Report: ERP market to grow at 4.8% rate over next 5 years

The worldwide market for Enterprise Resource Planning (ERP) solutions continues to grow on the plethora of acquisitions, ARC Advisory Group reported.  The worldwide market for ERP is expected to grow at a Compounded Annual Growth Rate (CAGR) of 4.8 percent over the next five years.  The market was $16.67 billion in 2005 and is forecasted to be over $21 billion in 2010.

ERP software license revenue provides a strong barometer on how the market is performing.  Plus, while ERP had its genesis in manufacturing, users from a wide range of other industry sectors are taking advantage of the wide range of benefits offered by an ERP solution.

Acquisition Strategies

Many of the industry leaders are executing aggressive acquisition strategies in an attempt to gain market share on SAP’s dominant market position, but they face many challenges in the post-acquisition phase, such as defining a clear, go-to-market strategy for integrating the various products and the installed base.

Service-Oriented Architecture (SOA)

There always has been a need for integrated solutions, especially when talking about an integrated enterprise from the plant floor up to the executive offices.  With the continued demand on acquisitions, along with the programs to address the Small-Medium Business (SMB) market, systems integration is a necessary evil between ERP and other enterprise solutions.  Integration has been difficult, but SOA provides value to the enterprise by freeing key pieces of business functionality from individual systems, and making them available for integration with other applications.
 

Market. Market. Market. China!

Using a play on words with “location, location, location”, China is the emerging market for lots of ERP solutions.  China is attaining preeminence in global manufacturing and already produces 50 percent of the world’s cameras, 30 percent of air conditioners and televisions, 25 percent of washing machines, and 20 percent of refrigerators.  One private Chinese company manufactures 40 percent of all microwave ovens sold in Europe.  The city of Wenzhou, in Eastern China, produces 70 percent of the world's metal cigarette lighters.

China is adding state-of-the-art production capacity in cars, specialty steel, petrochemicals, and microchips.  These plants are initially aimed at meeting seemingly insatiable Chinese domestic demand, but inevitably, when growth stalls, the resulting glut will turn into an export wave.  Furthermore, Beijing will host the 2008 Summer Olympic Games, and the country has very high hopes of hosting the 2018 FIFA World Cup.

Pushing the ERP Envelope Beyond Manufacturing

Historically and traditionally, ERP was exclusive to the manufacturing domain, going back to its roots in MRP (Manufacturing Resource Planning).  For the past decade, major portions of ERP solutions, most notably Financials and Human Resources, and, more recently, Supply Chain Management applications, found their way into sectors like government, banking/finance, health, retail, distribution, and education/administration under the ERP umbrella.  These sectors are becoming increasingly more acceptable to seeking relief from ERP solutions, and in places like India, ERP is now being sold into the Real Estate and Construction markets.