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04 May 2011
IT departments can be more flexible in their enterprise resource planning (ERP) software deployments, despite consolidation in a global market set to grow to $50.3bn by 2015, according to Forrester.
The analyst firm's State of ERP in 2011 report found that IT departments now have a wider choice of add-ons for existing enterprise applications, and a greater choice in deployment options.
Forrester gave the examples of Oracle's forthcoming Fusion applications and SAP's Business ByDesign suite, coupled with its family of on-demand applications built on the ByDesign platform.
However, Forrester warned that most ERP customers will not invest in their systems this year because of limited IT budgets.
Pointing to its January survey, the IT consultancy said that only 25 per cent of the 900 respondents plan to invest in existing ERP systems in 2011.
However, the global ERP market is expected to grow to $45.5bn in 2011, from $43bn in 2010 and $40.6bn in 2009, and to $50.3bn by 2015.
Software-as-a-service (SaaS) ERP currently comprises just two per cent of the market, but is gaining momentum as Oracle and SAP make moves in the SaaS demand direction, and Forrester expects SaaS ERP to grow by about 21 per cent annually through 2015.
IT departments are attracted to the SaaS model because it provides relief from disruptive version upgrades and managing a large number of disparate applications.
Meanwhile, Forrester research shows that revenue from ERP licences will rise by seven per cent in 2011, but that the long-term outlook for ERP licence revenues is flat to declining as more businesses opt for subscription models.
SAP and Oracle remain the leaders in the global ERP market, logging 2010 revenues of $16bn and $7.7bn respectively, according to Forrester.
There is still a large gap between SAP and Oracle and its three closest followers - Sage, Infor and Microsoft - which have ERP revenues in the $1bn to $2bn range.
Infor recently announced a definitive agreement to acquire Lawson, which will vault it ahead of Sage and into third place.
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SaaS ERP is right for healthcare
Forrester’s suggestion that Software-as-a-Service (SaaS) ERP will grow by about 21 per cent annually through 2015 makes sense – I can see that happening. We think the SaaS ERP model will be particularly suitable to healthcare, which typically has multiple sites in a region; often incurs high costs for managing those local deployments, and has the burden of managing complex back-up infrastructure. For healthcare, to be relieved from ‘disruptive version upgrades’ and ‘managing a large number of disparate applications’ make absolute sense. Healthcare organisations, like all customers, would just need to make sure contracts are in place with partner suppliers to deliver a managed, secure service which stops downtime.
Posted by: Paul Malcolm, Simpl UK 29 Jun 2011