2020 ERP Market Trends, Data and Analysis

An enterprise resource planning (ERP) system is the key to integrating different business functions across an organization. The widespread growth of ERP system adoption illustrates the importance of ERP to successful businesses.

Why have ERP systems gained such popularity? Because a shared database of information for employees and decision-makers is a direct path to peak levels of business performance.

ERP Market Statistics

ERP is a core system for businesses, driven by market characteristics such as widespread digital adoption, thriving global trade and vast amounts of data that need to be tracked, maintained and analyzed. ERP market statistics show the move towards increased usage and global demand.

• The ERP market remains in a phase of rapid expansion, with total market size expected to exceed $49.5 billion by 2024.
• In 2019, the global ERP software market grew by 9%, resulting in a worldwide value of approximately $39 billion in total software revenue.
• Revenue growth occurred for ERP in all areas in 2019, with strong growth for administrative ERP with financial management software (FMS) growth at 7% and human capital management (HCM) growth at 10%.
• The ERP market size in North America is worth over $10 billion.
• Asia-Pacific is an emerging ERP market expected to achieve a CAGR of 13.2% through 2026.
• Global market growth is expected to increase at a CAGR of over 8.1% over the next five years.
• In a survey of IT decision-makers, 53% said ERP was an investment priority, in addition to CRM.
• 50% of companiesare soon acquiring, upgrading or planning to update ERP systems soon.
• The global ERP software market is expected to reach $78.4 billion by 2026.

ERP Implementation Statistics

To execute a successful ERP implementation, companies must have a clear vision of new system requirements to create alignment throughout the organization. Choosing the right vendor and assigning an internal implementation team increases the chance of project success.

Although ERP implementations can be challenging, data and statistics show many companies exceeding and even surpassing implementation efficiency expectations.

• In a 2019 surveyof distributors and manufacturers, 67% described their implementations as successful or very successful.
• Companies that had very successful ERP implementations noted internal organizational elements like support from management, good change management programs and due diligence as primary reasons for success.
• When asked what went wrong during implementation, only 12% of respondents noted poor quality of software.
• The top two problems noted during implementationwere inadequate testing and inadequate business process reengineering.
• After ERP implementation, 49% of companies said they improved all business processes. Only 5% of business said they did not improve business processes.
• In a survey on ERP implementation, midsize companies with $100 million to $250 million in revenue had the fastest implementations at 6.6 months. Very large companies, over $25 billion in revenue, took the longest at 12.35 months.
• Regarding implementation, minor customization was needed by 10% of respondents, some customization was needed by 33% and significant customization was needed by 37%.
• For a group of companies that underwent ERP implementation, nearly half (49%), went live in the allocated time– 13% went live sooner than expected, 27% were a little late and 11% failed to go live in the time allotted.
• Expansion of the initial project scope was the primary reason companies went over budgetduring implementation.

ERP ROI Statistics

Organizations use ERP to become more efficient and save costs. Statistics on ERP return on investment (ROI) highlight the benefits of the technology.

• ERP implementation led to business process improvement for 95% of businesses.
• In a study of companies implementing ERP, 85% had a projected timeline for ROI. Of that group, 82% achieved ROI in their expected time.
• The top three benefitsbusinesses said they gained from an ERP system are reduced process time, increased collaboration and a centralized data system.
• An average for ROI timein a group of companies that implemented ERP was just over 2.5 years.
• The top three business goalscited for implementation are achieving cost savings (46%), improving performance metrics (46%) and improved efficiencies in business transactions (40%).
• When asked to select areas where ERP produced ROI, the top three answers were reduced IT costs (40%), reduced inventory levels (38%) and reduced cycle time (35%).
• For midsize companies—revenue under $1 billion—the cost of owning an ERP system is approximately 3-5% of annual revenue.
• For large companies—revenue over $1 billion—the cost of owning an ERP system is 2-3% of annual revenue.

