Entity Resource Planning amalgamates the procedures and information of the organization into a single arrangement. It includes both hardware and software to achieve the required combination for storing and maintaining of the database of the whole organization. Traditionally it was used by larger organizations but with the technological advancement ERP is use has become highly comprehensive therefore all types of entities use ERP, large or small.
ERP is a system which covers multiple functions in an organization for example the database for each department like Finance, Marketing, Warehousing etc, was kept in a separate application but now with the use of ERP it is all kept under one umbrella. (Source: ERP fan) Respondents to the recent survey indicate a strong preference toward purchasing their ERP products in an on-demand fashion. For most ERP vendors, there is no real technical barrier to entering the software-as-a-service (SaaS) world, and providers that do not have a plan for SaaS should reconsider fast.
As more companies become interested in the SaaS purchasing model, many challenges and growth opportunities will be created and could even shift the balance of power in the mature ERP market. (Source: The ERP Market and SaaS: Natural Evolution, Disruption, or the New wave To Ride? ) Survey indicates that it has become a fashion for ERP products to be bought, with no technical barrier existing in this market to stop new entrants to join the world of software.
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More and more companies are buying the software-as-a-service (SaaS) model to deal with the ever changing requirements, challenges and opportunities to grow which can ultimately change the power of the dominating firm in the mature market of ERP. (Source: Business Information Technology) It is expected that the ERP market will grow to $25 billion by 2011 from $18 billion, currently, assuming that the multiple rate of 6. 7% is applied according to the ARC Advisory Group. This growth is likely to come from emergent markets like China and Latin America where focus will be on acquisition and maintenance with the help of the software.
Also new avenues will be sought through ERP as horizons will stretch beyond manufacturing industries to architecture, real estate and construction. (Source: Business Information Technology) Looking at the breakup of an ERP vendor, growth can be broken down in to number of major heads. Maintenance is expected to be 37% of the total revenue with 11% growth, software as 33% with 12% growth, consulting as 25% with 9% growth, training as 4% with 12% growth while other activities represent 1% of the total revenue.
Similarly if looked upon country wise USA tops with 28% share with 12% growth, Germany 20% share with 5% growth, Asia Pacific 7% share with 14% growth, Japan 5% share with 6% growth while the rest of the world constitute 8% share with 18% growth. (Source: Business Information Technology) This analysis can also do among different competitive vendors. From the financial summary presented in SAP Annual Report 2006, it shows that Oracle grew from 9% to 9. 3% and forecasted to reach 10% according to AMR Research due to the merger of PeopleSoft with Oracle.
SAP has grown from 24% to 26% with forecasts expected to reach 43% similarly Microsoft even grew from 0. 6% however it is expected to decline over the coming periods by 50%. Other market vendors share also dropped by 3. 7% which clearly shows how technological advancement pressurizes dominating companies as those who are already using ERP have increased their maintenance costs while those who are new at implementing ERP are seeking means to enhance their software and consultation sales.
(Source: Business Information Technology, Oracle and PeopleSoft Sign Definitive Merger Agreement) Also with the IT market being made widely available and with low barrier to entries, ERP companies are expanding their horizons to other part of the market such as Business Intelligence (BI) market. SAP is thinking to by one of the BI companies whereas Oracle bought Hyperion. Therefore ERP companies are snagging a bigger part of the market as all IT based markets are interlinked and give rise to better horizons.
Even though this act may not contribute towards transforming the industry but it certainly reduces the competition and enhances the market share of that company, therefore a very valid reason why an ERP company would want to further expand in future. (Source: Q&A: Microsoft's Jeff Raikes on pervasive BI, ERP encroachments)
1. Simon Jacobson (February 26, 2008) The ERP Market and SaaS: Natural Evolution, Disruption, or the New Wave To Ride? http://www. amrresearch. com/Content/View. asp? pmillid=21202 2. Kong Li Te Lawrance, Business Information Technology, University of Wales.
http://66. 102. 9. 104/search? q=cache:CptO0yurcw4J:volospin. com/030391071146_KONGLiTeLawrence_Assignment1_Final. doc+What+is+the+expected+future+growth+of+the+ERP+marketplace+in+terms+of+overall+sales;hl=en;ct=clnk;cd=1;gl=pk 3. Redwood Shores (December 2004), Oracle and PeopleSoft Sign Definitive Merger Agreement, California. http://www. oracle. com/us/corporate/press/017124_EN 4. ERP Fan Club www. erpfans. com 5. Q;A: Microsoft's Jeff Raikes on pervasive BI, ERP encroachments http://www. computerworld. com/action/article. do? command=viewArticleBasic&articleId=9019027&pag
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