ERP Market Seen Exceeding $21 Billion by 2010

Enterprise resource planning market set for steady growth as China, new verticals continue market expansion, ARC reports

Enterprise resource planning market set for steady growth as China, new verticals continue market expansion, ARC reports

Dedham, MA — April 21, 2006 — The worldwide market for enterprise resource planning (ERP) solutions continues to grow on the plethora of acquisitions and will exceed $21 billion in 2010, according to a new report from technology research firm ARC Advisory Group.

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, according to the new ARC study "Enterprise Resource Planning Worldwide Outlook."

"ERP software license revenue provides a strong barometer on how the market is performing, and this study focuses on that aspect of the whole ERP environment," said ARC Senior Analyst Steve Clouther, the principal author. "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."

Elsewhere, the ARC study addresses:

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)

ARC writes that 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 and midsize 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, according to ARC.

Market, Market, Market: China!

Just as "location, location, location" is key in real estate, ARC sees China as the key emerging market for many 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 ERP Beyond Manufacturing

Historically and traditionally, ERP was exclusive to the manufacturing domain, going back to its roots in manufacturing resource planning (MRP). For the past decade, major portions of ERP solutions — most notably financials, 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.

Additional information on the market study can be found at:

Additional Articles of Interest

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