- The cloud Enterprise Resource Planning (ERP) market size is estimated to grow from $18.52B in 2016 to $29.84B by 2021, at an estimated Compound Annual Growth Rate (CAGR) of 10.0% according to Research & Markets.
- Gartner predicts the global Cloud ERP software and services market will reach $34.5B in 2017, growing at a 9% CAGR through 2021.
- By 2020, 40% of large organizations will have at least 60% of their ERP applications in the public cloud according to a recent IDC FutureScape webinar.
- Investment in cloud-based ERP systems more than doubled in 2016, reaching $78B in global software and services revenue according to PriceWaterhouseCoopers (PwC). The consultancy predicts that traditional ERP software spending will decline by more than 30% to less than $15B.
- Cloud ERP systems are now over 20% of all ERP systems sold and deployed based on the consensus estimates from industry analysis firms including Apps Run The World, IDC, Forrester, Gartner, and others.
In 2017 and beyond, Cloud ERP will continue to accelerate as the system of record for organizations of all sizes, with specific focus in the manufacturing industries. Legacy ERP systems, either home-grown or highly customized to ways of doing business long ago, are now becoming quickly obsolete. It’s common to find legacy ERP systems delivering just 7-10% of the information a company needs to excel at meeting and exceeding customer requirements including ship delivery times. Add to this the fact that these legacy ERP systems are on-premise and require extensive software upgrades to keep delivering the 7-10% of valuable data, and the conditions are perfect for Cloud ERP systems to accelerate fast.
Why Cloud ERP Is Winning
The need for time-to-market speed dominates every company’s agenda today, encompassing new products and the delivery of new IT apps and platforms. Cloud ERP systems are solving both of these challenges today at significantly reduced costs. Here are the top factors accelerating Cloud ERP’s adoption, many times replacing legacy ERP systems in the process:
- Reducing one-time costs while providing organizations with greater flexibility to managing their business. The graphic below from Price Waterhouse Coopers’ (PwC) published study Beyond ERP: New technology, new options (free PDF, no opt in) illustrates the cost savings of taking the first steps towards pursuing a Cloud ERP strategy. The majority of companies seek to integrate their legacy data while relying on the latest Cloud ERP system features to gain the information they need to better operate their businesses.
- Faster ERP deployments without the extra baggage of on-premise upgrades in the future. For organizations who have paid tens of thousands of dollars for upgrades on their legacy ERP systems in the past, web-based ERP systems give them the opportunity to break free from the expensive upgrade charges many providers of on-premise ERP systems charge.
- More effective at standardizing common processes across manufacturing locations and organization-wide. Cloud-based solutions can quickly streamline the most common processes and scale them faster than legacy on-premises applications can. Having a secured network within a company makes Cloud ERP systems faster to implement than on-premise systems as well. For many organizations, this leads to greater time-to-market for launching new cloud-based apps that are part of their ERP system.
- Delivering an excellent user experience including the defining and fine-tuning of application interfaces over time is easier to accomplish with Cloud ERP systems. For organizations with complex user interfaces on their legacy ERP systems today, Cloud ERP systems can help to drastically reduce the confusion and complexity of how each applications’ screen looks and interacts with other aspects of the system. Many SaaS ERP systems have current-generation user interface (UI) technologies and workflows that enable role-based designs of individual screens. Cloud ERP systems have won the UI war and are rapidly being adopted as a result.
Enables organizations to concentrate on their core business and invest in new opportunities instead of having to spend so much on ERP licenses and upgrades. Many organizations are continually making tradeoffs as to which projects they will invest in. For many, the trade-offs most often center on how to turn their IT investments into catalyst to drive greater business growth. Cloud ERP systems give senior management teams the flexibility and freedom to prioritize projects that will drive new revenue. In addition, Cloud ERP solutions stay up to date on the latest upgrades and enhancements, further saving valuable time that can be invested within customers and new initiatives.
2017 Benchmark of Cloud ERP Providers
The following is a vendor-independent analysis of the top cloud ERP software providers who are delivering customer-proven solutions to their customers today. Each is evaluated on their strengths, weaknesses, and the potential for growth:
Designed primarily for small and medium businesses, Acumatica’s cloud-based ERP system scales well for companies who primarily operate out of a single location and have less than 1,000 employees. Acumatica’s cloud applications run on the Microsoft Azure operating system and rely on SQL Azure. The depth of Azure expertise inside Acumatica is impressive given the size of the total company, and it is evident this is an area of high priority strategically for the company. Additional strengths include the availability of a financial, customer management, project accounting, distribution management and manufacturing management suites tailored to the needs of small and mid-sized businesses. Acumatica has also significantly improved its user interface and streamlined the user experience. Weaknesses include their CRM application that is not as feature-rich as many that are available stand-alone today. Also, producing reports from the CRM system can be time-consuming. Further, to work with Salesforce, Acumatica’s systems require field and object mapping. Acumatica’s future is going to be defined by how well they can accelerate new apps on the Azure platform and solve the CRM challenges they have today.
Epicor ERP 10
Epicor has a proven record of accomplishment delivering global deployments using a two-tier ERP strategy and has extensive vertical market expertise. Also, the platform and technology stack Epicor relies on for building out its ERP cloud application is scalable enough to support legacy ERP integration and has API support, which is critical in large-scale deployments where legacy systems dominate. Further, Epicor has improved application performance over time, which had been a weakness in the past. Weaknesses include the tendency of their sales and professional services teams to create demos that commit to functionality beyond the scope of projects to upsell customization and additional services. Lack of features depth in Manufacturing Express Edition and its limited functionality is another weakness. Despite these weaknesses, Epicor has deep vertical expertise gained from a series of acquisitions and commitment to key verticals. If your business competes in one of the verticals they address, consider them on your list.
