Market Share Technology Report (MSTR): ERP Software 2020

March 27, 2020 Scott Wallask

Market Share Technology Report logoThis Market Share Technology Report (MSTR) from Datanyze examines ERP software market share and trends over the prior 12 months. Vendors can use this MSTR report to track estimated unit market share among competitors and learn about the frequency of customer implementations, while software end users can read about the industry leaders and trends that influence popular features in common ERP products. 

Market Summary: Established Enterprise Resource Planning Products are Firmly in Control

Although there are many ERP platforms to choose from -- at least 439 as of January 2019, according to Datanyze -- at the top echelon of these products, it’s a tug-of-war between three veteran vendors: Microsoft, SAP, and Oracle.

ERP -- which stands for enterprise resource planning -- describes a back-end business system that helps run a company’s finances, HR processes, inventory management, logistics, and other functions. These functions, often called modules or components, handle different tasks while still operating within a unified database of information, making it more efficient for company departments to operate.

Often a full ERP system will allow companies to pick and choose what modules to use. Other vendors offer niche ERP choices that focus on specific business uses. Some ERP options can be tailored to specific industries, too. 

ERP software trending leadersFigure 1: A look at enterprise resource planning systems by estimated unit market share. Source: Datanyze.

The ERP software market is mature, as its roots stem from the 1960s with the first inventory and materials management software. By the 1980s, manufacturing resourcing planning, or MRP, had taken hold, and that approach later evolved into the first true ERP systems in the 1990s. Cloud-based ERP arose in the early 2000s.

In this article, Datanyze tracks unit market share, which is the number of units (i.e., tech installations) that ERP vendors sell as a percentage of total sales in a market. It does not track market share by revenue.

ERP software market presenceWhat is the Market Presence for ERP Software?

ERP vendors are infamous for changing platform names ahead of updates or tweaked features, which makes for a challenging job to determine unit market share for products. 

Our unit market share list below illustrates this hurdle: For example, our data picked up separate technology signatures for SAP ERP (#2 on the list) and SAP ERP Central Component (SAP ECC), when in reality they are longtime, interchangeable phrases for the same product. And if not confusing enough, another name for the current version of SAP ERP is SAP Business Suite 7.

In such cases where two product names refer to the same platform, we combined their unit market share. 

In other cases, the specific features of an ERP platform do create different products. Case in point: The full Microsoft Dynamics suite (#1) offers different options than Microsoft Dynamics GP (#8). In such situations, we have left those entries separate.

Top ERP vendors by unit market shareFigure 2: Microsoft Dynamics and SAP ERP battled for the top spot in estimated unit market share for enterprise resource planning. Source: Datanyze.

An interesting note from the list is that SAP -- a company synonymous with ERP -- continues, at least by the numbers, to cater to enterprise-level customers. SAP’s legacy ERP product, along with Oracle E-Business Suite (#6), are strongest at companies with 10,000 or more employees, based on Datanyze’s estimated installations.

Meanwhile, NetSuite (#3), Workday (#4), and Sage ERP (#5) are neck-in-neck for unit market share, with all three competing for small companies with 20 to 49 workers.

Visit Datanyze’s ERP market share page to check out the full list of available products. 

Oracle ERP Products Hinge on Company Size

Oracle sells three of the ERP systems on the list: NetSuite, Oracle E-Business Suite, and JD Edwards EnterpriseOne (#7). However, it’s clear each product’s features lie with different-sized customers and certain industries or office environments:

  • NetSuite is a cloud ERP system designed to take companies from startup onward.
  • E-Business Suite is another cloud product, with a focus on enterprise functions.
  • JD Edwards is a hybrid cloud setup that aims at firms in the consumer packaged goods, manufacturing, and services industries.

ERP expert Eric Kimberling, CEO of Third Stage Consulting Group, praised NetSuite as a strong overall product in the market. “The industry’s pioneer cloud ERP system is in a great spot now that other vendors are struggling to prematurely rush their cloud offerings to market,” Kimberling wrote in October 2019.

Deltek (#9) and Exact Online (#10) are not as well known as the other products on the list, likely because they sell to niche markets. Deltek focuses on project-based industries, such as architecture, engineering, and research and development. By comparison, Exact Online centers on entrepreneurs and accountants.

Microsoft Dynamics 365, which barely missed being on the Datanyze top 10 list, will likely arrive on it by 2021. Dynamics 365 is the cloud version of Dynamics. Microsoft reported that Dynamics 365 revenue rose 42% year over year for Q2 2020 (which ended on December 31, 2019 for Microsoft).

Important development for ERP softwareWhat is an Important Development for ERP Technology?

