September 23, 1998 Market Analysis ERP Market Could Reach $52 Billion by 2002 The enterprise resource planning (ERP) software market could see an annual growth rate of 37% over the next five years. So says AMR Research (Boston, Mass.; www.advmfg.com), a market analysis firm specializing in enterprise applications and enabling technologies. According to AMR Research, total company revenue will top $52 billion by the year 2002. This conclusion is in marked contrast to other forecasters who believe that ERP demand has been artificially stimulated by Year 2000 concerns. "Given the time it takes to select and implement these major systems, companies have already passed the Y2K deadline," said Tony Friscia, president of AMR Research. "We believe that most Global 1000 firms are well advanced in their ERP deployments and will now seek to extend ERP and related applications throughout their global supply chains." AMR Research attributes the continued growth to three primary factors: ERP vendors are continuing to expand market presence by offering new applications such as supply chain management, sales force automation, customer support, and human resources. To sustain their rapid growth, ERP vendors will look to sell more licenses into their installed base. Currently ERP vendors have a 10-20% penetration (i.e., percentage of total employees currently using the ERP system). This will grow to 40-60% within the next five years. While ERP originated in the manufacturing market, ERP usage has spread to nearly every type of enterprise including retail, utilities, the public sector and healthcare organizations. Most will purchase new ERP systems over the next five years, often for the first time. AMR Research predicts that the ERP market will reach $14.8 billion in total company revenue in 1998. In addition, when third party services, hardware, databases and networking are considered, AMR Research estimates that the ERP infrastructure is worth over $42 billion. This market will continue to be one of the largest, fastest growing and most influential in the applications industry, and is poised for steady growth into the new millenium. The Manufacturing Report © Copyright 1997, 1998 by Lionheart Publishing, Inc. All rights reserved. E-mail Editorial Dept: tmr-editorial@lionhrtpub.com Lionheart Publishing, Inc. 2555 Cumberland Parkway, Suite 299, Atlanta, GA 30339 USA Phone: 770-431-0867 | Fax: 770-432-696 E-mail: lpi@lionhrtpub.com Web Design by Premier Web Designs E-mail: lionwebmaster@preweb.com