ERP implementations: Some growth ahead, shifting to subscriptions

The enterprise resource planning (ERP) market is heating up in 2011, but despite more on-demand offerings from SAP and Oracle's Fusion upgrades, two-thirds of companies say they will stick with the status quo for their business applications.

The enterprise resource planning (ERP) market is heating up in 2011, but despite more on-demand offerings from SAP and Oracle's Fusion upgrades, two-thirds of companies say they will stick with the status quo for their business applications.

That's the major takeaway from Forrester Research's state of the ERP market report.

Nevertheless, the ERP market will be $45.5 billion in 2011, up from $43 billion in 2010. The market should hit $50.3 billion in 2015.

The customer picture:

The big question is how these companies will upgrade when it's time for an ERP upgrade. NetSuite and others have been talking highly of so-called two-tier upgrades. In a nutshell, you keep your on-premise ERP and build out via software as a service options. Forrester agrees with that argument going forward---today SaaS ERP options are thin---but argues that the spoils will mostly go to Oracle and SAP.

Forrester writes that SaaS and hybrid deployments will grow and give customers more options.

Among the key points:

  • Forrester predicts that Infor, Oracle, Sage and SAP will continue to grow via acquisition. License revenue will start to fall by 2015 and maintenance revenue will carry the day.
  • Subscription revenue will pick up as SaaS ERP revenue grows 21 percent a year through 2015.
  • SAP and Oracle will remain the big dogs of ERP.
  • Specialist ERP vendors keep competing with generalists like SAP and Oracle. As a result, the market remains fragmented. For instance, healthcare has Allscripts, Cerner, Epic, McKesson and Siemens all competing. Add large players who are entering the market via acquisition.

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