Licensing and maintenance continue to be sticky areas for ERP enterprise customers, largely due to the costs of implementations (millions of dollars in many cases) and the complexities of the arrangements.

For example, SAP is pushing hard for existing customers to migrate to S/4HANA, its successor to SAP ERP. As part of this initiative, SAP planned to end support for SAP ERP in 2025, but after blowback from customers, the vendor announced in February 2020 that it would extend regular maintenance for the legacy system through 2027, with an option for additional support through 2030.

A further motivation for SAP’s recent moves? Existing customer adoption of S/4HANA is low, Kimberling wrote.

Datanyze’s tracking supported that notion. S/4HANA did not crack our top 10 list, and estimated installations of the platform appeared steady through most of 2019, with a slight bump upward in January 2020. While our data did not indicate reasons for adoption, at the very least it appeared that legacy SAP ERP software had a much stronger foothold than S/4HANA, which was originally released in 2015.

Comparing SAP ERP vs. SAP S/4 HANA installations

Figure 3: By percentage, SAP ERP has many more installations compared to SAP S/4HANA, based on estimated unit market share numbers. Source: Datanyze.

Customers Must Beware of Licensing Audits 

Meanwhile, Oracle is well known for being aggressive in auditing the licensing use of some customers. 

For example, Oracle examined the city of Denver’s use of its software and concluded in 2017 that the city had allegedly violated licensing agreements. Denver taxpayers ended up paying an extra $4 million as part of a new contract with Oracle that also appeared to settle the prior licensing dispute, CBS TV4 reported.

Generally, companies “can ensure compliance with software license agreements by clarifying contract terms, penalties, and user license definitions with each software vendor, and [firms] shouldn't be afraid to bring in external help to negotiate and interpret the finer points of these complex deals,” wrote Cherwell, an IT services management company.

ERP software buyer trendsWhat are Buyer Trends for ERP Software?

In quarterly surveys of IT and finance professionals conducted in 2019 by ZoomInfo, the parent company of Datanyze, two points stood out regarding ERP buyer trends:

  • Of 3,451 respondents, 65% indicated that there are no recent or upcoming ERP projects at their companies (or the respondents weren’t sure).
  • Of those who anticipated spending on ERP initiatives, 17% said their companies would invest more than $500,000 on the projects. ERP project commencement timelinesFigure 4: Companies that were not planning future ERP software initiatives dwarfed firms that recently completed or planned to begin enterprise resource planning projects. Source: ZoomInfo.

The lack of upcoming ERP projects perhaps owes to the maturity of the market and the cost of these systems; given the investment, customers want these systems to remain in use for long periods. 

The complexity of system integrations, the number of user licenses, and future maintenance all influence cost, so enterprise firms with higher employee counts and larger IT networks will spend far more for ERP than small and medium businesses.Anticipated spending on ERP softwareFigure 5: Here is a breakdown of what companies anticipated spending on ERP software in 2019. Source: ZoomInfo.

Outlook for ERP softwareWhat is the Future Outlook for ERP Systems?

There is no major technology change in sight that will end companies’ reliance on ERP software to handle financial, HR, inventory, and other common business processes.

Instead, bigger decisions for customers will center on whether to:

  • Keep on-premises ERP systems, move them to the cloud, or use a hybrid approach.
  • Migrate to newer versions of ERP products that vendors may be pushing or keep using legacy systems.

Microsoft, SAP, and Oracle will remain in the top mix given each has multiple ERP products in use today. Another major ERP player does not appear to be on the horizon.

About our data collection

Datanyze collects technographic data by scanning more than 35 million web domains daily, using a combination of web crawling, third party providers, and natural language processing. Most technologies leave behind a footprint or “signature” that helps the crawler identify it from other elements of a website or mobile app. By finding and cataloging these signatures across millions of sites, Datanyze can determine how many companies use a given technology -- and take note of when certain technologies appear or disappear from a company’s site.

For technologies that leave no footprint (such as databases and CRMs), Datanyze uses natural language processing as an alternative method to identify tech deployment. This involves scanning and digesting unstructured data -- text from job postings, social media, press releases, and more -- to infer a relationship between a company and a particular technology. This method involves complex keyword targeting.

Also, ZoomInfo (the parent company of Datanyze) conducts quarterly surveys of a percentage of business professionals within its database, asking them detailed questions about technology purchases and upcoming projects. 

About the Author

Scott Wallask

Scott Wallask is a director of content at ZoomInfo and Datanyze. He has more than 25 years of storytelling and editing experience, and previously oversaw a series of enterprise tech news sites. Before that, he spent 12 years covering hospital safety topics. He holds a BA degree in journalism from Northeastern University in Boston.

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