Business efficiency requires that everything within the company is in sync. But unless there’s a central system in place, it can be difficult to sort out what’s happening from one department to another. This kind of poor coordination can spell financial and logistical problems, putting the quality of company products or services on the line.
That is where enterprise resource planning (ERP) comes in handy for your business, a software system that lets you efficiently organize various aspects of your company’s day-to-day operations.
Whether you’re looking to manage company resources or make sales forecasts, an ERP system lets you maintain key business functions using only one platform. And because there is a seamless integration of information, systems, and processes across departments, decision-making becomes easier and smarter.
The History of ERP
ERP has been changing the business landscape by leaps and bounds since it was first used primarily in manufacturing. At the time, ERP became a tool for managing inventory and performing internal quality checks—nothing more, nothing less. The idea was to tap into the computational abilities of powerful machines to optimize production so that products could be quickly marketed and distributed.
Since then, ERP has come a long way. Today’s ERP systems make for a complete software package, providing businesses with solutions for storing, managing, and using large volumes of data in their daily operations.
This functionality is possible thanks to a host of applications that integrate business and customer data in a central database, which is readily accessible for end-users of the system. As such, you can now find ERP software that integrates well with your customer relationship management (CRM) system, for instance.
In the coming years, expect ERP systems to continue evolving alongside technologies and necessities. To prepare you for the future of ERP and what it means for your business, this article will feature a collection of trends and statistics in the ERP space to enable you to understand the technology better before implementing it in your company operations.
ERP Market Statistics
ERP has risen to be a multi-billion-dollar industry. Beyond market value, its phenomenal growth also means there is a vast opportunity for your business to apply data-driven solutions to some of your most pressing problems—whether that’s managing supply chain, tracking cash flow, paying employee salaries and benefits, gauging customer satisfaction, or discovering new markets.
To show just how big the ERP industry has grown, take a look at these statistics.
- The total market size of the ERP industry is expected to exceed $49.5 billion by 2025. (Source: Market Research Engine)
- Asia-Pacific is the fastest-growing market among the regions adopting ERP, with a projected CAGR of 9.8% through 2027. (Source: Allied Market Research)
- Among IT business executives, 53% consider ERP an investment priority for their organizations. (Source: Computer Weekly)
- The revenue generated by ERP in the U.S. is worth $21 billion. (Source: Statista)
ERP Implementation and Adoption: Facts and Statistics
More and more businesses are implementing and adopting ERP solutions, and for good reasons.
According to Aberdeen Group via Finances Online, ERP adoption among small and midsize businesses (SMBs) is driven by the technology’s ability to standardize back-office operations by 77%, minimize operational expenses by 11%, and provide real-time data and insights by 48%.
All of those numbers translate into huge savings, especially if you consider that ERP systems can be configured to suit your company’s specific requirements without needing to invest in additional technology.
Then again, it may take time before ERP users fully realize the technology’s benefits, as users are faced with a steep learning curve from the moment it is adopted. From learning the software to getting everyone on board, successful ERP implementation hinges on your organization’s ability to manage any changes that come with ERP.
Here, we’ve listed relevant facts and statistics on ERP implementation and adoption rates, including users’ outlook on their overall experience with ERP software and vendors.
- The manufacturing industry comprises 33.66% of the market, making them the top adopter of ERP systems. (Source: Panorama Consulting Group)
- 86% of companies that only communicated with employees during and after ERP implementation consider their projects a success (Source: Panorama Consulting Group)
- 52% of companies are highly satisfied with the ERP system that they have adopted (Source: Panorama Consulting Group)
- 46% of ERP customers say their implementation has gone over their projected timeline (Source: Statista)
How ERP Adoption Helps Businesses
True to its name, ERP has tremendous potential to improve how well you manage company resources. Besides helping you ensure that you’re utilizing your assets with utmost cost-efficiency, the technology is also effective in streamlining and coordinating a majority of your business processes.
With a host of applications, features, and functions at your disposal, it shouldn’t come as a surprise that ERP systems have helped numerous companies achieve their overall business goals.
Below, we’ve listed some of the most valuable results of ERP adoption for business organizations.
- 95% of businesses have reported an improvement in business processes after implementing an ERP system (Source: Panorama Consulting Group)
- The return on investment for 85% of companies that utilized ERP was achieved during their estimated timeline. (Source: Mint Jutras R&A/Ultra Consultants)
- Large companies—those with more than $1 billion annual revenue—incur lower costs (2% to 3% of annual revenue) when implementing ERP compared with midsize companies earning under $1 billion that spend 3% to 5% of their budget on ERP. (Source: Third Stage Consulting Group)
ERP and Cloud Technology Trends
With the fast-paced advances in the IT space—including ERP systems and services—you can only expect ERP to keep getting better and broader. That makes it vital for you to know where the industry is soon headed.
Here are the top trends to watch out for in ERP and how they will shape the future of businesses and industries globally.
