business unit
- 78% – organizations that use some type of consultant to assist their ERP projects. The ones typically requested by organizations are as follows (Panorama Consulting Group, 2020):
- 90% – ERP implementation
- 51% – organizational change management
- 46% – technology assessment
- 41% – business process management or reengineering
- 34% – software selection
- 32% – post-implementation and benefits realization
- 25% – digital strategy
- 25% – project auditing
- 24% – contract negotiation
- 3% – M&A integration
- The most common change management activities among Organizations that completed implementation were (Panorama Consulting Group, 2020):
- 73% – customized training
- 63% – change management strategy
- 57% – communication plan
- 53% – post-go-live assessments
- 50% – business readiness assessments
- 43% – change impact analysis
- 40% – focus groups
- 33% – benefits realization plan
- 30% – resistance management
- 30% – feedback loops
- 27% – coaching plan for leaders
- 7% – none of the above
- What benefits do organizations expect from ERP system implementation? (Panorama Consulting Group, 2020)
- 67% – reporting and visibility
- 65% – operational efficiency
- 62% – growth and competition
- 15% – updating technology
- ERP Effects on Business Process Management (Panorama Consulting Group, 2020)
- 48.60% – improved key business processes
- 37.10% – improved most business processes
- 14.30% – did not improve business processes
- Timing of Business Process Improvement Using ERP Software (Panorama Consulting Group, 2020)
- 56.70% – after selection
- 36.60% – during selection
- 6.70% – before selection
- How did organizations focus on change management after ERP software implementation? (Panorama Consulting Group, 2020)
- 63.30% – moderate focus
- 23.30% – intense focus
- 13.40% – very little or no focus
ERP deployment preferences
- What is the preferred deployment of organizations? (Panorama Consulting Group, 2020)
- 62.70% – cloud
- 37.30% – on-premise
- How do organizations fare when faced with the choice of implementing ERP or going straight for total digital business transformation? (Panorama Consulting Group, 2020)
- 57% – ERP implementation
- 43% – digital business transformation
Source: Panorama Consulting Group, 2020
ERP Adoption in Small Business Statistics
In the past, only large corporations considered using ERP systems as these can be very expensive. However, with the rise of cloud technology and SaaS, these solutions have become much more affordable. Some service providers offer products specifically for growing operations such as these 12 best ERP software for small businesses. Here are some notable trends in implementing ERP in SMB markets:
- 65% of small businesses are taking advantage of ERP consultation services. (Aberdeen Group)
- SMB’s are estimated to contribute a CAGR of 7.9% between 2014 to 2020 to the ERP market as a whole. Most of these are due to the benefits that ERP applications offer, such as reducing operating costs and inventory waste. (Allied Market Research, 2019)
- 96% of emerging businesses that excel in their respective industry rely on some form of ERP solution. (Aberdeen Group)
- Small businesses with ERP systems can make decisions with 36% less time than they did without the solution. (Aberdeen Group)
- SMBs choose ERP systems over standalone platforms because (1) it helps standardize back-office operations by 77%; (2) minimizes overall operation expenses by 11%; and (3) provides real-time visibility into various data and insights by 48%. (Aberdeen Group)
- Small businesses that negotiated with ERP service providers saved an average of 21%. (Aberdeen Group)
- Respondents from the SMB market noted that it takes about 11 months to fully realize the benefits of ERP. (Aberdeen Group)
- Growing enterprises prefer ERP over individual solutions because of the need for a better collaboration tool (37%), scalable solution (29%), and replace old technology (24%). (Aberdeen Group)
Cloud Technology and ERP Statistics
The innovations in cloud technology have been disrupting various industries, and the ERP market is experiencing the same. As cloud-based applications catch up to the power of their on-premise siblings, more businesses are taking notice. Aside from being relatively more affordable, these solutions also minimize the installation and set-up, simplifies IT infrastructures, and centralize all business professing data.
