TEC Research Shows Manufacturers Still Biggest ERP Shoppers

Since the 2008 economic crisis hit, many firms have been forced to cut back in order to keep their businesses afloat. Enterprise software spending is one area where cutbacks have been most noticeable. But now that the global economy is starting to rebound and information technology (IT) budgets are unfreezing, companies are evaluating upgrade or replacement enterprise resource planning (ERP) systems with added functionality to support their changing business needs.

So which sector is showing the greatest interest in evaluating ERP solutions? Find out after the jump.

Of nearly 4,500 ERP evaluation projects conducted by Technology Evaluation Centers (TEC) between October, 2011, and March, 2012, in TEC’s online Evaluation Centers, manufacturing companies were in the top spot, with 28% of projects (See Figure 1). This data is based on evaluation projects from firms with annual revenues averaging between $51 and $250 million (USD), and ERP software selection budgets averaging between $250,001 and $500,000 (USD).

Figure 1. Top 10 Industries Evaluating Enterprise Software, October 2011–March 2012 (Click to expand)

These findings aren’t surprising. Not only are manufacturing firms the traditional sweet spot for ERP vendors, but manufacturing was one of the hardest-hit sectors during the global economic downturn. Now that an economic recovery seems to have begun in earnest, manufacturers are looking for software solutions to help them stay efficient even as they take on new challenges.

Figure 2 shows the top ERP features and functions that manufacturers requested in TEC’s Evaluation Centers. Financials and accounting is, not surprisingly, in first place. This is a core part of ERP functionality, and manufacturers seeking to improve efficiency are no doubt looking for better ways to manage and track accurate information about their current and projected financial activities.

The rest of the top five—purchasing management, inventory management, advanced planning and scheduling (APS), and sales and order management—speak to manufacturers’ needs to accommodate a broader spectrum of activities, such as managing larger and more sophisticated orders and supporting multiple facilities for inventory planning and costing.


Figure 2. Top 10 ERP Functional Priorities Requested by Manufacturing Firms (as a percentage of all projects), October 2011–March 2012 (Click to expand)

ERP software vendors have responded by developing systems that deliver the functionality that helps manufacturers manage their changing needs effectively. For example, over the past few years, ERP vendors have launched a number of hybrid and software-as-a-service (SaaS) offerings specifically targeting the manufacturing industry. These solutions provide companies with attractive subscription models that enable their users to access ERP functionality on demand, and better control upfront IT costs that have traditionally been a burden particularly for small and medium sized manufacturing firms.

Watch for more TEC reports as we continue to track trends in the enterprise software market.
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