Larger-scale utilization of AI
Smart technologies like artificial intelligence (AI) and machine learning (ML) will be at the core of ERP. These technologies can complement ERP functions by managing and integrating diverse applications and then using the culled data to support complex decision making—this is the fourth era of ERP, as Gartner puts it.
By connecting AI to ERP, you can expect teams from different areas of your company to work with proper coordination and perform their individual functions with higher efficiency. For instance, accounting can check the status of account payables and receivables and use the information to keep the company’s cash flow at healthy levels.
Other use cases of AI-powered ERP include market research, product engineering, and project development—basically, any tasks that tap into heavy computing power to connect disparate data sets to help companies become more efficient on how they operate or improve their product offerings.
System integration via the Internet of Things (IoT)
Today’s world is highly connected thanks to the internet of things (IoT). This technology allows computers, machines, and digital devices to exchange information with one another over the internet.
When you book a ride-hailing or food delivery service, your device and that of the other party use internet protocols and communication technologies, as well as smart sensors, to determine each other’s location. That’s IoT at work.
In ERP, companies can rely on IoT devices to facilitate business processes while reducing manual work or human errors. Manufacturing equipment may be embedded with sensors to capture relevant information about the machine 24/7—its production rate capacity, amount of spoilage, potential performance issues, and so on.
Here, the integration of IoT and ERP means managers can proactively manage production even with a few technicians on duty and lower instances of machines slowing or breaking down.
From retail to industrial and healthcare, many other industries can be transformed by the ERP-IoT tandem through device connectivity, data management, and advanced analytics.
Increased use of a two-tier ERP system
As the name indicates, two-tier ERP entails using two ERP systems within the company instead of implementing ERP using a single system. In this approach, there’s an on-site ERP system (Tier 1) operating at the headquarter level, while a cloud-based ERP (Tier 2) is intended for branches, divisions, or subsidiaries.
This setup recognizes that ERP needs and functions differ between the corporate level and the customer-facing level.
For instance, you need Tier 1 ERP to have a single record of business activities or transactions to go back to each time you want to check on your business’s financial performance, while Tier 2 enables you to address customer support issues as they happen at any of your company’s subsidiaries.
ERP mobile apps coming to the fore
Mobile devices are no longer a luxury in this era; they have become a necessity for people to access, exchange, or share information. As such, more and more companies are using mobile apps and solutions to connect with their customers, as well as deliver the products and services that they need.
Likewise, mobile apps are now one of the primary delivery systems for ERP. This holds most especially for companies that have remote work or hybrid office setups. Your managers and employees can access client information, project status, company events, or customer communications from anywhere on their mobile.
Mobile ERP makes it possible for everyone to stay in the loop while delighting customers with how fast things are being delivered or done for them.
More emphasis on real-time data analytics
The fast-paced business landscape is characterized by the need to continuously innovate and quickly make sense of the influx of digital data, among many other focus areas. These factors necessitate that companies use modern tools to help them make the right decisions in a timely fashion.
Thankfully, ERP is becoming more and more efficient in capturing and reporting business data. Advanced ERP systems are designed to provide companies with up-to-the-minute and accurate information and communicate it to every department that may need that data.
Plus, they get constant updates to enable the system to be smarter in converting raw data to provide context to your data.
Imagine that there was a sudden problem in one of your production lines. This change in productivity will be reflected in your ERP system and quickly calculated into affected KPIs and metrics like production downtime, capacity utilization, and mean time between failure. Having these data on hand will help you take the appropriate action to mitigate your losses.
It’s all in the cloud
There’s no shortage of cloud ERP statistics indicating the accelerated use of the technology among companies and across industries. Gartner predicts that by 2022, 90% of cloud services will cater to innovative data and analytics requirements.
SMBs and larger companies alike find cloud ERP attractive. Cloud ERP is cost-effective, especially for SMBs that don’t need an elaborate IT infrastructure except for computers and internet connectivity services.
Similarly, major enterprises find cloud business solutions—IaaS, PaaS, SaaS, DaaS—a great alternative to physical servers that lets them streamline their standard processes, resulting in more revenue and lower operational costs.
Nowadays, you can also choose only the modules you need in cloud-based ERP instead of purchasing a complete package that you won’t have much use for, resulting in higher business savings.
Whether you’re operating a global company or otherwise, introducing cloud ERP solutions into your organization can better secure your data and make it more accessible to internal and external users.
The Future of ERP
ERP is both a tool and a goal. The goal is to reduce your operational costs while also improving competitiveness through optimized business processes and systems. And being a forward-looking business, it’s in your best interest to make use of the powerful technology that is ERP.
Ready to be ahead of the curve in implementing ERP? With the help of Acumatica, you can be at the forefront of emerging ERP trends. Let Yondu—Acumatica’s partner in the Philippines—introduce you to top-rate software solutions, such as the Acumatica ERP. Schedule your free consultation with Yondu’s ERP experts.