ERP: STATS, FACTS, AND TRENDS

An enterprise resource planning (ERP) system is the key to integrating different business functions across your organization. These functions include management of day-to-day activities such as accounting, procurement, project management, risk management and compliance, and supply chain operations. The widespread growth and adoption of ERP systems speaks to the importance of ERP to successful businesses.

It’s rather confusing for any organization to decide the best ERP to fulfill their needs and demands. As there are varieties of ERP solutions available on the market, you should know how to choose the perfect solution and use it correctly.

Here are the top ERP stats, facts, and trends to help you make your organization’s best decision.

ERP Market Statistics

ERP is a core solution for many organizations, driven by market characteristics such as widespread digital adoption, thriving global trade and extensive amounts of data that need to be tracked, maintained, and analyzed. ERP market statistics show the move towards increased usage and global demand.

• The ERP market remains in a phase of rapid expansion, with total market size expected to exceed $49.5 billion by 2025.
• In 2019, the global ERP software market grew by 9%, resulting in a worldwide value of approximately $39 billion in total software revenue.
• Revenue growth occurred for ERP in all areas in 2019, with strong growth for administrative ERP with financial management software (FMS) growth at 7% and human capital management (HCM) growth at 10%.
• The ERP market size in North America is worth over $10 billion.
• Asia-Pacific is an emerging ERP market expected to achieve a CAGR of 9.8% through 2027.
• Global market growth is expected to increase at a CAGR of over 8.1% over the next five years.
• In a survey of IT decision-makers, 53% said ERP was an investment priority, in addition to CRM.
• 50% of companies are soon acquiring, upgrading or planning to update ERP systems soon.
• The global ERP software market is expected to reach $78.4 billion by 2026.

ERP Implementation Statistics

To execute a successful ERP implementation, organizations must have a clear vision of requirements. Choosing the right partner and assigning an internal implementation team increases the chance of project success.

Although ERP implementations can be challenging, data and statistics show many companies exceeding and even surpassing implementation efficiency expectations.

• In a 2019 survey of distributors and manufacturers, 67% described their implementations as successful or very successful.
• Companies that had very successful ERP implementations noted internal organizational elements like support from management, good change management programs and due diligence as primary reasons for success.
• When asked what went wrong during implementation, only 12% of respondents noted poor quality of software.
• The top two problems noted during implementation were inadequate testing and inadequate business process reengineering.
• After ERP implementation, 49% of companies said they improved all business processes. Only 5% of business said they did not improve business processes.
• In a survey on ERP implementation, midsize companies with $100 million to $250 million in revenue had the fastest implementations at 6.7 months. Very large companies, over $25 billion in revenue, took the longest at 12.35 months.
• Regarding implementation, minor customization was needed by 10% of respondents, some customization was needed by 33% and significant customization was  needed by 37%.
• For a group of companies that underwent ERP implementation, nearly half (49%), went live in the allocated time – 13% went live sooner than expected, 27% were a little late and 11% failed to go live in the time allotted.
• Expansion of the initial project scope was the primary reason companies went over budget during implementation.

ERP ROI Statistics

Organizations use ERP to become more efficient and save costs. Statistics on ERP return on investment (ROI) emphasize the benefits of ERP solutions.

• ERP implementation led to business process improvement for 95% of businesses.
• In a study of companies implementing ERP, 85% had a projected timeline for ROI. Of that group, 82% achieved ROI in their expected time.
• The top three benefits businesses said they gained from an ERP system are reduced process time, increased collaboration and a centralized data system.
• An average for ROI time in a group of companies that implemented ERP was just over 2.5 years.
• The top three business goals cited for implementation are achieving cost savings (46%), improving performance metrics (46%) and improving efficiencies in business transactions (40%).
• When asked to select areas where ERP produced ROI, the top three answers were reduced IT costs (40%), reduced inventory levels (38%) and reduced cycle time (35%).
• For midsize companies—revenue under $1 billion—the cost of owning an ERP system is approximately 3-5% of annual revenue.
• For large companies—revenue over $1 billion—the cost of owning an ERP system is 2-3% of annual revenue.

ERP Usage Statistics

ERP implementation by industry varies, and organizations use ERP systems for different reasons. Recent ERP usage statistics provide some insight into current usage trends.

• Manufacturing companies are the No. 1 user of ERP software.
• In a survey of 255 companies looking to purchase ERP software, 89% identified accounting as the most critical ERP function. Other responses included inventory and distribution (67%), CRM and sales (33%) and technology (21%).
• Manufacturers represented the largest portion at 47% of companies looking to purchase ERP software, followed by distributors (18%) and services (12%).
• Eighty-four percent of ERP users had an expected ERP spend of less than 2% of annual income.
• Forty percent of companies identified better functionality as their primary reason for implementing an ERP system.
• The biggest influencers in purchasing ERP software were finance and accounting (23%) and IT department employees (23%).
• According to IDC, in a survey of small businesses with 50–99 employees, 57.5% strongly agreed on investing in cloud and hosted solutions.

ERP Trends

As business needs become more intricate, ERP software is advancing to meet the demand for more customizable features and integrations. Current ERP trends show a shift towards greater cloud adoption and intelligent systems that streamline and automate processes.

• By 2022, Gartner predicts that artificial intelligence (AI) will be integrated into ERP systems by 65% of CIOs.
• 53% of UK CIO’s are looking for more intelligent ERP systems that include technology like machine learning, AI and automation.
• CIO’s listed predictive analytics and deep learning as the most critical ERP technologies to gain a competitive advantage.
• Fifteen percent of organizations plan to increase their Internet of Things (IoT) budget.
• A broader move to more personalization across ERP systems leads 82% of UK CIO’s to choose ERP systems with some customization or use UI overlays.

ERP Challenges

Common ERP challenges include poor project management, failure to manage implementation costs and timelines, and internal resistance to new systems. These problems come from unclear ERP implementation goals, choosing the wrong ERP partner and purchasing software that’s not right for your company.

An ERP system can amplify your business, but you must choose the right platform and implementation team to avoid becoming another unfortunate ERP statistic.  

• Data collected over the years on ERP implementations states that 50% fail the first time around.
• Most implementations cost three to four times what was initially budgeted.
• Implementation can take 30% longer than anticipated.
• Fifty-one percent of companies experience operational disruption when they go live.
• System modifications needed to improve usability can cause overspending 65% of the time.
• The top three places ERP systems fall short for users is data accuracy, user experience and analytics.

Choosing the Right ERP Partner

The best ERP partners will offer a suite of services that cover enterprise basics like accounting and human resources—but they also offer applications spanning CRM (customer relationship management), human capital management (HCM), supply chain management (SCM), warehouse management systems (WMS), and more.

Contact the ACC Software Solutions team to begin your ERP journey today!!