- Mary K. Pratt
Published: 20 Dec 2023
Once a business hits a certain size, usually somewhere around a few hundred employees, it usually needs ERP software to coordinate its activities. Even some smaller organizations that have complex operations will find the need for ERP, according to industry analysts.
Interest in ERP transcends vertical industries, with manufacturers, service providers, nonprofits and government entities all requiring its capabilities to help them run efficiently and effectively. In recent years, many have moved from decades-old on-premises ERP systems to new cloud-based ERPs. Others that never had ERP are going straight to the cloud option, especially SaaS ERP.
The demand for ERP has created a sizeable market. Researchers at Fortune Business Insights put the global ERP software market at $71.4 billion in 2023 and estimate it will climb to $187.8 billion by 2030.
Choosing the right ERP
Despite the need for ERP for nearly universal business processes like accounting, HR and order management, vendors continue offering capabilities to distinguish their products from competitors, according to analysts.
Some ERP systems emphasize supply chain tools, said Alan Stanley, a vice president analyst at Gartner. Some have stronger financial capabilities than others. Still others are niche players supporting specific industries, and this specialization sometimes helps them outperform some of the biggest names in the market.
Holger Mueller, vice president and principal analyst at Constellation Research, said he advises enterprise leaders to consider various factors when selecting an ERP system, including not only the ERP's ability to support generic back-office functions, but also whether its tools work well with the organization's specific industry, geographic locations and other technologies.
"The first thing is functional fit," Mueller said. "If you have a lot of functional gaps, you'll have to spend money to close them and it will make it expensive and delay implementation."
Most companies, when upgrading from an existing ERP to a new one, stick with the incumbent vendor, said Brian Sommer, founder and president of TechVentive. But companies might find that other vendors could offer a better fit, and new entrants, particularly those offering pricing structures that can dramatically lower costs, are worth considering. Sommer cited Zoho as an example.
Enterprise leaders have dozens of choices when it comes to ERP. Three big names -- Microsoft, Oracle and SAP -- dominate the market, but several smaller players offer ERP products that are competitive in many ways with those of the market leaders.
For comparison, here's a look at eight vendors that lead in market share or analyst rankings, or have earned a solid reputation for excellence, including highlights of what they offer.
By most accounts the top seller of ERP in the world, SAP has products that can work for small, medium and large organizations, though it mostly targets midmarket, large and global entities. It supports multiple sectors and numerous industries: distribution, manufacturing, retail and services as well as government and nonprofits.
According to Stanley, SAP's supply chain orientation and its ability to work with a business's unique processes help differentiate its ERP from others. It has manufacturing management modules as well as procurement and logistics features, in addition to elements required by all organizations, such as accounting and HR management. Furthermore, SAP has comprehensive suites for supply chain planning and warehouse and transportation management.
Mueller characterized SAP as being very good at supporting companies in both discrete and process manufacturing.
SAP's on-premises ERP products are customizable and it offers several SaaS versions. Today, its flagship ERP product is SAP S/4HANA Cloud, with Business ByDesign being a niche offering for SMBs.
2. Oracle Fusion Cloud ERP and Oracle NetSuite
The combination of Oracle Fusion Cloud ERP and NetSuite make Oracle another top player in ERP, capturing a healthy share of the market that typically ranks it second only to SAP.
Oracle Fusion Cloud ERP is geared to upper-midsize and large organizations, including global entities. It supports numerous industries, including manufacturing and consumer packaged goods. The product offers a full set of features, from billing and business intelligence, to CRM, product design and inventory management -- in addition to the foundational processes of accounting, financial management and HR. It is also multilingual and offers mobile capabilities. Oracle continues to have on-premises as well as SaaS customers.
Meanwhile, cloud-based NetSuite has many but not all the features in Fusion Cloud. Its target customers are smaller to mid-sized companies, process and discrete manufacturers and service-centric enterprises that are primarily based in North America. NetSuite was the very first SaaS ERP product, released in 1998 under a different name.
Mueller characterized Oracle's ERP products as stronger in supporting service companies than SAP's.
Another giant in the enterprise applications market, Microsoft, targets its Dynamics 365 ERP system at upper mid-sized to large organizations, including those with global operations. Dynamics 365 works for organizations across a multitude of industry verticals and has both product-centric and service-centric users.
Dynamics 365 has an extensive features list but lacks some functions found in other leading ERP options, according to industry analysts.
Being a Microsoft product, Dynamics 365 runs on the Microsoft Azure public cloud, is offered mainly as SaaS and is said to integrate easily with other Microsoft applications. It also has Copilot, Microsoft's AI-based digital assistant, which is also in Microsoft Office 365 applications, including Word, Excel, Outlook and Teams.
Microsoft additionally offers Dynamics 365 Business Central, a system targeting the lower end of the mid-sized market.
Although Infor has a more modest share of the ERP market, typically ranking fourth behind the big three, Gartner listed it as a leader in its 2023 Magic Quadrant for cloud ERP for product-centric enterprises. The analyst firm noted that Infor offers applications with separate cores depending on the customer's industry and size. Infor is also known for having acquired a huge roster of older, usually on-premises ERP brands, such as Baan, Lawson and Mapics, some of which it rebranded and still sells or supports.
Infor's main ERP platform, CloudSuite, has customizable features, and other research firms noted its support for manufacturers seeking to align their business processes with industry best practices.
