2019

ERP Software
Report

2019 ERP software project report 1

All information held within this report is provided under Creative

Commons BY-ND license allowing use of the work with attribution

and no derivatives. To use the data from this report you must attribute

to Software Path (https://softwarepath.com) directly.

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01

Planning

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Timeframe for selecting ERP

The timeframe for selecting ERP increases as the company size

grows. A potential reason for this increase is that larger businesses

will have a larger number of stakeholders to consult during their

selection project.

On average, companies spend 22

weeks selecting ERP

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Percentage of employees using ERP

The data shows that smaller companies have a higher percentage of

employees actively using their ERP system than larger companies.

On average, 37% of employees use

a company's ERP system

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Percentage of employees using ERP by industry

Distribution and retail industries have the highest percentage

of employees using their ERP system, followed closely by the

manufacturing industry. Common requirements among all three

industries are the need for traceability of incoming and outgoing

goods, robust transaction reporting, and ability to manage a large

workforce to accommodate goods or services required.

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Percentage of companies using ERP

Companies with over 250 employees are most likely to be replacing

an existing ERP system, whereas small companies (with below 49

employees) are likely to be selecting an ERP system for the first time.

42% of companies purchasing ERP

are replacing an existing system

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02

Requirements

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Reason for implementing ERP

The leading reason for implementing ERP across businesses of all

sizes is to increase efficiency, similarly, many companies aim to gain

greater functionality by implementing a new system. Although the

second most popular reason is replacing outdated systems, less

than 4% of businesses are looking to implement a new ERP due to

poor support from their current vendor.

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Reasons for implementing ERP by company size

0-49 employees

• Increase efficiency 28.6%

• Greater functionality 25.5%

• Replace outdated legacy system 20.2%

50-249 employees

• Replace outdated legacy 34.9%

• Greater functionality 22.2%

• Consolidate disparate systems 18.8%

250+ employees

• Consolidate disparate systems 33.8%

• Replace outdated legacy 25.0%

• Integrate global operations 20.6%

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Hosting preferences by company size

6.5%

● Cloud ● No preference ● On-premise

Cloud ERP is the most popular deployment method across businesses

of all sizes, with on-premise ERP being the preferred hosting in less

than 10% of all businesses. The rise of mobility and BYOD could

account for the stronger preferences for a cloud ERP solution that is

accessible anytime, anywhere.

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Hosting preferences by industry

Companies in the manufacturing industry have the highest percentage

of on-premise hosting preference across all industries. The majority

of industries prefer a cloud-based system or have no preference as

to the hosting method provided.

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03

Budgets

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All budget data was gathered from projects as a projected total

cost of ownership for the new system over five years. Budget data

is presented as a budget per user to enable comparison between

companies of different sizes.

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Budget per user ($) by company size

Mid-sized companies, on average, have a higher budget per user.

Although mid and larger sized companies have similar reasons

for implementing ERP, such as consolidating disparate systems,

mid-sized companies have a greater spend per user whilst larger

companies benefit from economies of scale, in areas such as training

and implementation, causing their cost per user to be lower in

comparison.

The average budget per user for

ERP software is $7,200

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Budget per user ($) by hosting preference

Businesses looking to implement an on-premise ERP solution typically

have a larger budget per user than those looking at cloud-hosted

solutions. A possible reason for this is on-premise ERPs typically

follow a licensing pricing model, with one large upfront payment for

the system and the first year of support from the vendor, meaning

the initial outlay for the system is higher than cloud-hosted systems.

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Budget per user ($) by current ERP setup

The average spend per user is higher for companies already using

ERP. The earlier data showing that mid-sized and larger companies

are more likely to be replacing an existing system could explain this

difference as these companies will have increased costs for data

migration and change management. In contrast, companies who

have not previously used ERP may not be as acutely aware of the

hidden lifecycle costs involved in the implementation and may not

have factored these into their existing budget.

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04

Appendices

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Appendix A: Sample demographics

Sample geography

Territory Percentage

Africa 2.1%

Asia 0.2%

Europe 14.8%

Middle East 1.4%

North America 81.4%

South America 0.1%

Unknown 0.1%

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Appendix A: Sample demographics

Sample industry

Industry Percentage

Construction 4.0%

Distribution 14.1%

Manufacturing 51.6%

Other 5.2%

Retail 6.3%

Services 18.9%

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Appendix A: Sample demographics

Sample company sizes

Employees Percentage

0-49 33.6%

50-249 36.2%

250+ 29.8%

Unknown 0.4%

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Appendix B: Notes on methodology

Data gathering

Data was gathered directly from users of the Software Path website

or partner websites. All data was gathered from active software

selection projects between February 2018 - January 2019 unless

otherwise specified in the methodology. The total sample size used

for analysis was 1,646 although subsets of this may have been used

where data coverage was lower.

Budget data was gathered from active software selection projects

as a projected five-year spend on the software. This data was then

transformed to “budget per user” based on software user numbers

gathered in the same sample. Budget data was gathered between

February 2015 - January 2019.

Multivalued fields

Some projects used for analysis displayed multiple values in a single

field. Where appropriate these multivalued fields were included in

analysis for each value (i.e. one project may be recorded in analysis

of multiple values). This choice was made to best represent the

true demographics and characteristics of each project. These fields

include:

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• Reason for project

• Industry

• Platform preference (where “either” was given as a choice)

Analysis of multivalued fields in this way may give a percentage or

numeric total greater than the sample size or 100% respectively.

Averages

Averages have been used to present analysis on a number of samples,

including project timeframe and budget per user.

Analysis of project timeframe data uses the mean to present averages

due to the data being gathered in a structured range between 0-12

months.

Analysis of budget per user data uses the median to present averages

due to the data not being gathered in a structured range leaving the

mean susceptible to skew from extreme variables.

Contact us

For more information on this report including reuse of the data or

methodology queries, please contact [email protected].

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