By Neal Weinberg Contributing writer, CIO Magazine – FEB 17, 2022
For decades, traditional ERP systems have enabled enterprises to run core business processes on a single platform that delivered stability, reliability, and dependability. But the monolithic, on-premises ERP has since become an outdated approach.
Today, companies embracing digital transformation seek the flexibility, agility, speed, and remote access to applications that comes with cloud-based systems. And they are looking ahead to what Gartner calls “composable” ERP, an approach based on the concept of running apps on highly configurable, interoperable, and flexible software platforms.
In putting together our list of the 10 most powerful ERP vendors, we took the size of the vendor into account, but also evaluated vendors on their cloud strategy and how their vision for the future of ERP is shaping the market. The inclusion of vendors not traditionally thought of as ERP powerhouses underscores how the cloud and evolving digital strategies are blurring traditional enterprise software category lines and reshaping the battle for enterprise dollars.
1. Oracle: Coming on strong with two cloud ERP products
Why they’re here: Oracle sits at No. 2 in market share but is aggressively coming after market leader SAP with two cloud-native offerings. Oracle NetSuite ERP, the result of Oracle’s purchase of NetSuite in 2016, is targeted mostly at midrange businesses. Oracle Fusion Cloud ERP, built by Oracle from the ground up, is a broad platform that can accommodate the largest global enterprise. Gartner puts Fusion Cloud ERP in the top leadership position in its latest Magic Quadrant for product-centric ERP.
Power moves: In late 2021, Oracle announced its biggest acquisition ever, the $28.3 billion purchase of electronic healthcare records company Cerner Corp. The move gives Oracle a major foothold in the fast-growing healthcare industry.
By the numbers: Oracle’s annual cloud ERP revenue is roughly $5 billion. Chairman and CTO Larry Ellison predicts it could hit $20 billion in five years.
Outlook: Oracle’s ERP business is a bright spot for the company. When earnings were announced in December, CEO Safra Catz said, “We now have 8,500 Fusion ERP customers with revenue growing 35% and 28,400 NetSuite ERP customers with revenue growing 29%.” Ellison noted that Oracle is not only winning new customers but still has a captive audience of 6,500 on-prem legacy ERP customers (from its acquisitions of JD Edwards and PeopleSoft) that it plans to transition to the cloud.
2. SAP: The battleship is turning around
Why they’re here: German juggernaut SAP is the runaway market leader with annual revenue approaching $30 billion. But most of SAP’s massive installed base is still running on-premises ERP. The challenge facing SAP is how to compete against the upstart cloud-only ERP vendors and convince S4/HANA customers not to jump ship, but to jump to the SAP cloud.
Power moves: In late January, SAP bought a majority stake in privately held US fintech firm Taulia. The move will help SAP expand its presence in supply chain financing.
By the numbers: 74: The number of acquisitions SAP has made over the years.
Outlook: Says Nucleus Research analyst Trevor White, “While slower than others to embrace the cloud, SAP has now committed to the cloud’s future, providing a clear and modern roadmap for enterprise clients.”
, which helps customers with their cloud migration and digital transformation efforts. Those efforts seem to be paying off. SAP’s cloud revenue rose around 25% and CEO Christian Klein predicts that by 2025, SAP will have $25 billion in cloud revenue.
3. Microsoft: A vertically integrated offering from desktop to cloud
Why they’re here: Microsoft has become an ERP powerhouse with its broad line of Dynamics products targeted mostly at small to midsize businesses, and available in on-prem or cloud iterations. The obvious advantage that Microsoft has is its ability to integrate ERP business processes with other productivity tools in the Microsoft arsenal, such as Office, Teams, Outlook, Power BI, the SQL Server database, and, of course, the powerful analytics available in the Azure cloud.
Power moves: Microsoft recently purchased Orions Systems, a leader in the real-time analysis of video and image content. The technology enables Microsoft to expand the capabilities of Dynamics 365 for brick-and-mortar retailers.
By the numbers: Dynamics revenue grew 29% year-over-year, while Dynamics 365 (cloud-based) revenue jumped 45%, according to the company’s latest earnings report.
Outlook: The immediate effects of the pandemic — the shift to remote work, the migration of business apps to the cloud, the increased need for collaboration tools — played right into Microsoft’s strengths. The longer-term impact of the pandemic has been for organizations to rethink their business processes, which again plays into Microsoft’s ability to take basic ERP and add collaboration, data visualization, and AI.
4. Workday: Shaking up the ERP market
Why they’re here: Workday started out as a SaaS-based Human Capital Management (HCM) application, but the company has filled out its portfolio to include financial management and enterprise planning primarily for service-based rather than product-based organizations. Workday execs like to talk about killing off the term “ERP” altogether and replacing it with “enterprise management cloud.”
Power moves: In 2021, Workday bought VNDLY, a company that helps organizations manage contractors and other third parties.
By the numbers: $510 million: The amount Workday spent to buy VINDLY.
Outlook: Workday doesn’t have the broad, industry-specific sets of ERP modules that the legacy vendors can offer, particularly in areas such as supply chain and manufacturing. But it has positioned itself as a powerful challenger looking to shake up the staid world of ERP with a cloud-only, best-of-breed alternative in the areas of financials, HR, payroll, and planning. Workday’s revenue has been growing at a steady 25% clip and annual revenue tops $4 billion.
