Market Share Analysis: ERP Software,

Worldwide, 2018
Published: 9 May 2019 ID: G00390945

Analyst(s): Chris Pang, Robert Anderson, John Kostoulas

The ERP software market saw an annual growth of 10% to become a $35
billion market in 2018. The continued transition toward digital business, the
maturing of SaaS applications and purchases of new ERP versions drove
end-user spending in ERP.

Key Market Findings

■ Market growth was healthy and steady. Spending was characterized by end-user organizations
making incremental ERP investments rather than “big bang,” single-vendor, full ERP suite
projects.
■ Administrative ERP (financial management systems and human capital management) grew 11%
— nearly twice as fast as operational ERP (manufacturing and operations and enterprise asset
management) at 6% annual growth.
■ ERP is fragmented compared to other mature software segments, with the top three vendors
combined holding no more than 40% market share, and the top five holding 51% market share.

Vendor Performance Highlights

■ SAP and Oracle retained their respective No. 1 and No. 2 market share positions with little
change in the overall market share.
■ Workday is the first cloud-native provider to break into the top three for vendor revenue market
share.
■ Kronos broke the billion-dollar mark in software revenue and retained its No. 7 position.

Market Share Data

Gartner’s definition of enterprise resource planning (ERP) software broadly includes the categories
of:
 ■ Administrative ERP, which includes financial management system (FMS) software and human
capital management (HCM) software
■ Operational ERP, which includes manufacturing and operations software and enterprise asset
management (EAM) software

These technologies can be purchased separately, in different combinations or as a complete suite.

Figure 1 shows the 2018 revenue for the top five vendors in the ERP software market.

Figure 1. Top Five ERP Software Vendor Revenue, Worldwide, 2018

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 Table 1 shows the top 10 ERP software vendors worldwide, ranked by total software revenue in
2018. The combined revenue contribution of the top 10 vendors in 2018 was about 63%; this was
consistent with previous year.

Table 1. Ranking of Top 10 ERP Software Vendors by Revenue, Worldwide, 2018 (Millions of Dollars)

2017 Rank 2018 Rank Vendor 2017 Revenue 2018 Revenue 2017-2018 2018 Market
Growth Share

1 1 SAP 7,072 7,709 9% 22%

2 2 Oracle 3,715 3,901 5% 11%

4 3 Workday 1,746 2,325 33% 7%

3 4 Sage 1,869 2,048 10% 6%

5 5 Infor 1,639 1,720 5% 5%

6 6 Microsoft 1,179 1,261 7% 4%

7 7 Kronos 947 1,019 8% 3%

8 8 Ultimate 802 997 24% 3%

Software

9 9 Visma 724 783 8% 2%

10 10 Yonyou 526 628 19% 2%

Other Vendors 11,968 13,061 9% 37%

Total 32,186 35,451 10% 100%

Notes: Numbers may not add to totals shown because of rounding.

Source: Gartner (May 2019)

Table 2 shows the growth of administrative ERP versus operational ERP during 2018.

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 Table 2. Administrative and Operational ERP, Worldwide, 2017-2018 (Millions of U.S. Dollars)

2017 Revenue 2018 Revenue 2017 Market 2018 Market Growth 2018
Share Share Year

Enterprise Asset 1,547 1,599 5% 5% 3%

Management (EAM)

Manufacturing and 5,714 6,098 18% 17% 7%

Operations

Operational ERP Total 7,261 7,696 23% 22% 6%

Financial Management 12,321 13,301 38% 38% 8%

Systems (FMS)

Human Capital 12,604 14,454 39% 41% 15%

Management (HCM)

Administrative ERP Total 24,925 27,755 77% 78% 11%

ERP Market Total 32,186 35,451 100% 100% 10%

Notes: Numbers may not add to totals shown because of rounding.

Source: Gartner (May 2019)

Overall Market Segment Performance Analysis

The ERP software market grew 10% to a global market value of $35 billion in 2018 (see “Market
Share: Enterprise Resource Planning, Worldwide, 2018”). Market growth was healthy and steady
rather than explosive because there was no major “burning platform” to promote significant and
marketwide end-user spend on ERP. Growth was driven through a combination of reasons,
including the ones listed below.