ERP Usage Statistics

ERP adoption by industry varies, and organizations often use ERP systems for different reasons. Recent ERP usage statistics provide some insight into current usage trends.

• Manufacturing companies are the No. 1 user of ERP software.
• In a surveyof 255 companies looking to purchase ERP software, 89% identified accounting as the most critical ERP function. Other responses included inventory and distribution (67%), CRM, sales (33%) and technology (21%).
• Manufacturers represented the largest portion at 47%of companies looking to purchase ERP software, followed by distribution (18%) and services (12%).
• Eighty-four percent of ERP users had an expected ERP spend of less than 2% of annual income.
• Forty percent of companiesidentified better functionality as their primary reason for implementing an ERP system.
• The biggest influencers in purchasing ERP softwarewere employees from finance and accounting (23%) and IT department employees (23%).
• In a survey of small businesses with 50–99 employees, 57.5% strongly agreed on investing in cloudand hosted solutions.

Cloud Technology Statistics

Adoption of cloud technology continues to increase worldwide as businesses move from on-premises technology to achieve business efficiencies, on-demand service, network elasticity and expanded network access. Statistics on the increase of cloud technology show the dramatic growth of cloud applications as they relate to the ERP market.

• Forrester estimates that 2020 cloud subscriptions for business applications will account for $170 billion in revenue.
• Cloud-based ERP systems had a 20.7% enterprise application growth ratein the public cloud in 2018.
• By 2022, global cloud app spending will reach $226.9 billionand cloud platform services will reach $70 billion.
• An international survey of ERP users indicated 64% of companies using SaaS, 21% using cloud ERP and only 15% using on-premises.
• Cloud deployments account for 44%of all implementation for survey respondents in manufacturing and distribution.

ERP Trends

As business needs become more complex, ERP software is advancing to meet the demand for more customizable features and broader social integrations. Current ERP trends illustrate a shift towards greater cloud adoption and intelligent systems that streamline and automate processes.

• By 2022, Gartner predicts that artificial intelligence (AI) will be integrated into ERP systems by 65% of CIOs.
• 53% of UK CIO’sare looking for more intelligent ERP systems that include technology like machine learning, AI and automation.
• CIO’s listed predictive analytics and deep learningas the most critical ERP technologies to gain a competitive advantage.
• Fifteen percent of organizationsplan to increase their Internet of Things (IoT) budget.
• A broader move to more personalization across ERP systems leads 82% of UK CIO’sto choose ERP systems with some customization or use UI overlays.

ERP Challenges

Common ERP challenges include poor project management, inability to manage implementation costs and duration, internal resistance to new systems, software integration issues and poor data quality. These problems stem from unclear ERP implementation goals, choosing the wrong ERP vendor and purchasing software that’s not right for your company.

An ERP system can supercharge your business, but you must choose the right platform and implementation team to avoid becoming another unfortunate ERP statistic.

• Data collected over the years on ERP implementations states that 50% failthe first time around.
• Most implementations cost three to four timeswhat was initially budgeted.
• Implementation can take 30% longer than anticipated.
• Fifty-one percent of companies experience operational disruptionwhen they go live.
• System modifications needed to improve usability can cause overspending 65% of the time.
• The top three places ERP systems fall shortfor users is data accuracy, user experience and analytics.

How to Succeed with ERP/Choosing the Right ERP Partner

The best ERP partners will offer a suite of services that cover enterprise basics like accounting and human resources—but they also offer applications spanning CRM (customer relationship management), human capital management (HCM), product lifecycle management (PLM), supply chain management (SCM), warehouse management systems (WMS), and more.

Cloud-native ERP systems with advanced technologies suit forward-thinking organizations who want access to ERP benefits such as increased efficiencies, cost savings and quick deployment times. Cloud deployment has opened the door for fast-growing organizations of all sizes, making ERP software available for big and small companies.

Article Attribution: This article was originally posted on the on NetSuite.com and was written by Justin Biel | Trends Editor, Grow Wire.