- Nearly 90% of companies that selected a cloud-based ERP software opted for a SaaS model over a hosted model. (Panorama Consulting Group, 2020)
- 86.30% – SaaS
- 13.70% – hosted
- What is the preferred hosting option of organizations? (Panorama Consulting Group, 2020)
- 77.40% – internally
- 22.60% – externally
- What are the top reasons why organizations do not opt for cloud ERP? (Panorama Consulting Group, 2020)
- 40.91% – lack of information about offerings
- 31.82% – risk of data loss
- 27.27% – risk of security breach
- Around 22% of businesses with existing on-premise ERP are looking for IaaS or managed hosting. (Accenture, 2019)
- Nearly 90% of companies that selected a cloud-based ERP software opted for a SaaS model over a hosted model. (Panorama Consulting Group, 2020)
- 86.30% – SaaS
- 13.70% – hosted
- What is the preferred hosting option of organizations? (Panorama Consulting Group, 2020)
- 77.40% – internally
- 22.60% – externally
- What are the top reasons why organizations do not opt for cloud ERP? (Panorama Consulting Group, 2020)
- 40.91% – lack of information about offerings
- 31.82% – risk of data loss
- 27.27% – risk of security breach
Most Popular ERP Software
There are thousands of ERP solutions available for small businesses and big corporations alike. That said, it’s more challenging to find the ERP software that fits your needs. To simplify your search, here are some currently leading the market:
- NetSuite ERP – A cloud-based solution that aims to grow with your business. Aside from the core inventory management functionalities, it automates various processes, such as fixed assets, order management, financial management, and more. It provides a system for the entire company from the executives down to the clerical staff.
- Odoo – An open-source ERP and CRM solution that allows you to manage your entire operation without ever needing another application. Perfect for growing companies, this highly extensible platform lets you manage various parts of your business, from finance and human resources to operations and customer management.
- Sage Intacct – A popular cloud business solution that streamlines your entire operation to maximize your revenue and minimize your expenses. It includes core ERP features along with powerful financial management functionalities. You can manage cash flows, accounts payables and receivables, budget, orders, and more.
- SYSPRO – A fully-featured ERP platform specifically developed for the manufacturing industry. It allows you to integrate, control, monitor, and synchronize various manufacturing and operating processes using warehouse automation, employee communication, device integration, and API services. You can optimize your entire workflow using just one system.
- Oracle ERP Cloud – A platform that aims to provide end-to-end business solutions to companies of various sizes. Designed to connect data across your entire organization, it comes with various features, such as procurement, financial management, risk management, project management, and much more.
New Technologies in ERP
ERP systems were initially developed to solve the issues in manufacturing operations. Eventually, it began providing solutions to various other industries. However, significant changes in business processes come far in between. The core functionalities of ERP systems have not significantly changed in the past years. But features that implement these functionalities have been changing.
- 63% of organizations are investing in cognitive technologies to improve competitiveness (Deloitte, 2020)
- 15% of executives believe AI could fundamentally change which companies win and lose. (UST SmartOps, 2020)
- According to businesses (33%), custom APIs are necessary to transform and extract ERP data. (Accenture, 2019)
- On the other hand, intelligent technology was only a part of 4% of ERP solutions. (Accenture, 2019)
- In the UK, 53% of CIOs intend to extend their ERP applications with innovative, intelligent technologies. (Accenture, 2019)
Current and Potential Challenges in Using ERP Systems
Just like any platform, ERP applications are not without its issues and challenges. From installation to scalability issues, here are some of the potential problems that you might encounter while using an ERP solution.