Digital Business Initiatives Trigger New ERP Investments

While not a new trend, end-user organizations continue to embrace digital business strategies.
Digital business changes the way an organization deals with customers, suppliers, partners, internal
processes, and employee engagement — all of which are supported by ERP, thus driving ERP
upgrades and/or replacements. Today, most organizations are taking a postmodern ERP approach
where investments are targeted on specific workloads, such as financial management, HR, or
manufacturing and operations, rather than a big bang, single-vendor, full suite initiative. This
certainly drove spend in new ERP solutions, but it did not result in explosive growth due to the
absence of a burning platform such as Y2K or the sunset of a major application.

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 Multicloud ERP Options Help Move Reluctant Customers
All the major non-cloud-native ERP providers are on multiyear journeys of moving customers to
their latest-generation ERP platforms. In many cases, these platforms are deployed via a multitenant
SaaS model. But some providers offer more flexibility through private cloud, deployment in third-
party cloud providers or even on-premises. Previously, most providers deliberately limited additional
deployment options due to the economics and complexity of doing so. But with the rise of third-
party infrastructure as a service (IaaS) offerings, this is less of an issue. ERP providers are now able
to sell to organizations that could not — or preferred not — to use multitenant SaaS ERP offerings
due to regulatory or cultural constraints.

Slow but Incremental Move to Latest Version ERP

Many of the leading non-cloud-native providers have had general availability of their next-
generation ERP applications for a number of years. But getting mainstream adoption and building
the reputation of a new product/version takes time because customers will have their own time
frames and business cases for a new or upgraded ERP. Likewise, there are still questions around
the depth of functionality in new platforms versus old platforms — especially in operational ERP.

In general, for non-cloud-native providers, live customers on new platforms (compared to previous
generation products) remain small. But the revenue impact is already hitting the top line because
customers are buying and subscribing to these new platforms and are in varying stages of rollout.

Emerging Technologies Indirectly Influence New Spend

Within the ERP market, very few providers can “sell” artificial intelligence (AI), the Internet of Things
(IoT), blockchain, augmented reality or other emerging technologies as a stand-alone SKU. Instead,
emerging technologies are being made available as an integral feature or an integration hook is
made available and/or published to make it easier to interface with third parties. Hence, the direct
revenue impact of emerging technologies is low, but it is an incentive for customers to purchase
new versions/platforms because new technologies are deliberately not made available for legacy
products.

Focus and Specialization Are Key to Growth

ERP is an established and mature software market with a history going back four decades, yet no
provider is truly dominant. SAP, for example, is the market share leader with 22% of the market, but
that still leaves 78% of the market to other providers. In the small and midsize market, the vendor
landscape remains incredibly fragmented. All major providers have increased their market
opportunity through mergers and acquisitions and new product development, but a wide portfolio
offering does not always lead to the most growth. Customers want a product that is “right” for their
requirements and a vendor they feel comfortable doing business with. This means that even in a
mature market like ERP, there is still abundant opportunity. This is demonstrated by the fact that
providers with the highest growth tended to be specialists in a particular domain, industry and/or
geographical coverage (see Table 1).

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 Packaging and Pricing Creativity Helps Drive Additional Revenue
All major ERP providers have teams dedicated to pricing and packaging strategies. They have to
walk a fine line of revenue optimization without appearing to be greedy. As the transition to cloud
continues, some “old” ways of finding additional revenue, such as software usage audits, remain.
But new ways are coming to light as well. This all helps to drive incremental revenue for providers.
Recent examples we have seen include:

■ Indirect usage licensing for robotic process automation (RPA) use cases; previously we saw this
mostly in connection with data extraction and consumption by third-party application providers.
■ Limited advisory/vendor consultation sold as a premium customer support subscription rather
than as a professional service.
■ Expanded user license types that enable providers to sell licenses for more of their clients’ user
base than before.
■ Additional capabilities (such as additional storage, sandbox systems, API support) that increase
the annual contract value.

Top Vendors Analyzed

SAP
SAP grew ERP software revenue by 9% (7% in home currency). SAP comfortably remains the
largest vendor with almost double the market share of the next nearest contender. SAP is
deliberately transitioning its revenue mix to being cloud-heavy instead of being dominated by
traditional license and maintenance.