5. Sage: Carving out a low-cost, high-value niche
Why they’re here: Sometimes viewed as the low-cost alternative to Oracle and SAP, the Sage Group is hoping to kickstart revenue growth after treading water at around $2.5 billion over the past few years. The company has built out its own cloud platform and is expanding its product lines beyond accounting and payroll for small businesses, where Gartner rates Sage Intacct a visionary. Under the Sage X3 brand, the company is moving to supply chain management, manufacturing, and sales.
Power moves: In late 2021, Sage bought Brightpearl, which features both ERP and CRM software specifically for retailers.
By the numbers: $300 million. The amount Sage paid for Brightpearl.
Outlook: Sage is taking an aggressive approach to growth. CEO Steve Hare says, “Having re-shaped and invested significantly in the group over the last three years, we are now focused on growing the business in absolute terms, both organically and through acquisitions.”
6. Infor: Banking on deep industry-specific knowhow
Why they’re here: With annual revenue north of $3 billion and a market share in the 5-6% range, Infor is in the top tier of ERP vendors. It offers the full breadth of ERP offerings across industries and, as a legacy vendor, has made the transition to cloud. Infor differentiates itself with industry-specific ERP modules and a multi-tenant cloud platform hosted on AWS. Infor’s CloudSuites is rated as a leader by Gartner in the category of ERP for product-centric enterprises.
Power moves: In 2020, Infor was purchased by Koch Industries, and is now a subsidiary of the $110 billion conglomerate.
By the numbers: $13 billion: The amount of money Koch Industries paid for Infor.
Outlook: Koch Industries was both a customer of Infor and an investor prior to the acquisition. The assumption is that Koch was impressed with what it saw and believed that with an infusion of capital, it could push Infor to new heights. Koch Executive Vice President and CEO of Enterprises Jim Hannan put it this way, “Koch has the resources, knowledge, and relationships to help Infor continue to expand its transformative capabilities.”
7. Epicor: Taking customers on a journey to SaaS
Why they’re here: Epicor’s Kinetic cloud ERP platform is listed as a visionary in Gartner’s latest evaluation of ERP vendors. Gartner says Kinetic “delivers a solid operational ERP solution for midmarket manufacturing and distribution companies, along with adjacent capabilities for demand planning, inventory and warehouse management.”
Power moves: In January, Epicor bought JMO Business Systems, a leader in warehouse management and enterprise mobility solutions for the automotive industry.
By the numbers: $4.8 billion: The amount that Clayton, Dubilier & Rice (CD&R) paid to acquire Epicor in 2020.
Outlook: Somewhat similar to Infor, Epicor’s acquisition by a large, private equity firm is expected to bring an infusion of funds for acquisitions, as well as drive the transition from on-prem to a SaaS model for its longstanding customer base. At a recent event, company officials painted a bullish picture, with revenue approaching $1 billion on double-digit growth, and SaaS delivering half of recurring revenue.
8. ServiceNow: Creating a platform for digital transformation
Why they’re here: Cloud-based IT services leader ServiceNow is not a traditional ERP vendor and certainly doesn’t have the deep industry-specific knowledge of the legacy players. But ServiceNow comes at ERP from a different perspective; its Now Platform enables companies to connect digital workflows and optimize business processes across IT, employees, customers, and application creators. Gartner rates ServiceNow as a leader in cloud-native, low-code application platforms.
Power moves: Bought ERP migration company Gekkobrain. The move will help organizations identify and understand the custom code in their ERP apps and automate the modernization of ERP apps and resulting workflows.
By the numbers: ServiceNow reported 30% growth in 2021, with total revenue approaching $6 billion.
Outlook: Industry analyst Josh Bersin says ServiceNow is tapping into a market that goes beyond traditional ERP into what he calls content creator platforms. “Every HR team, every manager, and every IT department wants to build a new workflow or design a new process.” He adds, “They’re going to ServiceNow to do so.”
9. QAD: Cloud-based innovator in manufacturing and supply chain
Why they’re here: Gartner ranks QAD as a visionary in the category of manufacturing and
for midsize manufacturers with its cloud-based QAD Adaptive ERP suite. QAD is another company that’s blurring the lines between ERP and CRM. It recently purchased WebJaguar, a digital commerce platform, with the goal of creating an omnichannel customer management solution for both B2B and B2C.
Power moves: QAD was taken private by Thoma Bravo in 2021.
By the numbers: $2 billion. The amount Thoma Bravo paid for QAD.
Outlook: Thoma Bravo has a long and successful history of acquiring software companies, injecting capital and providing management expertise. QAD founder and president Pamela Lopker says, “Through this partnership, we will be even better positioned to build on our strong foundation.”
10. Salesforce: Creating a cloud-based platform for digital transformation
Why they’re here: Salesforce is the unquestioned power player in CRM. And it has invaded the ERP market with a unique strategy. Salesforce built a powerful cloud platform on which to run CRM applications (SaaS) and to write applications (PaaS). Then, it opened up its platform to enable third-party companies offer ERP solutions. Rootstock offers manufacturing, distribution, and supply chain ERP on the Salesforce Cloud. And FinancialForce delivers finance and accounting on the Salesforce platform.
Outlook: Salesforce is a force to be reckoned with. It is making the very persuasive pitch that since a company’s core business data is already stored on the Salesforce cloud, it only makes sense to run integrated ERP apps on that same platform.
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