Founded in 1989 and headquartered in Paso Robles, CA, IQMS is an award-winning providers of Cloud ERP systems and solutions for a wide variety of manufacturing industries. The company has proven expertise the automotive, aerospace and defense, medical products, food and beverage, packaging and process-centric industries. IQMS has regional offices are located throughout North America and Europe, in addition to a growing network of global channel partners. The IQMS solution integrates enterprise resource planning and manufacturing operations functionality, including accounting, CRM, purchasing, EDI, reporting and business intelligence, production planning and scheduling, and production, real-time shop floor control, quality, supply chain, and warehouse and shipping management. IQMS’ Cloud ERP systems are known for the ease of use, excellent navigation and how quickly system users can jump between modules and drill down on production workflow areas of interest. The IQMS ERP suite of applications also supports a wide variety of Bill of Materials (BOM) and configuration, which make this Cloud ERP system ideal for complex manufacturing. In addition, users report that Lot Tracking and Serialization, traceability of products from Finished Goods to Purchase Orders is easy to use.
Built on the Salesforce1 platform, Kenandy Cloud ERP software has done a very good job of building out solutions for Procure-to-Pay, Global Financials, and Trade Promotion Management. The engineering team has done an excellent job of making the most of the Salesforce1 platform, enabling mobile support for all Kenandy applications while ensuring API-level integration and Salesforce Object support for each application. Kenandy does well with retail and distribution-oriented businesses that are also on the Salesforce platform. Weaknesses include a weak Quote-to-Cash solution and little if any support for advanced product configuration workflows for manufacturing. The architecture is entirely dependent on Salesforce, which can become a constraint for any company not using this specific CRM platform today. For retailers, distribution and manufacturing companies running Salesforce CRM today, Kenandy Cloud ERP is an excellent fit given its native platform support.
Microsoft Dynamics AX
Microsoft continues to invest heavily in Dynamics AX, and it shows at the user interface, financials, projects module, global support and cloud performance running on Microsoft Azure. Microsoft has had its ups and downs with it global partners organization and has turned this into a strength that is now delivering solutions across its core verticals of including distribution, manufacturing, retailing and professional services. Microsoft’s AX development team has made Accounts Receivable (AR) agile in managing multi-site focused, which has long been a request from larger customers. Also, the tight integration with other Microsoft products is a core strength of the AX architecture and supported workflows. Weaknesses include report writing tools that could be more intuitive and better bank reconciliation workflows. Additionally, AX doesn’t have a robust product configurator but relies on a world-class series of partners for this functionality. The bottom line is the Microsoft Dynamics AX is one of the best cloud ERP applications available today for companies competing in the industries they serve.
One of the original Cloud ERP solutions, NetSuite helped create the category by using agile development methodologies to release new updates quickly and compete successfully against legacy ERP vendors. To their credit, NetSuite continues to win deals, replace legacy ERP systems, and at a minimum integrate to them using a two-tier ERP strategy. Strengths include easy of customization, availability for any Web-enabled device, anywhere, search, and e-commerce. Weaknesses include how slow the app and interface can be at times according to frequent users of the system, document workflows, multisite manufacturing support, lack of product configuration options, and lack of reporting flexibility. The bottom line is that NetSuite is aiming at 14 vertical markets and excels in a core set that includes retail, fashion & apparel, internet & software companies and wholesale distribution.
Originally founded to meet the needs of automotive suppliers in the upper Midwest, Plex Systems is quickly becoming a global force in cloud ERP systems. Their depth of expertise in automotive manufacturing, food & beverage, aerospace & defense and other lean manufacturing industries is impressive. The company’s deep expertise in core manufacturing-based areas of ERP is reflected in the high renewals rate attained each year with their customers. Core expertise areas include Consolidate to Report, Design to Make, Order to Cash, Plan to Produce, Procure to Pay, and Reconcile to Report. The latest new products introduced include new supply chain planning solutions that include Plex Master Scheduling, Plex Sales & Operations Planning, and Plex Distribution Planning. Plex is also leaders in delivering two-tier ERP systems to many of the leading industrial manufacturers globally who integrate Plex applications to their legacy ERP systems. The weaknesses Plex faces include scaling out their engineering team to manage the exponential growth of customer requests for new functionality, global scale-out to support new countries they are just moving into, and the need to also scale out professional services to manage new accounts and their unique customization needs. The bottom line is that if you are a manufacturer that competes in their core verticals, be sure to consider them.
Rootstock was launched in 2008 and has established itself as one of the leading Cloud ERP providers for manufacturing, distribution and supply chain. The company operates throughout North America, Europe and Asia Pacific. Built entirely on the Salesforce.com Force platform, all of Rootstock’s applications are available on the Salesforce.com AppExchange. In the nine years the company has been in business, six core areas of manufacturing have emerged as their core strengths which are now reflected in their application strategies. These areas include the following: Build To Order ERP, Build To Stock ERP, Engineer To Order ERP, Configure TO Order ERP, Project-Based ERP and Hybrid ERP. They are clearly one of the Cloud ERP leaders for manufacturing on the Salesforce.com Force platform.
Rootstock is successfully deploying monthly updates to all their Cloud ERP customers today. These updates include application fixes, bug patches, and enhancements. Rootstock also has a partnership with FinancialForce.com that provides shared customers with a Cloud ERP system that can scale across accounting, financial and manufacturing requirements. Rootstock is also known to excel in job-shop environments where build-to-order requirements are commonplace.