During 2018, SAP further refined its vision of the Intelligent Enterprise (a future based on event-
driven, real-time business applications) to encourage more adoption of SAP S/4HANA. SAP’s vision
is designed to encourage customers to reimagine the experience which they give to their
customers, improve their internal productivity, increase innovation capacity and creating and
sustaining an engaged workforce.

To this end, SAP is still early in its journey of S/4HANA adoption (see “SAP S/4HANA Research
Roundup”). At the close of 2018, we estimate around 10,500 in total customers had licensed it, and
approximately 2,600 were in production. From the existing SAP ERP installed base, SAP continued
to make progress. Gartner estimates about 17% of the base have acquired the licenses and about
4% are in production on the platform. Overall while the percentage of customers in production
remained low, the product license switch to SAP S/4HANA did contribute significant revenue in
2018. Other ERP product lines such as SAP Business One (for small and midsize businesses) also
performed well, with around 6,000 new customers joining and a year-end customer count of 65,000.

From a cloud portfolio perspective, SAP Business ByDesign also saw continued momentum, as did
SAP Concur. SAP SuccessFactors is another key pillar within SAP’s cloud product strategy, which
finished 2018 with close to 3,000 Employee Central customers (over 30% growth). However, there

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 remains a sizable opportunity for more customers to migrate from the SAP’s existing on-premises-
based HCM offering to SAP SuccessFactors in the coming years.

Oracle
Oracle maintained its No. 2 position in 2018, driven by a 5% annual growth rate and maintaining
11% revenue share of the overall ERP market. It finished the year with 6,000+ Oracle ERP Cloud
customers, with approximately 60% of customers net new to Oracle. Gartner estimates that 27% of
Oracle ERP Cloud customers also bought HCM Cloud, which has been a successful driver for
growth. In core financials, ERP Cloud was bolstered by new subscription and revenue management
features and the introduction of an Accounting Hub as a gateway to financial reporting.

NetSuite, Oracle’s cloud-native ERP for small and midsize enterprises, ended the year with 16,000+
customers and an ERP revenue growth rate of 25%. Sales momentum and productivity in 2018 was
helped by its investment in SuiteSuccess. SuiteSuccess is an implementation and onboarding
approach aimed at helping customers be in production within 45 days and giving them an active
roadmap for future value delivery. NetSuite also introduced Oracle NetSuite Planning and Budgeting
to provide additional capabilities, as well as additional sales presence in Europe.

Workday
Workday ascended to the No. 3 position, driven by another strong year of sales with 33% growth in
software revenue for 2018. Workday as a cloud-native provider competes in the administrative ERP
areas of FMS and HCM. It finished the fiscal year with a customer count of 2,600+ HCM customers,
650+ financial management customers and a user count of 35 million. While Workday’s HCM
customer count is not the highest of the big three, its strategy of targeting large global customers
with its suite-based approach is working well. Key attributes that helped Workday win include the
continual evolution of its cloud-native architecture, a largely organic approach to development, and
its focus on customer satisfaction.

In 2018, Workday executed its largest acquisition to date by acquiring Adaptive Insights to improve
and accelerate its capabilities for integrated business planning. Adaptive Insights continued to be
sold as a stand-alone offering, adding another 200 customers following its acquisition. Other
significant actions in 2018 included early adopter availability of platform as a service (PaaS), and
Workday being delivered via Amazon Web Services (AWS) for customers needing data residency in
Canada and Germany. These and other enhancements allowed Workday to better compete against
larger competitors with already released platform extension capabilities and more extensive data
center operations.

Sage
Sage slipped to No. 4 in 2018 despite a 10% increase in ERP software revenue (6% in home
currency). Like many established ERP providers, Sage is transitioning its business to be more
cloud-revenue-heavy through a combination of acquiring native cloud products and cloud-enabling
selective products within its existing portfolio.