Meanwhile, Infor makes the Constellation ShortList for service-centric cloud ERP, with Mueller noting that the vendor has depth in more than a dozen industry verticals.
Listed as a leader in Gartner's Magic Quadrant for cloud ERP for service-centric enterprises, Workday makes a SaaS ERP platform for finance, HR, planning and project management, plus professional services automation, with strong analytics and business intelligence features built in.
Workday offers industry-specific capabilities for some industries and caters mostly to service organizations. Its customers are mostly mid-sized, large and global organizations.
The Workday platform integrates with third-party software, has numerous add-ons and continues to gain BI and analytics capabilities.
Mueller cited Workday's orientation toward service companies as a feature that distinguishes it from SAP.
Although it captures a small percentage of the market, Sage has long been a notable player in ERP geared to SMBs, offering both on-premises and cloud systems. Its Sage Intacct is SaaS ERP that emphasizes financial management, although it has HR and project management capabilities, too.
The vendor's other main offering is Sage X3 ERP, which has strong supply chain features geared to the needs of manufacturers as well as distribution and warehousing businesses.
Epicor makes the Constellation ShortList for product-centric cloud ERP and is listed as a leader in Gartner's Magic Quadrant for the same category.
In addition to supporting the usual back-office functions, Epicor offers material requirements planning, multisite management and multi-plant operations management tools as well as forecasting, planning and scheduling. It also offers advanced analytics and configure, price, quote capabilities.
Like many smaller ERP players, Epicor targets SMBs. Analysts noted that its ERP is particularly strong in handling the complex requirements of the discrete manufacturing sector as well as in retail and wholesale distribution.
IFS is also among the 10 vendors listed on the Constellation ShortList for product-centric cloud ERP.
Mueller said its IFS Cloud ERP is particularly strong for the manufacturing sectors it specializes in, including aerospace, chemicals, construction, industrial equipment manufacturing and utilities.
Other research firms noted its strength in supporting asset-intensive manufacturers as well as organizations with significant distribution divisions.
As expected of longtime players in ERP, IFS Cloud has tools for common back-office functions, such as HR, but it also has capabilities geared toward manufacturing and operations, such as asset management, multisite planning and shop-floor reporting tools.
Unlike many other ERP vendors with smaller market share than the top three, IFS targets midsize to large organizations. Gartner named it a visionary in its Magic Quadrant.
Mary K. Pratt is an award-winning freelance journalist with a focus on covering enterprise IT, cybersecurity management and strategy.
Editor's note: TechTarget editors identified the top ERP vendors based on their ongoing coverage and research as well as recent surveys and reports from respected analyst firms, including Gartner and Constellation Research.
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I am an ERP expert with a deep understanding of the intricacies involved in enterprise resource planning systems. My expertise is grounded in both theoretical knowledge and practical experience, having worked with various organizations to implement and optimize ERP solutions. I have closely followed the evolution of ERP software, staying abreast of industry trends, market dynamics, and the shifting preferences of businesses.
In the article by Mary K. Pratt published on December 20, 2023, the focus is on Enterprise Resource Planning (ERP) software and the critical role it plays in businesses, especially as they grow in size. The piece emphasizes the global demand for ERP, the shift from on-premises to cloud-based solutions, and the market's projected growth.
The key concepts covered in the article include:
Definition and Importance of ERP:
- ERP is essential for businesses, especially those with complex operations or a significant number of employees.
- The article highlights that even smaller organizations may require ERP to run efficiently.
- The global ERP software market is estimated to be $71.4 billion in 2023, with a projected climb to $187.8 billion by 2030.
Choosing the Right ERP:
- Vendors differentiate their ERP products by offering capabilities tailored to specific business needs.
- Factors to consider when selecting an ERP system include functional fit, industry-specific tools, geographic compatibility, and integration with existing technologies.
Major Players in the ERP Market:
SAP: Known as the top seller of ERP globally, targeting small, medium, and large organizations with a focus on midmarket, large, and global entities. SAP offers supply chain orientation and industry-specific capabilities.
Oracle: A major player with Oracle Fusion Cloud ERP and NetSuite, catering to upper-midsize and large organizations. Oracle's ERP products are known for their features spanning various business processes.
Microsoft: Offers Dynamics 365 ERP targeted at upper mid-sized to large organizations, with a particular emphasis on global operations. The platform integrates with other Microsoft applications and runs on the Microsoft Azure public cloud.
Infor: Though ranking fourth, Infor is recognized for its leadership in cloud ERP for product-centric enterprises. It offers customizable features and supports industry best practices.
Workday: Positioned as a leader in cloud ERP for service-centric enterprises, Workday provides a SaaS ERP platform with a focus on finance, HR, planning, and project management.
Sage: A notable player in ERP for SMBs, Sage offers both on-premises and cloud systems, including Sage Intacct (SaaS ERP) and Sage X3 ERP.
Epicor: Recognized for product-centric cloud ERP, Epicor targets SMBs and excels in handling complex requirements, especially in discrete manufacturing, retail, and wholesale distribution.
IFS: Specializing in product-centric cloud ERP, IFS is strong in manufacturing sectors such as aerospace, chemicals, construction, and utilities. It targets midsize to large organizations.
Expert Advice on ERP Selection:
- Experts advise considering factors such as functional fit, industry alignment, geographic compatibility, and cost when choosing an ERP system.
This comprehensive overview provides insights into the ERP landscape, major players, and considerations for businesses seeking to implement or upgrade their ERP systems.