SAP Stands the Test of Time in ERP

SAP Stands the Test of Time in ERP
SAP Insights

SAP Stands the Test of Time in ERP

As companies shift more business processes and workflows to the digital space, the demand for enterprise-grade software has boomed. The global enterprise resource planning (ERP) market has expanded steadily over the past decade to meet this need, projected to reach $82 billion by 2025 according to research firm Gartner. And despite intensifying competition from newer cloud-native options, the traditional titan of ERP remains on top – SAP continues to lead as the #1 ERP vendor worldwide after 40+ years.

SAP captured an impressive 21.7% market share in 2020 by revenue according to technology advisory firm Apps Run The World. The German multinational is still the vendor of choice for large multinational corporations, particularly in manufacturing, consumer products, and retail industries. Over the past five years they have sustained double-digit revenue growth quarter-over-quarter, even while adapting their core ERP software suite SAP S/4HANA for next-gen integration.

However, SAP’s reign relies heavily on marquee Enterprise customers – smaller businesses frequently opt for more affordable and flexible cloud-based systems instead of complex, on-premise deployments. Recognizing this segment as a vulnerability, SAP has invested extensively into growing their SaaS ERP: SAP S/4HANA Cloud and SMB product SAP Business ByDesign now make up almost 30% of the company’s ERP related revenue.

And SAP shows no intentions of ceding ground in cloud ERP either – their recent $8 billion Qualtrics acquisition and partnership with Microsoft Azure give SAP an avenue to reach new customers globally. With affordable subscription pricing, no need for on-site servers, and quicker implementation times, SAP hopes to fend off pure cloud rivals.

Still, ERP upstarts like Workday, Oracle NetSuite, Acumatica and Infor are relying on their head start in multi-tenant SaaS to try and knock SAP from its enterprise throne over the long run by chipping away at the lower end of the market for now. But despite their momentum and industry acclaim for usability, none of younger ERP platforms come close to unseating SAP today in terms of market presence.

Can these cloud-native options eventually disrupt SAP’s reign? They’ll need to continue their blistering pace of adding customers and expanding capabilities. However, with its hybrid cloud/on-premise ERP approach and foothold among large enterprise customers, don’t expect SAP to relinquish its ERP crown anytime soon.

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