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The global enterprise resource planning (ERP) software market size was USD 46.30 billion in 2020. The market is projected to grow from USD 50.31 billion in 2021 to USD 93.34 billion in 2028 at a CAGR of 9.2% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with solutions witnessing a positive demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a significant growth of 8.6% in 2020 as compared to year-on-year growth during 2017-2019. The steady rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.
The global ERP software market growth is driven by the increasing need for an affordable and effective solution among organizations to carry out business functionalities streamlined and improve operational efficiency.
Further, with rising digitization, businesses face challenges analyzing profits and costs on a product or changing consumer behavior and continuously varying business requirements, which further elevated the demand for enterprise resource planning solutions. As a part of business strategy, major players are investing in the research and development. For instance, in March 2019, Oracle extended Artificial Intelligence (AI) capabilities within Oracle ERP Cloud and Oracle Enterprise Performance Management (EPM) Cloud. This product up-gradation would help organizations in expense reporting assistant, project management, digital assistant, advanced financial controls, and project-driven supply chain management. Such initiatives would further contribute to the enterprise resource planning market size.
ERP Technology Helps Manufacturing and Other Industries Sustain the COVID-19 Impact
Businesses efficiently leverage the cloud to construct robust and disaster-resistant systems to support a remote workforce while also protecting data and business application integrity. Travel restrictions and project delays will have a negative impact on the IT consulting and professional services sector. These developments are expected to drive up demand for public cloud services, particularly SaaS-based industry-specific apps such as collaboration and other productivity and business continuity solutions.
The COVID-19 pandemic has impacted the way businesses operate, from customer behavior and business functionalities. Manufacturers were forced to quickly shift gears due to the COVID-19 epidemic, from dealing with work-from-home regulations to handling severe demand fluctuations and unstable supply chains. While the crisis has caused many businesses to fail, the firms that will most likely survive in the long term are companies that are willing to adopt change and embrace new business models. Organizations and firms are using ERP tools to scale their manufacturing operations and ease business functionality.
Companies operating in various industry verticals such as manufacturing, healthcare, IT & telecommunications, among others, have integrated solutions in their business infrastructure to tackle the disruption caused by COVID-19. For instance,
ERP tools are helping companies survive the impact of COVID-19 in the following ways:
As a result of the increased mobility of the workforce due to lockdowns and the need for security to avoid high network downtime costs, cloud services are in high demand across the globe. Furthermore, the majority of platforms contains modules for inventory control and supply chain management, and many manufacturers will resort to specialist suppliers in the event of an epidemic. COVID-19 has aided current ERP systems in realizing their full potential by increasing remote working capabilities. Furthermore, the epidemic has compelled businesses all over the world to convert their physical workplaces to virtual working environments. This has resulted in a spike in demand for the product, thereby fueling the enterprise resource planning software market growth.
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Cloud-Based ERP Solutions to Witness Robust Adoption
The increasing demand for cloud-based solutions is expected to drive market growth. Cloud-based solutions allow enterprises to store their data on shared computing resources. Cloud-based solutions help companies to share information across divisions, unlike traditional software. Organizations can upload and access data on any device with an internet connection in real-time through the cloud, which allows enhanced collaboration between departments. According to a blog published by Selecthub in 2020, 62.7% of companies opt for cloud-based suite over on-premises deployment. Key players, including Oracle and SAP, offer ERP solutions based on a cloud platform to deliver data backup and storage recovery plans to manage primary business functions such as accounting, inventory and order management, human resources, and customer relationship management (CRM).
Cloud enables businesses to reduce upfront costs for computing infrastructure such as hardware and data servers and easy installation. It gives businesses the flexibility and scalability they need to simplify their operations and increase productivity. Thus, with the advances in cloud technology, cloud-based ERP solutions will enable companies to align their business strategies.
Growing Need to Improve Operational Efficiency and Streamline Business Processes Among Enterprises to Drive Growth
The rise in need of operational efficiency and transparency in business processes has forced global companies to adopt various business models. Advancements in advanced technology reduce the complexity of enterprise resource planning (ERP) systems and allow third-party apps to support corporate processes more effectively. According to the 22nd Annual Global CEO Survey conducted by PwC, 80% of all CEOs believe that the product commercialization will have a significant influence on their organizations and business models in the next years.
Businesses worldwide are concentrating on optimizing their business processes to increase operational efficiency while keeping track of running costs. Businesses are looking for a centralized solution to handle a variety of business operations, including finance and accounting, sales and marketing, procurement, and supply chain management. Integration of ERP software has made business operations simplified and more efficient. Manual data entry is no longer necessary, and it allows companies to see all of the data in single uniform platform. Using this cloud-based software, complex procedures, such as a multi-step production plan, may also be made easy and painless. Key players operating in the market are taking strategic initiatives to expand their portfolios. For instance, in March 2021, Acumatica, Inc., launched Acumatica 2021 R1, a cloud-based suite that offers best-in-class functionality and a powerful user experience. Such initiatives by key players are expected to contribute to the growth of the market.
