By: Eric Kimberling
The ERP market is in great flux as 2018 winds down, positioning some ERPs in unaccustomed positions as market leaders.
A number of emerging trends herald an exciting year for the ERP market and companies’ digital transformations. First and foremost, I believe there will be a shakeup in the ranks of ERP systems, as reflected in our new list of what we consider to be the top five systems for 2019.
This year’s ranking, with some new players included and some traditional incumbents missing, underscores the constantly changing nature of the ERP software industry.
The ranking takes into account: market share; ease of implementation; maturity, flexibility, and scalability of solutions; ease of integration to third-party systems; ease of organizational change management and training; strength of vendor ecosystem; and average time to benefits realization.
#5: Salesforce. Long considered a leading customer relationship management system (CRM), Salesforce is slowly becoming a legitimate top ERP system. Financial Force and its ecosystem of integrated third-party applications has allowed Salesforce to address the broad needs outside CRM functionality.
The fact that Salesforce was built natively in the cloud is another strength. While other ERP vendors are scrambling to move legacy applications into the cloud, Salesforce is constantly upgrading its relatively mature cloud solution. It’s flexibility and ease of implementation are two key strengths.
#4: Workday. Another natively build cloud application, Workday has evolved from a human capital management (HCM) system to a full-fledged ERP system. We see more organizations adopting Workday not only for human resource functions, but also for financial, accounting, and other ERP functions.
The company has made tremendous strides in functionality and market share in recent years. It has also moved upstream in the industry by penetrating the upper mid-market and even some larger enterprises. Its flexible product, ease of integration, and expanding ecosystem give Workday momentum heading into the new year.
#3: NetSuite. The Oracle-owned company was the pioneer of cloud ERP. Unlike Salesforce and Workday, NetSuite has always focused on addressing broader ERP functionality, including financials, inventory management, CRM, HCM, and light manufacturing.
A decade ago, NetSuite was a good option primarily for small and some mid-size companies. While that’s still the case, we are seeing more demonstrated scale of the product at upper-mid-market and larger organizations. It continues to broaden and deepen its functionality to meet the needs of manufacturing, project management, forecasting, and other advanced functions traditionally limited to the bigger ERP systems.
#2: SAP S/4HANA. This system has a large market share, especially among Fortune 1000 companies. While the product is relatively immature as the company continues to migrate functionality from its ERP Central Component and other legacy SAP products, it continues to be a de facto option for large organizations that want to scale and standardize.
Relative to other options in the market, the system’s framework offers the potential to provide better real-time analytics, machine learning, and artificial intelligence. The biggest things holding it back from the #1 spot? The system is often overkill for smaller and mid-size organizations, and SAP failures such as Lidl continue to cast a dark shadow.
#1: Microsoft Dynamics 365. A few years ago, the Microsoft Dynamics product roadmap and ecosystem were a mess. Choosing between Great Plains, Navision, Axapta, and other options was very confusing — even for resellers and system integrators.
With the Dynamics 365 platform, however, Microsoft finally has a cohesive cloud ERP strategy. Though the product lacks the maturity of NetSuite and other native cloud ERP offerings, it is a very flexible and scalable solution with relatively easy integration to third-party systems. Organizations large and small are quickly adapting the platform.
The offering’s biggest weaknesses are the fragmented and loosely managed ecosystem, relative immaturity of the cloud solution, and flexibility that can be a curse during a transformation. Large companies looking to standardize operations or move to a centralized shared services model may not find the product to be a good fit.
There are a lot of good ERP systems in the market, so it was hard to narrow the above list to just five options. Here are a few others that scored well and the specific niches and industries for which they’re an especially good fit:
- Infor: retail, distribution, and manufacturing
- Epicor: small to mid-size manufacturing, distribution, and retail
- IQMS: mid-market manufacturing and distribution
- Deltek: project-based environments such as aerospace, defense, government, and professional services
- Ariba: supply chain management
- SAP SuccessFactors: the HCM space
- Plex: the automotive industry
You may have noticed that we did not include Oracle’s Cloud ERP and eBusiness Suite products among the top systems. Oracle generally ranks second in overall ERP market share, so it’s reasonable to assume that one of those products might be somewhere near the top.
Oracle has some great products, including the two mentioned above. We even pointed out some of the product strengths in our recent technology-agnostic comparison of Oracle Cloud, SAP S/4HANA, and Microsoft Dynamics 365.
But there are reasons why Oracle’s legacy flagship products didn’t place within our top five.
First, NetSuite — which Oracle acquired in 2016 — has more traction in the market than either Oracle Cloud or eBusiness Suite.
Since Oracle began shifting focus from eBusiness Suite to Oracle Cloud ERP, we have seen a dramatic decrease in companies expressing interest in acquiring or implementing the solution. While there are certainly successful Oracle Cloud ERP implementations, it seems the product is off to a slower start than was the case for eBusiness Suite and other Oracle products of years past.
Oracle has a very large installed base of companies using eBusiness Suite, PeopleSoft, JD Edwards, and other legacy Oracle products. R&D dollars will continue to be diverted from them to the flagship cloud solution.
The legacy base has in some ways slowed the product suite’s migration to the cloud. So far, much of the robust functionality of these legacy products — which took decades to build — has migrated to the cloud relatively slowly.
However, things could change a lot by a year from now. Oracle could make significant progress migrating legacy on-premise application functionality to its cloud offering. The stability of the top digital-transformation providers is at an all-time low; a lot is in flux right now.
Having heard all of the above, you should most prominently consider business and the technology that fits your business model going forward in your ERP evaluation and selection process.