September 1997, Volume 3, No. 9 Market Analysis: ERP Software Increasingly Popular Worldwide

Buzzword watchers, take note: Enterprise resource planning (ERP) software vendors are experiencing unprecedented global expansion, according to Advanced Manufacturing Research (AMR) (Boston, Mass.; http://www.advmfg.com), a market research firm. Asia/Pacific and Latin America are taking the lead as the fastest growing ERP markets in 1997: Asia/Pacific at 68% and Latin America at 63%. AMR attributes the ERP growth spurt in these regions to their rapid economic expansion, as well as the sharpening competitive pressure to catch up with North America and Europe. "Japan, in particular, should become a major ERP market as it shifts from custom software to packaged systems," said Gisela Wilson, AMR's director of primary research. "Beyond that, China and India have enormous market potential since the vast majority of businesses currently use no information systems to speak of. In other Asian countries, rapid economic growth is creating hot demand for modern ERP systems." Previously, U.S.-based software vendors were the primary beneficiaries of global growth in ERP, but that picture has been changing recently. "Five years ago, only one of the top ten ERP vendors was based overseas," Wilson noted. "Now, four of the top 10 vendors are based in Europe, representing fully 45% of the overall market." AMR's research pegs the market leader as Germany-based SAP AG, with a market share of 33%. Other globally active offshore ERP vendors include Baan (The Netherlands), JBA International (U.K.) and Intentia (Sweden). With this global expansion of market opportunities as well as vendors, competition for market share is more intense than ever before. "Just to sustain their current position, vendors have to grow software revenue by at least 34% annually," according to Wilson. AMR estimates the ERP software market will generate $9.6 billion in total revenues in 1997, up from $7.2 billion in 1996.

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