- How do organizations score in terms of the different aspects of ERP implementation? (Panorama Consulting Group, 2020):
- Difficulty of Process Change
- 69.0% – difficult
- 17.2% – neutral
- 10.3% – very difficult
- 3.4% – very difficult
- 0.0% – easy
- Difficulty of Organizational Change
- 55.2% – difficult
- 31.0% – neutral
- 10.3% – very difficult
- 3.4% – very easy
- 0.0% – easy
- Difficulty of Technical Aspect
- 51.7% – neutral
- 24.1% – difficult
- 10.3% – very difficult
- 10.3% – easy
- 3.4% – very easy
- Difficulty of Process Change
- The most common reasons for ERP implementation budget overruns (Panorama Consulting Group, 2020):
- 20% – initial project scope was expanded
- 20% – organizational issues
- 15% – project staffing was underestimated
- 13% – data issues
- 10% – consulting fees were underestimated
- 8% – additional technology needed
- The most common workforce impact of ERP projects and digital transformations are (Panorama Consulting Group, 2020):
- 50% – reskilling
- 25% – no impact yet
- 19% – downsizing
- 19% – other
- Executive Buy-In Before and After ERP Implementation (Panorama Consulting Group, 2020)
- Very little buy-in support
- 6.7% – before
- 16.6% – after
- Some buy-in support
- 53.3% – before
- 46.7% – after
- Strong buy-in support
- 40.0% – before
- 36.7% – after
- Very little buy-in support
- Employee Buy-In Before and After ERP Implementation (Panorama Consulting Group, 2020)
- Very little buy-in support
- 20.0% – before
- 16.7% – after
- Some buy-in support
- 63.0% – before
- 50.0% – after
- Strong buy-in support
- 16.7% – before
- 33.3% – after
- Very little buy-in support
- As a result, testing and other related processes can shoot up ERP projects’ budget to 50% more than what was allotted. (Software Testing Help, 2021)
- 51% of users needed to manually extract their data from their ERP systems. Additionally, 33% of ERP customers needed APIs to do the same. As such, significant technical knowledge is required for data extraction in ERP platforms. (Accenture, 2019)
- Lastly, it is difficult for organizations to achieve a unified data view as a large number of ERP platforms (92%) need manual intervention to enable data sharing. (Accenture, 2019)
Why Do You Need an ERP System?
Asset management is essential to any type of business. Challenges and issues are to be expected, especially during implementation. But, the benefits far outweigh the potential problems. Here are a few:
Better Inventory Monitoring
Keeping track of all company assets is challenging for any business. ERP systems use RFID, serial numbers, or barcodes. These unique identifiers allow you to check your inventory in your supply operations. You can determine which products are in your warehouse. Also, you can track which ones are in transit. It is also easy to see your current shelf supplies.
ERP applications cut product loss by increasing the visibility of your inventory. You know how fast your products are moving through your entire operations. As such, you can make the necessary adjustments to improve its efficiency.
Enhanced Productivity
As with any business, tedious and repetitive tasks are unavoidable. That is why it takes hours to track inventory, write reports, process orders, and more. Furthermore, you will also have to allot time to check the quality of such tasks.
With the right ERP application, these steps in your workflow can be automated. ERP platforms often include a centralized database. Hence, it eliminates redundant data entry. Also, it can calculate data in seconds to generate reports in minutes. Such a solution will improve your productivity and efficiency.
Detailed Analytics and Insights
The centralized database makes it easy to analyze your workflow. Also, it automates your entire reporting process. Without such a platform in place, it will take days of data entry and research to create such reports.
Using ERP software, you can generate insights in a couple of clicks. Also, most solutions include dashboards that you can customize. As a result, you can see real-time data, which is essential if you want to track your entire operation.
Saving Money on Various Solutions
Even with flexible pricing, ERP systems can still be expensive. That is why subscribing to one is a huge investment for your company. But, modern solutions unify many systems that are otherwise fragmented. Most ERP software already include functionalities, such as accounts payable and CRM.
As such, you get to save a significant amount of your budget by having one platform from which to run your operations. Additionally, the onboarding process is much shorter. And, you only have to train your staff on using one software. Hence, it saves you time and money.
Increased Collaboration
ERP software usually provides some level of collaboration. Having a unified database allows your entire team to have one source of truth. As a result, you can cut miscommunication and reduce any human error. By improving collaboration, you can increase productivity by 20% to 30% through these online tools.
Additionally, all team members have access to information at any given time. So, this ensures that everyone is on that same page. Without having to merge information from different sources, you are also saving a lot of time.
What Do These ERP Statistics Mean for Your Enterprise?
The trends above show the evolution of ERP platforms. From being simple business software, they have become full-scale business solutions. Likewise, it shows that you can now run an entire company without using disjointed platforms.
Also, the data shows cloud technology’s impact on current ERP applications. It is now more accessible to SMBs compared to on-premise versions. Moreover, these platforms are far more scalable than their past iterations. As such, they grow along with your business.
Similarly, the ERP market is being disrupted by artificial intelligence and IoT. They allow ERP to become complete business software.
Even with potential challenges, an ERP system provides long-term benefits for your operation. While it can be expensive, it enables your business to generate revenue much faster.
