“The ERP Software Market: $35 billion+, 40 years in the making, but still growing nicely!” by Chris Pang

Spring has finally arrived in the Northern hemisphere and in keeping with tradition, we also published our annual ERP market share this month! The ERP software market is mature, (some vendors trace their roots back some 40 years) but it still has plenty of life in it. And last year the ERP software market surpassed $35 billion in total software revenue, that’s annual growth of 10%!

We’ve written a more comprehensive analysis in Market Share Analysis: ERP Software, Worldwide 2018, but I wanted to share some of the content we have. The visual below shows the top 5 vendors in market share…

For the most part there was no change to the top 5 – except one… And this is Workday, which moved up to no.3 in 2018 (from no.4 in 2017). Workday’s movement is notable because they’re the first cloud native provider to break into the top 3.

As we were writing our market summary, a few key points stuck out.

• The market REMAINS fragmented. The top 5 vendors between them only have 51% of the market. This goes to show that biggest doesn’t always mean best fit (in terms of functionality, industry, geography etc..) and there is a huge demand for alternatives to the big names. We speak to hundreds of small providers each year, often focused on specific market with a loyal local following but with little exposure outside of their territory.
• The breadth of providers in the ERP market continues to grow, as new vendors tackle emerging areas such as employee engagement and financial planning. These are areas where small providers often have more agility over the big vendors (Check out our hype cycles and Cool Vendor reports).
• Cloud continues to make its mark on the ERP market but on premise is NOT going away just yet – especially in operational ERP and use cases involving sensitive data or high regulation. So if you are being pressured by your vendor to move to cloud, make there is a compelling business and functional need to do it.

So to recap, the ERP market while no longer a spring chicken, continues to be a growth market despite the uncertainties in the political and economic landscape we saw last year. Check out our ERP market share to help as a data point for evaluating vendors, but don’t assume size is everything.