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ERP Market


During the last 3-4 years the ERP market witnessed considerable growth rates driven mainly by the Y2K crisis. ERP companies including SAP, PeopleSoft, Oracle and Baan etc have recorded consistent growth in revenues, which were well above the 20% mark.




However, recent trends in the industry indicate a slowdown in the traditional ERP market. The slowdown has been attributed to the Y2K crisis, which is round the corner and the stagnant world economy. Growth rates which were as high as 40% per annum is expected to slowdown considerably to around 15-20%.

However, the market is also witnessing new avenues like the emergence of SMEs (Small and Medium Enterprises – turnover of $50mn to $500mn) as a major ERP spender with significant demand for module specific implementation. As the Fortune 500 market for product license revenue becomes saturated, larger ERP firms are shifting their focus to the middle market. Also, other areas like Supply Chain Management (SCM), Customer Relationship Management (CRM), extended ERP and Web enabled ERP are catching attention.

During the year 1998 the total ERP market is estimated to be around $17.5bn by IDC a growth rate of around 26%yoy. The ERP market is widely spread with the top ten players accounting for almost 48% of the total market the rest of the market is accounted for by the small and regional players.

However, the top end of the market is captured by a few players. SAP, the market leader, accounts for 17% of the total market (1998). Other major players include Baan, Oralce, PeopleSoft etc.

ERP market forecast - license revenues

A D V E R T I S E M E N T

S A P - R E S O U R C E S


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$ mn

1994

1995

1996

1997

1998

1999E

2000E

SAP

352.0

669.0

942.0

1,221.0

1,908.0

2,800.0

3,700.0

% yoy  

90.1

40.8

29.6

56.3

46.8

32.1

Oracle

103.0

209.0

341.0

533.0

667.0

850.0

1,100.0

% yoy  

102.9

63.2

56.3

25.1

27.4

29.4

Peoplesoft

69.0

139.0

253.0

433.0

668.0

1,000.0

1,400.0

% yoy  

101.4

82.0

71.1

54.3

49.7

40.0

BaaN

60.0

112.0

240.0

437.0

651.0

950.0

1,200.0

% yoy  

86.7

114.3

82.1

49.0

45.9

26.3

JD Edwards

108.0

134.0

180.0

249.0

325.0

400.0

550.0

% yoy  

24.1

34.3

38.3

30.5

23.1

37.5

Others

978.0

1,187.0

1,444.0

1,989.0

2,539.0

2,900.0

3,750.0

% yoy  

21.4

21.7

37.7

27.7

14.2

29.3

Total

1,670.0

2,450.0

3,400.0

4,862.0

6,758.0

8,900.0

11,700.0

% yoy

59.0

46.7

38.8

43.0

39.0

31.7

31.5

Source: AMR, Company reports

ERP market by functional modules

The main modules in any ERP application include Finance and accounting, customer order management, MRP, Materials management, Decision Support/ data Warehousing and Non ERP applications.

During 1998 finance and accounting accounted for 30% of the total license revenues. According to AMR this figure is expected to grow at a CAGR of more than 40% in the next 2-3 years to contribute 33% of the total revenues.

While customer order management and MRP account for another 30% of the total license revenues material management account for another 11%.

ERP market by functional areas

$ mn

1996

1997

1998

1999

2000

2001

Finance & accounting

934.0

1,336.0

1,910.0

2,712.0

3,824.0

5,354.0

% yoy

43.0

43.0

42.0

41.0

40.0

Customer order management

505.0

682.0

928.0

1,253.0

1,678.0

2,232.0

% yoy

35.0

36.1

35.0

33.9

33.0

MRP

557.0

721.0

952.0

1,257.0

1,684.0

2,239.0

% yoy

29.4

32.0

32.0

34.0

33.0

Material

392.0

516.0

696.0

940.0

1,250.0

1,663.0

% yoy

31.6

34.9

35.1

33.0

33.0

Decision support

179.0

234.0

307.0

399.0

519.0

674.0

% yoy

30.7

31.2

30.0

30.1

29.9

Non-ERP Apps

890.0

1,159.0

1,567.0

2,144.0

2,952.0

4,091.0

% yoy

30.2

35.2

36.8

37.7

38.6

Total

3,457.0

4,648.0

6,360.0

8,705.0

11,907.0

16,253.0

% yoy

34.5

36.8

36.9

36.8

36.5

Source: AMR

ERP market by functional areas

% of total

1996

1997

1998

1999

2000

2001

Finance & accounting

27.0

28.7

30.0

31.2

32.1

32.9

Customer order management

14.6

14.7

14.6

14.4

14.1

13.7

MRP

16.1

15.5

15.0

14.4

14.1

13.8

Material

11.3

11.1

10.9

10.8

10.5

10.2

Decision support

5.2

5.0

4.8

4.6

4.4

4.1

Non-ERP Apps

25.7

24.9

24.6

24.6

24.8

25.2

Total

100.0

100.0

100.0

100.0

100.0

100.0

A D V E R T I S E M E N T

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