ERP Software Market
The state of the ERP and procurement software markets in 2019 is one of strong growth and steady change. The most prominent market trends include increased adoption of ERP software by small to mid-size businesses (SMBs); continued transition to cloud-based ERP solutions; and the rise of eProcurement software to eliminate costly manual errors in key procurement processes.
The ERP marketplace in 2019
ERP software defined
Enterprise resource management (ERP) involves the use of sophisticated, highly-integrated and customizable software to help monitor, manage and automate business processes and information. Although ERP software can vary significantly in scope, it generally encompasses a wide range of operations, from the supply chain to inventory to human resources. Further, there is a current trend in ERP software to integrate or encompasses accounting and customer relationship management (CRM) as well.
Small to mid-size business adoption
Once considered an option only for larger corporations, in 2017 small to mid-size businesses (SMBs) have the option to adopt powerful, affordable ERP software. ERP leader SAP, for example, has made an aggressive push into the SMB space. Providers of financial, accounting and customer relationship management (CRM) software have moved into the ERP space as well, primarily attracting SMBs with relatively low-cost, cloud-based solutions.
The rise of the cloud
On-premise ERP solutions, despite their power, can take years and cost millions to implement. However, cloud-based or SaaS ERP solutions do not require the same on-site specialists and hardware to implement. For this reason, and many others, implementing cloud-based ERP solutions can take a fraction of the time, and cost a fraction of the price. Maintaining and updating cloud-based ERP software is also generally less expensive and time-consuming.
Nonetheless, the shift to cloud-based ERP implementations, although steady, has been slow, at least for larger businesses. According to a recent report, large businesses have been reluctant to rapidly transition away from on-premise ERP. Among the four leaders in the ERP software market, cloud adoption currently ranges from roughly 40% at Infor to 60% at SAP.
The procurement software market in 2019
Procurement software defined
Although often considered a module within the ERP software suite, procurement software has its own unique domain, and often its own specialized software providers. Overall, procurement software manages, monitors, expedites and automates key procurement processes, such as purchase orders and sourcing queries.
Today’s procurement software market
According to a recent market research study, the procurement software market will grow at a CAGR of nearly nine percent through 2021. The report indicates that the manual approach to electronic requisitioning, invoice processing, order management and other procurement processes has led to consistent errors and losses. Therefore automation through eProcurement technology will continue to serve as one of the key drivers of strong growth in the procurement software market through 2021. According to the report, eProcurement can represent a roughly 40% reduction in time spent on procurement processes.
The report further indicates that the increasing demand for procurement software has attracted a large number of providers, both regional and global. Due to crowding in the procurement software marketplace, software makers are fine-tuning their delivery and deployment models in an effort to differentiate themselves. The report singles out six vendors that currently stand out in the competitive landscape: SAP, Oracle, IBM, PROACTIS, Basware and SciQuest.
The procurement software market, like the ERP software market, is split between cloud and on-premise solutions. The report foresees that on-premise deployment will continue to win the majority of the market share in coming years. Yet cloud-based procurement software is gaining momentum, and has several clear advantages, such as reduced deployment costs.
Getting started with ERP and procurement software in 2019
ERP and procurement software is designed to help companies monitor, control, expedite and automate key business processes, such as inventory and purchasing, resulting in significant savings in time and costs. However, choosing a provider in 2017 requires understanding a number of key decision-points and market trends. Among other factors, your choice of ERP and procurement software will depend on the size of your business; your preference for on-premise versus cloud implementation; and your need for a broad ERP solution or a specialized eProcurement solution.