Non-manufacturing adoption drives ERP growth

Although Enterprise Resource Planning (ERP) had its genesis in manufacturing, users from a range of other industry sectors are taking advantage of ERP benefits, resulting in an expected compounded annual growth rate of 4.8% over the next five years. The market was $16.67 billion in 2005 and is forecasted to be over $21 billion in 2010, according to a new report by Steve Clouther, senior analyst with ARC Advisory Group.

By Control Engineering Staff June 15, 2006

Although Enterprise Resource Planning (ERP) had its genesis in manufacturing, users from a range of other industry sectors are taking advantage of ERP benefits, resulting in an expected compounded annual growth rate of 4.8% over the next five years. The market was $16.67 billion in 2005 and is forecasted to be over $21 billion in 2010, according to a new report by Steve Clouther, senior analyst with ARC Advisory Group .

China is the emerging market for many ERP solutions, says Clouther. China is attaining preeminence in global manufacturing and already produces half of the world’s cameras, 30% of air conditioners and televisions, 25% of washing machines, and 20% of refrigerators. China is adding state-of-the-art production capacity in cars, specialty steel, petrochemicals, and microchips.

Historically and traditionally, ERP was exclusive to manufacturing, going back to its roots in MRP (Manufacturing Resource Planning). For the past decade, says Clouther, major portions of ERP solutions, most notably financials and human resources, and, more recently, supply chain management applications, have found their way into sectors like government, banking/finance, health, retail, distribution, and education/administration under the ERP umbrella. “These sectors are becoming increasingly more acceptable to seeking relief from ERP solutions, and in places like India, ERP is now being sold into the real estate and construction markets,” he says.

While consolidation continues in this segment, “the market continues to grow in spite of itself,” Clouther says. “As many industry leaders attempt to encroach on SAP’s dominant market share through aggressive acquisition strategies, they face challenges of the post-acquisition phase such as defining a forward strategy for integrating various products and the installed base.”

“There always has been a need for integrated solutions, especially when talking about an integrated enterprise from the plant floor up to the executive offices,” adds Coulter. “Integration has been difficult, but service-oriented architecture (SOA) provides value to the enterprise by freeing key pieces of business functionality from individual systems, and making them available for integration with other applications.”

This ERP study looks at the other enterprise applications—customer relationship management (CRM), enterprise asset management (EAM), product lifecycle management (PLM), supply chain management (SCM), and supplier relationship management (SRM)—as provided by the vendors classified as “ERP.”

—Renee Robbins, editorial director, Control Engineering, renee.robbins@reedbusiness.com