The global ERP software market


ERP software market is a growing market with exceptional growth opportunities. With the passage of time, new vendors and advancements take over the older version of ERP software with newer and more efficient ERP software.


According to different studies and researches the market size of the global ERP software market will be around 100.7 billion dollars by 2025. 


With such exceptional growth, the ERP software market is experiencing rapid expansion in the ERP software market. Countries that have higher exposure and accessibility to technology have the highest share of the software market. Emerging and developing economies are undergoing a phase where their business dynamics are demanding immense adoption of advanced ERP software.


Underdeveloped and underdeveloped economies are initiating different campaigns to make businesses feel the urge to use ERP software. Different promotional schemes are launched to make people understand the purpose of ERP software. The roots of traditional business management systems are so deep that it will take some time before these economies fully shift toward ERP software. With better policies and effective strategies, the pace of implementation is swift and efficient. We can expect a faster pace in the future.


Components of ERP software:


To better understand the dynamics of the ERP software market we have to study different components of ERP software. ERP software consists of three different components each of the components have different parts:


Three components of ERP software include:

  • Deployment model
  • Business function
  • End-user

Deployment model:


The deployment model refers to how the ERP system is implemented in the business. There are three different types of deployment models include:

  • On-premises ERP software
  • Cloud ERP software
  • Hybrid ERP software 


On-premises ERP software:


On-premises ERP software is a deployment model for ERP software. In this ERP software, a separate set of hardware and software is installed on the business premises.


Cloud ERP software: 


Cloud ERP software is the most popular model of deployment for ERP software. Cloud ERP software has a cloud database. The users can access the data remotely and can perform their tasks remotely. The ease of use and mobility Cloud ERP software offers to increase the efficiency and data security of businesses is second to none.


Hybrid ERP software:


Hybrid ERP software is the combination of on-premises and cloud ERP software. Large sized enterprises with exposure to multiple industries use hybrid ERP software.


Business function:


ERP software performs different business functions. The business functions ERP software performs are of various nature and styles. Usually, ERP software has five pillar functions which we briefly discuss here. Five basic pillar functions of ERP software are:

  • Financial resource management
  • Human resource management
  • Customer relationship management
  • Supply chain & Inventory management
  • Manufacturing management

These functions work as a system that we call enterprise resource planning (ERP) software.


End user:


End users refer to the entity that is using the ERP software. Usually, three different types of enterprises use ERP software. The three types include:

  • Large sized enterprises
  • Medium sized enterprises
  • Small sized enterprises


Moreover, the end users can be one large enterprise that has exposure to different industries. The ERP software is designed in a way that it can accommodate different users with different needs at once. Although different industries demand different types of modules.



The growth potential of the global ERP software market:


The growth potential is very high for the global ERP software market. Every day new businesses are exploring ERP software. The excessive demand for ERP is leading new vendors to enter the market causing tougher competition.


According to a study, the IT spending on enterprise management software is expected to be 672  billion dollars worldwide in 2022 increasing around 11% from 2021.


The stats and studies show that businesses around the globe are investing billions to acquire effective ERP software that can perform general tasks efficiently. The business environment is evolving over time, the dynamic nature of businesses is creating a need for a complex tool to perform the task that is nearly impossible to do manually. 


The ERP software vendors are increasing their profitability by introducing new versions of ERP software. The market revenues of ERP software vendors doubled between 2010 and 2020.


Top 4 factors impacting the growth of the global ERP software market:


We have discussed the potential of the ERP software market globally. The growth and vast expansion of the ERP software market are dependent upon certain factors that contribute to this rapid expansion. 


The factors can be classified into two different types, external factors, and internal factors. Combining both we get the four major factors that contribute to the growth of the ERP software market.

  • Cloud technology
  • Technological advancements
  • Increase in awareness
  • Complex business dynamics

Cloud technology:


Cloud technology is one of the main factors that contribute to the success of ERP software. Cloud technology enables new features and increases the accessibility for businesses. Cloud ERP software is one of the most advanced and most used ERP software in the market.


Enterprises prefer systems that can be easily used and accessed. Older versions of ERP software do not support this feature. After the integration of cloud technologies, ERP software becomes an attraction for enterprises. 


Another reason that contributes in this regard is the data security feature of cloud technology. Cloud ERP software stores all its data on a cloud database. Cloud databases are very hard to breach and consider safest for the mobility of data. Moreover, cloud ERP software can be easily updated through the server connectivity of the vendor.


These reasons make cloud technology an internal factor in the increasing popularity of ERP software.


Technological advancements:


Another major factor that contributes to the expansion of the ERP software market is rapid technological advancements. Technologies like business intelligence (BI) and artificial intelligence (AI) contribute to the rapid expansion of the ERP software market.


With technological advancements in ERP software, enterprises can easily perform complex calculations and data analysis. The results of such complex analysis help businesses with more concrete decision-making and a better understanding of their business dynamics.


ERP software vendors use these technological advancements in their updates to increase the efficiency of their ERP software, hence increasing the productivity and efficiency of business management by ERP software.


Besides these internal factors now we will discuss two external factors.


Increase in awareness: 


Making people aware of the benefits they can have if they use ERP software is one of the most challenging tasks for ERP software vendors, governments, and regulators. Different promotional schemes were launched by the collaboration of government and ERP vendors to make businesses adopt ERP software. 


For business owners and managers, it is a difficult task to replace their traditional systems with this modern system. With the passage of time and exposure of people to technologies businesses started to use ERP software. Even today in underdeveloped economies it is a difficult task to make people use ERP software for their businesses. 


Today, with the increase in accessibility to information people are eager to know more about technology. Now it is easy to make businesses use ERP software. An increase in awareness and exposure to technologies and information contributes to the growing popularity of ERP software and the size of the ERP software market.


Complex business dynamics:


Complex business dynamics is another external factor that contributes to the vast popularity of ERP software. As the complexity of business dynamics and environment increase the demand for advanced and complex management solutions increases. 


Today, businesses are producing a lot of data that needs to be stored, cleaned, and analyzed. 


Managing such huge data is a difficult task for businesses and processing that data is again a difficult task without any tools. To manage and process that data enterprise needs a complex analytical tool that can store, process, and analyze the data.


ERP software being the solution to all these problems, it becomes popular among enterprises.


Effect of COVID-19 pandemic on ERP software market:


COVID-19 pandemic hits every market and affects the market dynamics in the worst way possible. Businesses suffer from decreasing labor availability and restricted mobility. Like other markets, the global market for ERP software is affected by the COVID-10 pandemic. 


Although it helps enterprises understand the need for a centralized and accessible management system that can work without human input.


The growth path of the global ERP software market is on the right track. The estimated CAGR for the ERP software market is expected to be 8.5% between 2020-2026. During the pandemic, such CAGR is a strong indicator for higher demand for ERP software and management solutions.


ERP software market in Pakistan:


Pakistan is an underdeveloped country with exceptional potential to excel in technology and growth. Businesses in Pakistan are booming and more investors are investing in various businesses across Pakistan.


With the expansion in business, the demand for management solutions is surging in Pakistan. Different local and international vendors started offering different versions of ERP software


CIS is one of the most popular ERP software providers in Pakistan. CISERP is considered the most featured ERP software for small, medium, and large sized businesses. CISERP is integrated with some amazing features that help businesses to manage their business and increase the efficiency of the business processes.