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“The 2020 ERP Market: Single dip or double dip ahead?” by Chris Pang

by Debbie Wilson  |  July 17, 2020  |  Comments Off on “The 2020 ERP Market: Single dip or double dip ahead?” by Chris Pang

Hard to believe, but we are more than half way through the year and as is tradition we use this time to update our year end and beyond forecast. Now for many years we’ve been quite optimistic, but unfortunately this is not a normal year. So from a +9% growth in 2019, we’re now looking at a 5% contraction (meaning a drop from $39 billion to $37 billion). This drop won’t be a surprise, but the question many investors and vendors are asking is whether that’s it and we’ll come back up? or whether worse is to come with a double dip and prolonged recovery?  Only time will tell but we like to be cautiously optimistic here, so we’re currently forecasting a scenario of bottoming out in 2021 before a return back into positive territory in 2022. This is because the ERP market is disproportionately heavy on recurring revenue streams (maintenance and SaaS) so the gaiting factor for growth is the amount of new business and spend.

And this is where many of you have an influence… Hunkering down at the moment is a natural and expected response, but doing so for a long period is also risky. For a long time the industry has promoted why businesses need to invest in modern ERP platforms for reasons of agility, cost reduction and business innovation. And if I’m honest, we all got a bit blasé about it and the messages lost some urgency or just became surrounded by background noise from hype around AI and other technologies. However, recent events have brought it all back and are a stark reminder how important business resilience, visibility, control, reporting and agility are. Organizations who had already modernized their ERP application strategy are coping better with the challenges posed by remote working, sudden changes in production and revenue and tentative return to work initiatives.

So while investing into big ERP modernization program is likely unrealistic at the moment, doing nothing isn’t advised either. Luckily, today’s technology and implementation methodologies are much better than before so companies don’t have to do a big bang and they can start in smaller chunks. For example, we’re seeing many Gartner clients doing smaller projects in finance such streamlining the accounts payable and T&E processes with new technology which reduce processing cost and manual interventions. Likewise we’re also seeing a lot of organizations put more investment into online learning platforms because traditional classroom training is unlikely to return anytime soon. And for some manufacturing companies, we’re seeing some organizations re-assess whether pushing all their manufacturing to the very edges on the network and relying on contract manufacturers remains sensible? (see

Ultimately, as we work our way through the crisis, our ways of working, the operating models which businesses have, staffing levels and the attributes of staff will be different (see 9 Predictions for the Post-COVID Future of Work) to what they were at the start of the year. And this is where modern ERP infrastructure which can support,  replace, augment your current capabilities will be necessary sooner rather than later.

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Click the following link for a free webinar recording of Gartner analysts discussing how to Adapt Core Business Apps (ERP, Procurement, Finance, HCM) to Lead COVID-19 Recovery and Renewal.

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Category: applications  erp-it  erp  

Deborah R Wilson
Managing Vice President, ERP Strategy Team
12 years at Gartner
20 years IT industry

Deborah Wilson, a recovering Gartner research analyst, leads the Gartner ERP strategy research team. Read Full Bio




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