AMR Research, Inc., the leading industry and market analysis firm specialising in enterprise applications and enabling technologies, predicts that the Enterprise Resource Planning (ERP) market will grow at a compound annual growth rate (CAGR) of 32 percent over the next five years. According to the firm`s Enterprise Resource Planning Software Report, 1998-2003, total company revenue will reach $66.6 billion by 2003. As Y2K projects wind down, ERP vendors will drive market expansion by broadening their footprints into untapped industriees, extending products throug specialty applications, and furthering global expansion.
"As many leading companies resolve and pass their Y2K deadlines, they are refocusing strategic technology plans to extend ERP and related offerings throughout global supply chains to gain competitive advantage," said David Caruso, vice president and service director, Enterprise Application Strategies.
The ERP Market in 1998
Total 1998 company revenue hit $16.6 billion, a 39 percent increase from 1997. With the inclusion of combined third party services, hardware, databases and networking, AMR Research estimated that 1998 ERP infrastructure sales totaled $70 billion.
Total Enterprise Resource Planning Revenue, 1998 -- 2003 Forecast
Source: AMR Research, 1999
The top five ERP vendors, SAP America, Oracle Corporation, Peoplesoft, Inc., JD Edwards & Company, and Baan International, account for 61 percent of total ERP market revenue. These vendors played a major role in shaping the landscape of new target markets, expanded product functionality, and higher penetration rates.
ERP Market Opportunity
According to AMR Research, ERP license sales have slowed considerably in 1999, however, despite Y2K complications the firm expects the market to grow at a steady pace of 22 percent in 1999. With budgets increasing, ERP users are focusing more attention on business applications, increasing ROI, and extending services. In the next millennium, the ERP market will continue to expand as vendors promote services to include ERP outsourcing, Internet portals, and electronic commerce applications.
AMR Research predicts tremendous growth ahead for ERP vendors. With current ERP systems touching only a small percentage of users, vendors are extending their footprint by rolling in Supply Chain Management (SCM), Customer Relationship Management (CRM), and Electronic Commerce applications.
These specialty areas will make up a larger percentage of vendor revenues going forward, as vendors strive to have every employee within an organization touch the system. The traditional manufacturing-centered ERP market is by no means saturated. Rather, vendors are racing to broaden their footprint into untapped industries such as retail, insurance, and banking, and expanding into new geographies.
Conclusion
AMR Research predicts that the ERP market will reach $66.6 billion by 2003, with an estimated CAGR of 32 percent over the next five years. ERP systems are recognized as key enablers for companies approaching a supply chain-based economy. As more companies resolve their Y2K issues, increasing IT budgets will be directed towards extending ERP by leveraging the backbone and achieving substantial ROI. These trends and predictions will be discussed in detail at the upcoming AMR Research Enterprise Application Strategies Conference, to be held on June 2-4 in Scottsdale, Arizona. With the continuation of its steady growth, the ERP market will be one of the largest, fastest growing and most influential in the applications industry.
AMR Research
Founded in 1986, Boston-based AMR Research is the preeminent industry and market analysis firm specializing in enterprise applications and related trends and technologies. Tracking more than 500 leading software and service providers, AMR Research helps Global 1,000 companies evaluate, select, and manage new systems for every part of the enterprise, including logistics and supply-chain management, Enterprise Resource Planning (ERP), Manufacturing
Execution Systems (MES), Customer Relationship Management (CRM), and electronic/internet commerce.
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