Topic 2 - ERP Market Place

Kedareshwaran S

ERP-BPM 2020
 ERP Market Place
• According to Allied Market Research, global ERP software market is expected
to garner $42 bn. by 2020, at a CAGR of 7.2% for the period of 2014-20.

• Sectors that implement ERP are - (a) Manufacturing (28%), (b) Business
services and consulting (17%), (c) Wholesale and Retail (12%), (d) Education
(11%), (e) Food and Beverage (7%), (f) BFSI & Construction (6%), (g)
Telecommunications (5%), (h) High-Tech & O&G (4%).

• In terms of functions (modules), finance & accounts is the most important

reason for implementing ERP followed by purchasing and inventory
management.
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 ERP Market Place
• In terms of priority in implementing functions (modules), the top 3 modules
demanded are (a) Finance & accounts (62%) (b) Purchase Management
(56%), (c) Inventory management (45%) .

• Cloud ERP: According to Markets and Markets, the cloud ERP market size is
estimated to grow from $ 19 bn. in 2016 to $ 30 bn. by 2021 at an estimated
CAGR of 10%.

• BFSI sector has been the largest adopted of private cloud deployment in ERP
market owing to the involvement of sensitive data.

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 ERP Vendor Tiers
Sr. Characteristic Tier – I ERP Tier – II ERP Tier – III ERP
No Vendor Vendor Vendor

1. Annual revenue of > $250 mn. OR $25 - $250 mn. OR < $25 mn. OR
customer. > ₹ 2000 cr. ₹200 - 2000 cr. < ₹ 200 cr.
2. Complexity of processes High Medium Low

3. Total Cost of Ownership High Medium Low

4. ERP Vendor Industry Diversified Industry-sp ecific Industry-specific

solutions
5. Multi-language & multi- Supported Few can support Not supported
currency capabilities

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 ERP Tier 1 Market Strategies
• Key strategies by Tier 1 ERP vendors are product launches, acquisitions,
partnerships and collaborations.

• According to Panorama Consulting Solutions, the Top 4 ERP vendors are

SAP, Oracle, Microsoft and Infor.

• Tier 1 vendors can manage clients having multiple companies and multiple
plants with international locations.

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 Tier 1 ERP Vendor - SAP
• In 1972, five former IBM employees launched the company, Systems,
Applications & Products in Data Processing (SAP) in Germany with a vision
to develop standard application software for real-time business processing.

• Today, SAP is the world leader in enterprise applications in terms of software

and software-related service revenue.

• It has more than 3.45 lakh customers in more than 180 countries and 15,000
partnering companies globally.

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 Tier 1 ERP Vendor - SAP
• In 2018, the company generated revenues of $ 29.4 bn with a growth of 5.3%
over previous year.

• It is a global company with revenues across EMEA (Europe, Middle East &
Africa) at 44% followed by Americas (N&S) at 40% and remaining 16% from
APJ (Asia Pacific Japan).

• Products such as SAP BusinessOne, SAP BusinessByDesign and SAP Business

All-in-One is for SME. In the recent times, SAP has acquired several products
that include Business Objects, Sybase, SuccessFactors & Ariba.

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 Tier 1 ERP Vendor - SAP S/4 HANA
• SAP has collaborated with Accenture, Capgemini & Deloitte to accelerate
customer adoption of SAP S/4 HANA cloud in manufacturing and service
industries.

• SAP S/4 HANA supports volumes of data in-memory upto a Petabyte

returning results in under a second.

• According to Bill McDermott, CEO SAP, “We reinvented ERP software on an

in-memory architecture. Today, with nearly 8000 SAP S/4 HANA
customers, we are leading the market to ‘Intelligent ERP’.”

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 Tier 1 ERP Vendor - Oracle
• Founded in 1977 in California, USA with revenues of $40 bn. (2018), the
company offers its database, tools and applications products along with
related consulting, education and support services.

• Oracle has acquired PeopleSoft, J.D. Edwards, Siebel & Hyperion and offers
more than 10 comprehensive product lines designed to meet specific business
needs in areas such as sales, BI, E-Commerce and more.

• Oracle E-Business Suite: It is the most comprehensive suite of integrated,

global business applications spanning ERP, CRM and SCM.

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 Tier 1 ERP Vendor - Oracle
• Oracle Siebel CRM: It covers combination of transactional, analytical and
engagement features to manage all customer-facing operations.

• Oracle ERP Cloud: It is a SaaS ERP with suite of cloud applications for
finance, project management, procurement, risk management and other day-
to-day activities.

• It is connected with all Oracle enterprise cloud applications and scales to

support added users, transactions and sites.

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 Tier 1 ERP Vendor - Microsoft
• Headed in Washington, USA with revenue of $ 110 bn (2018), Microsoft is the
world’s largest software company.

• Microsoft Dynamics 365: It is a cloud-based business applications platform

that combines ERP and CRM.