Key Insights
- Widespread Need: ERP systems are no longer exclusive to large corporations. Businesses of all sizes, including small and medium-sized enterprises, are adopting ERP solutions to manage assets and streamline operations.
- Market Growth: The global ERP software market is growing steadily. In 2021, it is projected to reach $95.37 billion, with a CAGR of 0.7% from 2020 to 2024. Despite a brief decline due to COVID-19, the market is expected to rebound with an 8% CAGR from 2021 onwards.
- Industry Adoption: Manufacturing remains the largest consumer of ERP software, followed by IT, professional services, and wholesale distribution. Other sectors like healthcare, retail, and utilities are also significant users.
- Implementation Challenges: Implementing ERP systems involves technical skills, preparation, and training. Common challenges include process changes, organizational changes, and technical difficulties.
- Cloud ERP Dominance: A majority of businesses prefer cloud-based ERP solutions over on-premise setups due to their affordability, scalability, and ease of implementation.
- Small Business Adoption: Small businesses are increasingly adopting ERP systems, with 96% of successful small enterprises using some form of ERP. These systems help standardize operations, reduce costs, and provide real-time visibility into data.
- New Technologies: AI, cognitive technologies, and custom APIs are being integrated into ERP systems, enhancing their functionality and competitiveness.
- Potential Challenges: Common issues with ERP systems include implementation costs, data extraction difficulties, and achieving unified data views. Despite these challenges, the benefits of ERP systems outweigh the potential problems.
FAQ
- What is an ERP system?
An Enterprise Resource Planning (ERP) system is a software platform designed to manage and integrate the key functions of an organization. These functions include inventory management, financial management, human resources, supply chain management, and customer relationship management. - Why do businesses need ERP systems?
ERP systems help businesses streamline their operations, improve productivity, enhance collaboration, and provide detailed analytics and insights. They enable organizations to manage assets efficiently, reduce costs, and make informed decisions. - How does the global ERP market look currently?
The global ERP software market was valued at $94.71 billion in 2020 and is projected to reach $95.37 billion in 2021. The market is expected to grow steadily with a CAGR of 0.7% from 2020 to 2024. The market is anticipated to rebound strongly post-COVID-19 with an 8% CAGR. - What are the main industries using ERP systems?
The main industries using ERP systems include manufacturing, information technology, professional and financial services, wholesale distribution, healthcare, retail, utilities, construction, mining, education, and transportation. - What are the common challenges in implementing ERP systems?
Common challenges include difficulty in changing business processes, organizational resistance to change, technical issues during implementation, and budget overruns. Effective communication, change management strategies, and consulting support can mitigate these challenges. - Why are cloud-based ERP systems preferred over on-premise solutions?
Cloud-based ERP systems are preferred because they are more affordable, scalable, and easier to implement. They also reduce the need for extensive IT infrastructure and maintenance, allowing businesses to focus on core operations. - How do small businesses benefit from ERP systems?
Small businesses benefit from ERP systems by standardizing back-office operations, reducing operating costs, providing real-time visibility into data, and improving decision-making processes. ERP systems help small businesses scale operations and compete more effectively. - What new technologies are being integrated into ERP systems?
New technologies being integrated into ERP systems include artificial intelligence (AI), cognitive technologies, and custom application programming interfaces (APIs). These technologies enhance the functionality, efficiency, and competitiveness of ERP systems. - What potential issues might businesses face with ERP systems?
Potential issues include high implementation costs, technical difficulties in data extraction, achieving a unified data view, and managing the organizational change required for successful ERP adoption. Proper planning, training, and support can help address these issues. - Is investing in an ERP system worth it?
Yes, investing in an ERP system is worth it for most businesses. Despite the initial costs and potential implementation challenges, ERP systems offer long-term benefits such as improved efficiency, better asset management, increased productivity, and enhanced decision-making capabilities.
References:
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- The Business Research Company. (2020, September). Enterprise Resource Planning (ERP) Software Global Market Report 2020–30: Covid 19 Impact and Recovery. Report Linker. https://www.reportlinker.com/p05967791/Enterprise-Resource-Planning-ERP-Software-Global-Market-Report-30-Covid-19-Impact-and-Recovery.html
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