Lack of Skilled Professionals and High Costs to Hamper Market Expansion
Enterprise resource planning suite is a costly solution, and it can also be expensive for SMEs and startup companies to set up ERP solutions. It is hard for businesses to operate efficiently and smoothly, and therefore adequate preparation, skilled professionals, and experienced workforce is essential. Insufficient training may result in employees mistreating the technology, resulting in the loss of valuable information. Besides this, computer hardware, updated network equipment, and security software are necessary to implement solutions, resulting in increased expenditure. These factors might be key restraining factors for the global market.
Integration Issues with On-Premises Deployment Models to Limit ERP Adoption
Organizations have gradually begun to integrate cloud enterprise resource planning solutions and services. However, companies still face substantial problems in integrating these solutions with their existing systems due to system complexity and implementation costs. Existing legacy systems must be tightly linked with new ones for cloud ERP to be implemented successfully. Due to a lack of resources, few businesses continue to rely on their present systems, which are based on outdated technology and include manual procedures, which result in a high rate of mistakes and a long turnaround time. Furthermore, because current legacy systems are mainly on-premises, connecting them with new cloud-based systems might be a barrier to digital process automation solutions and services adoption.
Rising Demand for Enterprise Resource Planning Software among Enterprises to Improve Operational Efficiency
Based on component, the market is segmented into software and services.
Among these, the software captured maximum share in terms of revenue. The global market size is inclusive of various software offered by key players such as Tally.ERP 9 by Tally, Oracle NetSuite ERP by Netsuite, and TYASuite Cloud ERP by TYASuite. The segment growth is mainly ascribed to the increased adoption of the product among businesses to manage all aspects of a business, such as financial management, human resources, supply chain management, and make it easier and efficient for companies to collect data. In addition to this, the penetration of Big Data technology and the continuously evolving customer-centric market is expected to create enormous opportunities for key players to invest in enterprise resource planning solutions.
Further, the services segment is expected to rise with a steady CAGR during the forecast period. The growth of the services segment is owing to the rising investment and adoption of cloud-based ERP solutions among the various industries, including manufacturing, BFSI, IT & telecom, and others. In services, key players are providing consulting, implementation and integration, and support and maintenance.
Large Enterprises Are Implementing ERP Solutions for Resource Planning and Business Expansion
Based on organization size, the market is segmented into SMEs and large enterprises.
Large enterprises captured maximum market share. Factors such as increased operational efficiency, reduced production costs, and central collection of data for wide distribution are expected to augment the demand for the product among large enterprises over the forecast period. For instance, SYSPRO software helps large enterprises to manage global operations and multiple subsidiaries with scalable tools. Besides this, compliance with strict government rules has prompted the product adoption in several industries, allowing efficiency to be improved and minimized operational complexities.
Further, the SMEs segment is expected to rise with the highest CAGR during the forecast period. Cloud ERPs are introduced to help SMEs to simplify business processes along with cost benefits to remain competitive in the market. Also, expanding SMEs requires proper database management that is expected to boost the demand.
Increased Demand for ERP Software with Enhanced Data Storage Will Drive Market Growth
Based on deployment, the market is segmented into cloud, on-premises, and hybrid.
Cloud-based ERP accounted for the largest market share during the forecast period. Low infrastructure costs and the ability to integrate with mobile and tablet devices are projected to increase the market for Cloud ERP over the forecast period. Cloud solutions enable businesses to store data over the internet and provide tools to restore data in case of any data loss or data breaches.
Further, the hybrid ERP is expected to rise with the highest CAGR during the forecast period. The key factors driving the growth of the hybrid deployment model is the increasing availability of Big Data through cloud computing, the rising demand for better end-user experiences and key players investing in hybrid ERP solutions.
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Use of ERP Solutions to Automate Business Processes and Strengthen Financial Transactions to Drive Market Forward
Based on business function, the market is segmented into financial management, human capital management, supply chain management, customer management, inventory and work order management, and others.
The financial management captured maximum market share and is expected to maintain its dominance over the forecast period. The segment focuses on financial management features offered in software. For instance, financial management features form SAP SE’s suite offer streamlined financial processes, planning, budgeting, and forecasting capabilities, among others. Financial services companies now rely entirely on new, scalable systems to guarantee compliance with government data, operations, and accountability regulations. An platform consisting of proper financial management features is fully integrated with the order management, shipping and receiving, and manufacturing of structural units of the company. The ERP financial management platform helps businesses to gather financial data and generate reports according to vendors and customer needs. Moreover, the financial management function provides several features to organizations such as profit tracking, ledger management, accounts payable, accounts receivable, fixed asset management, risk management, multi-currency management, and tax management.
Inventory and work order management is expected to grow at the highest CAGR over the forecast period. The growth is mainly attributed due to the increasing demand for ERP tools to prioritize and coordinate work orders with accuracy and efficiency. Companies can manage the process of identifying and executing scheduled and urgent maintenance activities throughout an organization using an interactive work order management function from an ERP application.