• Combining these two enterprise applications natively gives users a connected

view of data intelligence on customer records, transactions, behaviors and
preferences, along with information about orders, inventory and shipping,
and in addition to predictive tools for decision makers.

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 Tier 1 ERP Vendor - Microsoft
• For companies that rely on Office 365 and Outlook, or run applications on
Azure, MS Dynamics 365 provides more beneficial integration with these
products through the MS Appstore and common user-interface throughout
MS suite of business applications, enabling easier training and improved
efficiency.

• It has capabilities across different industry sectors – manufacturing, retail &

finance.

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 Tier 1 ERP Vendor - Infor
• Infor ERP solutions have expanded to include Business Intelligence (BI),
sales automation and e-commerce.

• It has capabilities across different industry sectors – healthcare, public

sector, retail, hospitality, distribution and service sector industries.

• It has acquired SSA Global, Lawson Software, GEAC ERP, and so on.

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 Tier – II ERP Vendors
• According to TEC, this Tier consists of (customer) companies with annual
revenues in range $ 25-250 mn. Need ERP solutions with medium level of
complexity.

• These vendors offer an alternative to Tier 1 ERP vendors in terms of price,

ease/speed of implementation, and/or focusing on a particular industry
segment.

• The ERP vendors in this tier make up largest segment in terms of number of
clients. Often, ERP vendors are focused on particular industry. Some of the
ERP vendors in Tier II include Sage Group, QAD, Net Suite, etc.
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 Indian Context & Tier – II ERP Vendors
• Indian SME segment has been one of most aggressive adopters of ERP
software with a growth rate of 70% in the period 2008-2018.

• Currently more than 60% SME have already implemented ERP.

• Several Tier -1 vendors (such as SAP, Oracle) now have specialized products
for SME segment and hence offer huge competition to Tier II vendors.

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 Tier – III ERP Vendors
• These ERP vendors cater to single-site customers with revenues

• Currently more than 60% SME have already implemented ERP.

• Several Tier -1 vendors (such as SAP, Oracle) now have specialized products
for SME segment and hence offer huge competition to Tier II vendors.

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 SaaS Definition and Cloud Vendors

SaaS Cloud Vendors

• SaaS (Software as a Service) is a model of
software deployment whereby a provider
licenses an application to customers for use as
a service on demand.

• SaaS software vendors may host the

application on their own web servers or
download the application to the consumer
device, disabling it after use or after the on-
demand contract expires.

Source: SAP
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 PaaS Definition and Cloud Vendors

• PaaS (Platform as a service) is the delivery of PaaS Cloud Vendors

a computing platform & solution stack as a
service.

• It facilitates the deployment of applications

without the cost & complexity of buying and
managing the underlying hardware & software
layers.

• It offers an environment that supports the

complete lifecycle for building & running
applications based on a shared, standardized
& scalable platform, also known as Cloudware.

Source: SAP
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 IaaS Definition and Cloud Vendors

• IaaS(Infrastructure as a Service) is the IaaS Cloud Vendors

delivery of computer infrastructure as a
service, typically a virtualized environment
managed in an integrated and efficient way.

• It offers computing as a service that is billed

on a utility basis and amount of resources
consumed.

Source: SAP
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 Gartner Magic Quad – Cloud Infrastructure
• Amazon Web Services (AWS) has been the leader
in the public cloud market since it started in 2006.

• Based on research by Synergy Research, AWS

commands 34% market shares (as on July 2017),
followed by Microsoft (11%), IBM (8%) and Google
(5%).

• Though these cloud vendors provide a similar

storage solution, what sets them apart are drop in
prices of cloud instances, discounts, provide per
second billing, dropping of billing increments.

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 Virtualization
• Virtualization refers to the abstraction of logical resources away from the
underlying physical, hardware resources.

• Virtualization in cloud includes – server, storage and network.

• Server virtualization refers to the mapping of a single physical resource to

multiple logical representations or partitions.

• In a virtualized environment, computing resources can be dynamically

created, expanded, shrunk or moved as the demand varies.

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 Cloud Architectures
• Public cloud: It describes the use of resources that are provisioned from an
off-site third-party provider that provides the resources that are consumed on
a self-service basis over the Internet via web applications/web services.

• Private cloud: It describes the use of resources that are provisioned by the
consuming organization and hence do not have restrictions on network
bandwidth, security issues and legal requirements that are often issues in a
public cloud ecosystem.

• Hybrid cloud: The environment consists of multiple internal and/or external

providers.
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 SaaS and Cloud: Concerns
• Security : This is a primary concern in shared resources.

• As much sense as it might make for a small or medium enterprise to move to

a public cloud, large enterprises are not expected to adopt public clouds due
to security concerns, reliability issues and prior investments made in
hardware and software infrastructure.

• Large companies might, however, move to private clouds for core

applications and public clouds for non-core applications.

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