Currency fluctuations and regulatory compliance boosted IT spending figures on enterprise resource planning systems in 2004, with SAP taking advantage of Oracle's lengthy acquisition of PeopleSoft to boost its market share lead to 40 per cent, according to a new report.
AMR Research's annual ERP report shows the worldwide market grew by 14 per cent in 2004, although it estimates organic growth to be nearer eight or nine per cent when the strong euro and British pound and the weak US dollar are factored in. Growth for 2005 is also predicted to slow to around three per cent.
That growth was not even across the ERP vendors in the market. AMR predicts SAP will finish 2005 with more than twice the revenue and market share of the combined Oracle and PeopleSoft.
The report noted: "While most ERP vendors were struggling in 2004, SAP had a spectacular year. It increased its market share to more than 40 per cent globally while growing total revenue by 17 per cent and licence revenue by an amazing 20 per cent - without any acquisitions."
Consolidation is tipped to continue and the AMR's figures show the top five ERP vendors in 2005 - Microsoft, Oracle, Sage Group, SAP and SSA Global - will account for 72 per cent of total ERP revenue in 2005, compared to 59 per cent for the top five vendors in 1999.
ERP buying patterns are also changing with businesses moving away from large, upfront purchases and instead licensing user seats and ERP models incrementally as they deploy a product, according to the report.
Buyers and vendors are warned that the ERP market is going through a major technology transition phase due to the emergence of service oriented architectures (SOA). AMR said in the report that SOA may have the same disruptive effect as client-server systems in the 1990s.
Nigel Montgomery, director of European research at AMR Research, said in the report: "The spotlight on innovation and the concern of non-compliance has driven large companies to put the last nail in the coffin for aging legacy systems. Large companies are consolidating fragmented IT environments and small and mid-sized businesses are investing in their first true integrated business systems."
Silicon.com’s Will Sturgeon reported from London.