European Market for ERP Vendor to Grow from $8.8B in 2004 to Over $12B in 2009

Europe

AMR Research: Enterprise Resource Planning (ERP) market. Enterprise Resource Planning, 2004-2009 revealed that European ERP market revenues will increase 7% annually through 2009. The ERP market has grown in revenue, but consolidation continues to change the industry. In 1999, the top five vendors (J.D. Edwards, Baan, Oracle, PeopleSoft, and SAP) in the ERP market accounted for 59% of the industry’s revenue. AMR Research expects the top five vendors in 2005 (SAP, Oracle, Sage Group, Microsoft, and SSA Global) to account for 72% of ERP vendors’ total revenue.

Global ERP vendor revenue grew by some 14% in 2004, although a substantial portion of this can be attributed to favourable Euro to U.S. dollar exchange rates. There was, however, substantial organic market growth of between 8-9% in 2004, regardless of exchange rate issues.

While many ERP vendors struggled in 2004, SAP AG increased worldwide revenues by 17% and license revenues by 20% - without any acquisitions. SAP’s ERP market share increased to more than 40%, with a substantially higher market share position of 50%+ in Europe. Oracle nearly doubled the size of its application business through the acquisition of PeopleSoft.

The market growth reflects a focus on innovation and regulatory compliance. The spotlight on innovation and the concern of non-compliance has driven large companies to put the last nail in the coffin for aging legacy systems. Large companies are consolidating fragmented IT environments and small and mid-sized businesses are investing in their first true integrated business systems.

ERP vendors ranked by 2004 worldwide ERP license revenue can be seen in the chart below. The top ten ERP vendors by revenue include the following companies:

• The ERP market is entering another major technology transition phase. Service Oriented Architectures (SOA) may have the same disruptive effect that other technologies have had on the market, such as the emergence of client-server systems had in the 1990’s.

• The pace of acquisitions shows no sign of slowing down. Oracle’s recent purchase of Retek makes it very clear that PeopleSoft was simply the first of what is likely to be a series of purchases. Vendors like Sage Group, SSA Global, Infor Global Solutions, and Epicor have all been very active in the Merger and Acquisitions (M&A’s), and as a result have all been growing more rapidly than the overall ERP market.

• ERP buyers have moved away from large, upfront purchases. Now most tend to license user seats and functional ERP modules incrementally as they deploy a product. Along with widespread discounting, this has led to smaller average deal sizes.

Market Analytix Report: Enterprise Resource Planning, 2004-2009 Publ 20059620