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Cloud ERP: 2015 will be a Turning Point for SaaS ERP
ERP software has been a straggler when it comes to moving to the cloud. The complexity of ERP software, the worries of cloud security and performance, and the many existing integrations with on-premise ERP systems are factors that have held back businesses from moving to the cloud. But 2015 looks like a turning point for cloud ERP software. PwC predicts that on-premise ERP system will decline another 30 percent by 2016 while cloud ERP sales are growing rapidly.
The top five characteristics that users are looking for in their new ERP systems are from a 2014 Epicor survey:
- Fast to achieve good ROI
- Simple for all users
- Enables collaboration with customers, suppliers and employees
- Enables mobile access
- Provides options for on-premise, cloud and hybrid deployments
Traditional ERP vendors like SAP and Oracle are moving aggressively to provide cloud options and hold onto their existing customers. Newer vendors, primarily cloud-based, include Workday, SalesForce, and NetSuite.
Oracle, for example,recently announced that to date they’ve signed up 600 cloud ERP customers, 250 just in the last quarter. For Oracle, ERP revenues are now growing faster than 80 percent.
Similarly, SAP is pushing cloud ERP, recently releasing a new version of their SAP suite called S4 Hana. Bill McDermott, CEO of SAP, said that SAP cloud revenue grew 45 percent in 2014 and that they are targeting 30 percent annual cloud growth over the next five years. 2018 is expected to be the year where SAP cloud surpasses revenues from SAP on-premise.
Doug Henschen, Executive Editor of InformationWeek, quoted Erik Johnson, vice president of technical strategy at Epicor, as saying that “where you also see demand for cloud increasing is at the bottom of the market, where you see small shops that don’t want to run infrastructure, and at the top of the market, where multinationals are buying plants and companies and want to get them up and running in the cloud. In the latter scenario, it’s a two-step ERP deployment with corporate most likely running SAP. The ‘grand middle’ tends toward on-premise or hybrid deployments because they’re used to buying on capex terms, they have infrastructure and IT in place, and they have a ton of integrations.”