Rising Popularity of ERP Technology to Increase Operational Efficiency to Augment Market Share
Based on end-user, the market is segmented into manufacturing, BFSI, IT and telecommunications, retail and consumer goods, healthcare, transportation and logistics, and government, and others.
The manufacturing industry held the largest market share in the global market. The ERP solutions for manufacturing companies aim to use advanced features and functionality to optimize all facets of the manufacturing process–from sourcing and acquisition to development, storage, quality testing, and distribution. ERP for production can, therefore, improve efficiency, reduce costs, and increase sales and profits. It provides a solution that helps manufacturers to succeed in the global market landscape. It can produce finite and infinite planning capabilities that allow producers to build their original schedules. It can also turn the supply chain to achieve a production schedule for distribution, sourcing, financing, and consumer orders.
The integration of ERP solutions is changing the competitive landscape for small and medium-sized manufacturers. Small and medium manufacturers implement fully integrated ERP approaches to reduce costs, boost customer service, enhance profits and create new revenue streams. Moreover, with a highly efficient yet easily affordable system, SMB manufacturers can increase business outcomes. These solutions enable manufacturers to streamline processes, improve collaboration and communication among design and manufacturing teams, and enhance agility.
Moreover, the healthcare segment is expected to rise at the highest CAGR during the forecast period and contribute highest to the global ERP software market share. The efficient management of patient records is the first and foremost necessity of hospital and healthcare companies. An ERP has a robust database, capable of storing big, quantitative data. An integrated database can make patient records readily available for doctors and hospital staff. Implementing these solutions in the healthcare industry provides vital benefits such as better patient care, cutting down operational costs, streamlining medical processes, initiating better healthcare practices, and increased patient safety.
North America ERP Software Market, 2020 (USD Billion)
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Geographically, the market is segmented across five major regions, which are North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America.
North America captured the largest market share due to crucial vendors such as Oracle, Microsoft, Infor, and Epicor in the region. North America has higher adoption of advanced technologies such as cloud computing, IoT, Big Data, and business intelligence, further contributing to the regional market growth. In addition to this, higher adoption of ERP solutions among industry verticals is fueling the market in North America.
The rising need to automate business functionalities through digital methods is boosting the market’s growth in North America. Organizations in the U.S. and Canada are implementing ERP solutions to streamline business processes and upgrade their internal business efficiency. For instance, Loblaw Companies Limited, Canada's food and pharmacy leader, implements SAP solutions to optimize business functionalities. In addition to this, key players in the region are investing in research and development activities to develop new solutions. For example, in December 2017 – SYSPRO, a global provider of industry-built a software, partnered with Quebec company Shift Group to strengthen its position in Eastern Canada.
Asia Pacific is expected to grow with a remarkable CAGR during the forecast period. This region's growth is mainly due to the continually evolving industry verticals, including manufacturing, BFSI, and transportation and logistics. To cater to the rising demand for sustainable ERP solutions among these verticals, several key vendors in the region are focusing on developing and introducing advanced ERP solutions. Many small and medium-sized businesses in the region are implementing cloud-based solutions to improve productivity and reduce business complexity. Besides this, government regulations to support IT infrastructure is further expected to augment the market growth in the region.
The growth of the market in Europe is mainly driven by rising technological advancements and the growth of the regional manufacturing industry. According to the European Commission, in 2019, 30% for small businesses and 80% for large businesses implemented used enterprise resource planning tools. Furthermore, the growth is fueled by the large number of small and medium-sized businesses that are turning to hosted ERP systems to manage their company operations more efficiently, notably in countries like Germany, Italy, and France.
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Due to various factors such as the penetration of new industries and the development in the economy, the Middle East and Africa, and Latin America led the total market share in 2020. Furthermore, due to the low cost of deployment and maintenance, firms in this region are migrating from on-premise to cloud-based software.
Key Players to Focus on Product Offerings and Launch Variety of ERP Solutions
An Infographic Representation of Enterprise Resource Planning (ERP) Software Market
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The global market research report provides an in-depth analysis of the market. It focuses on key aspects such as leading companies, product Industry, and leading software and solutions. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the factors mentioned above, the report encompasses several key factors that have contributed to the market's growth over recent years.
2017 – 2028
2021 – 2028
2017 – 2019
Value (USD Billion)
By Component, Organization Size, Deployment, Business Function, End-User, and Region
By Organization Size
By Business Function
According to Fortune Business Insights, the global market is expected to reach USD 93.34 billion by 2028.
Fortune Business Insights says that the market stood at USD 46.30 billion in 2020.
The market is expected to grow at a CAGR of 9.2% during the forecast period (2021-2028).
Based on component, the software is expected to lead the market.
Increasing adoption of ERP technology to smoothen business functionalities is one of the key drivers for market growth.
Infor, The Sage Group plc, Unit 4, Epicor Software Corporation, Workday, Inc., SYSPRO, Acumatica, Ramco System, and QAD Inc. are some of the top companies in the market.
The manufacturing segment holds the major market share.
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