Cloud ERP Market Overview
Enterprise resource planning (ERP) has become a critical part of all organizations irrespective of their size. ERP streamlines business processes such as accounting, procurement, human resource, and others, resulting in improved productivity, efficiency as well as collaboration. The traditional ERP systems took longer time to be implemented, required high upfront cost, and ample of hardware, software, and technical expertise. The need for high return on investment (ROI) and lower upfront cost have been major drivers for the growth of cloud ERP market.
With advancements in technology and enterprise management solutions, cloud ERP technology received increased attention from industries across the globe, as it focuses on critical areas of businesses such as accounting & finance, human resource management and marketing, thereby increasing profitability via improved decision making. Additionally, cloud ERP solutions manage resources effectively and seamlessly integrate into organizational activities. With rise in operational efficiency of businesses, cloud ERP software provides competitive edge to organizations in their product and service management and reduces business complexities.
Based on deployment type, cloud ERP market is classified into public cloud, private cloud, and hybrid cloud. Public cloud model is easy to deploy, offers ease of management and reduces operating expenses, as it doesn’t require purchasing and management of expensive infrastructure. On the other hand, private cloud is perceived to have higher level of security in comparison to public cloud. Critical data like retail bank’s deposit data, mission-critical information, and other such crucial data are generally hosted on private cloud.
BFSI industry was the largest adopter of private cloud deployment in cloud ERP market in 2017, owing to the involvement of sensitive data such as account details of high-income group (HNI), traders’ operations, and other critical data. Since, cloud ERP incorporates both critical and non-critical datasets such as sales data, financials, human resource and others, hybrid deployment model is projected to exhibit fastest growth during the forecast period.
Based on enterprise size, cloud ERP market is classified into small and medium enterprises (SMEs), and large enterprises. Though, legacy ERP systems were popular among large enterprises, cloud ERP recorded an influx of demand from SMEs in recent times. Cloud ERP allow SMEs to access a large number of applications, such as financial management, sales forecasting, without incurring high upfront cost that are associated with traditional on-premises ERP. Implementation of cloud ERP is helping SMEs and start-ups by eliminating huge infrastructure cost, ensuring faster deployment, and rise in business agility, in addition to improving employee efficiency.
Globally, North America was the largest revenue contributor to the cloud ERP market in 2017, on account of growing organizational need for improving employee productivity and efficiency, in addition to saving operational costs. Companies in the region are increasingly adopting cloud ERP systems in order to improve collaboration among multiple departments and to manage different applications such as human resource, financials, and supply chain efficiently.
Providing more flexibility to businesses, cloud ERP solutions are predicted to open-up opportunities for the cloud ERP market in developing regions. This can be attributed to the growing digital transformation across the region, particularly in India, Japan, and China, owing the ongoing “Industry 4.0” revolution which is bringing digital transformation in the industry.
Cloud ERP Market Dynamics
Major demand for cloud ERP is generated with the need of on-demand access to computing services, availability of large storage space, automated resource management, and industry specific functions such as sales and customer support. Low cost, greater reliability, adoption of cloud-based services with integrated business management are also some other factors driving the demand for global cloud ERP solutions. The rapid growth in demand for cloud ERP in industries such as healthcare, retail, education and telecom are set to derive the market. Increased penetration of new technology solutions within organizations, low demographic barriers such as mobility, and availability of advanced open source applications with greater efficiency & transparency is also driving the growth of the global cloud ERP market.
Advancements in technology such as internet of things (IoT), big data analytics, smart wearables, artificial intelligence (AI) are anticipated to strengthen the growth of cloud ERP market in the coming years. Over a period of time, enterprises have accumulated a data silo that has traditionally been underutilized. As the adoption of IoT increases, the data generated by IoT devices would also increase exponentially. Therefore, by employing AI and analytical tools, enterprises would be able to utilize this data to make accurate forecasting, which form the basis of a more intelligent approach towards future business strategy and better decision making.
Cloud ERP Competitive Landscape
With advancements in technology like big data, predictive analytics, players in the market are focusing on offering advanced ERP solutions to compete effectively in the market. With rise in data generated from ERP systems, big data analytics and predictive analytics are being used to simplify data extraction and data analytics, which helps in forecasting and scheduling. Also, Oracle Corporation for instance, added AI to its Oracle ERP Cloud and Enterprise Performance Management (EPM) Cloud to offer intelligent process automation, expense reporting assistant, intelligent payments, supplier recommendations, intelligent performance management, and advanced access controls.
Some of the players operating in the Cloud ERP market are Oracle Corporation, SAP SE, Microsoft Corporation, Infor Inc, NetSuite Inc, Sage Group plc, Epicor Software Corporation, IFS AB, Workday, Inc, and IBM Corporation.