By virtually any measure, ERP software sales are healthy and growing. A recent Gartner report listed total enterprise software sales at $114.4 billion in 2011, with ERP software making up the largest segment at $23.2 billion. Office suites are the second largest segment at $15.7 billion.
ERP software has been a healthy market for many years as companies have realized that integrated applications that address the information management needs across the broad enterprise landscape are essential to the efficient and effective operation of the business. Like most markets, though, there have been some ups and downs along the way. The late 1990s saw a surge in ERP software sales as companies rushed to replace aging systems before the dreaded Y2K calendar change. As a result, ERP software sales soared during 1998 and 1999 but then lagged for the first couple of years of the new millennium. Much of the “normal” demand for those years was accelerated into 1998 and 1999 and companies that had not purchased new ERP systems during that time were exhibiting justifiable concern over the impact of the Internet on enterprise systems.
The emergence of e-business provided yet another stimulus to ERP software sales as companies realized that antiquated systems were inhibiting their ability to move forward into new online markets and adopt collaboration and portal technologies to enhance supply chain performance. Once developers incorporated e-business capabilities into their products, sales rebounded as many companies chose to implement a new system rather than enhance existing software for e-business or wait for their incumbent supplier to bring the enhancements to their product.
Sales patterns can be seen in CRM software sales, accounting software sales, and other software markets that reflect what ERP software sales did in earlier years when ERP became an accepted strategic direction for forward-looking manufacturers. CRM sales have followed the emergence of this business area (customer service and customer intimacy) as a strategic priority. Whether it was the evolution of software capabilities, changes in the market, or an emerging phase of corporate maturation that drove this heightened interest in customer service is debatable. CRM is an important part of most companies’ go-to-market strategy.
CRM capabilities are included in many ERP software systems but third-party CRM solutions have also evolved into a significant market presence on their own.