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 Sage’s native cloud business was helped in 2018 through having a full year of revenue contribution
from Intacct (cloud financial management), which was acquired in 2017. Sage Intacct was mainly
sold to the U.S. market, but toward the end of the year, Sage announced that the U.K. and
Australian markets would follow shortly. A significant driver of growth in 2018 has been Sage’s
cloud-connected products, where Sage 50 and Sage 200 desktop customers moved to
subscription contracts with cloud-connected functionality (thus increasing subscription revenue).
Sage Enterprise Management (Sage’s midmarket ERP suite) grew revenue by 11% through a strong
push for adding more customers with larger contract values. At year end, Sage added more than 70
new customer contracts worth more than £100,000 in software revenue.

Infor
Infor maintained its No. 5 position in 2018, underpinned by a 5% year-over-year growth rate. During
2018, Infor increased efforts on branding itself as a cloud ERP company, which it led with sales
motions tied to its CloudSuite solutions that are capable of running on multitenant AWS. By the end
of 2018, 70% of its sales revenue was subscription-based.

During the past year, Infor expanded its presence in healthcare, manufacturing, retail and the public
sector markets while increasingly differentiating itself on delivering last-mile vertical and
microvertical solutions. In other activities, Infor continued to enhance its Infor OS cloud operating
platform, including the ION messaging bus, the XML-based business object document integration
layer, the Ming.le user interface, and additional support for Amazon Web Services’ JSON-based
APIs.

Other Notable Vendors

Kronos
Kronos is an HCM software provider with a deep history and focus on workforce management
functionality. Kronos grew software revenue by 8% to more than $1 billion in 2018 and maintained
its No. 7 market share ranking. In doing so, Kronos joins the “billion dollar” club, in which the top
seven providers generate more than $1 billion in total software revenue annually (Kronos generated
total company revenue more than $1.4 billion).

Primary revenue drivers include continued sales momentum from Workforce Ready (a cloud-native
HCM and talent suite for small and midsize businesses) and adoption of Workforce Dimensions.
Workforce Dimensions is a recently released cloud-native workforce management suite and the
eventual successor to Kronos’ Workforce Central product. Kronos also generated new revenue from
the migration of on-premises license and maintenance customers to cloud licensing and
deployment options. While newer cloud-native products get most of the publicity, Kronos also
generated a substantial amount of maintenance revenue from a loyal installed base of Workforce
Central and other solutions within its portfolio.

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 Ultimate Software
Ultimate Software (Ultimate) is an HCM SaaS provider with almost a billion dollars in total software
revenue ($997.1 million), which represented a 24% increase in annual revenue. Ultimate continued
its customer acquisition focus on North America-based midsize and enterprise organizations, with
its customer base growing to more than 5,600 organizations and the number of people records in
the cloud expanded to more than 48 million. Ultimate maintained its customer retention rate of 96%
(same as 2017), which made it easier to grow top-line revenue.

In 2018, Ultimate grew its international operations by acquiring PeopleDoc, a key player in cloud-
based HR service delivery with offices in England, France, Germany, and the United States, and
more than 1,000 customers with users in 180 countries. Similar to 2017, Ultimate received a number
of awards for its culture, diversity and services, which helped to underline Ultimate’s image as a
positive and customer-friendly organization to do business with.

Mergers and Acquisitions

The following details some of the merger and acquisition activity that occurred in 2018 that impacts
the ERP software market. Note this is not an exhaustive list. Some acquisitions made by providers
in the ERP market have not been listed if the acquired assets are considered additive to areas other
than ERP.

■ Certify acquired Captio.

■ Cornerstone OnDemand acquired Grovo Learning and Workpop.
■ Infor acquired Vivonet.
■ Oracle acquired Iridize and DataScience.com.
■ Saba Software acquired Lumesse.
■ SAP acquired Recast.AI, Coresystems, Callidus Software and Contextor.
■ Ultimate Software acquired PeopleDoc.
■ Workday acquired Adaptive Insights, Rallyteam, SkipFlag and Stories.bi.
■ Visma acquired Raet.

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.

“Market Share: Enterprise Resource Planning, Worldwide, 2018”

“Market Share: All Software Markets, Worldwide, 2018”

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 “Market Definitions and Methodology: Software”

“Invest Implications: ‘Market Share: All Software Markets, Worldwide, 2018’”

Evidence
Gartner’s market statistics methodology combines primary and secondary sources to produce
Market Statistics documents. Gartner surveys all major participants within the industry in the Asia/
Pacific region, EMEA, Japan, North America and Latin America. This primary research is
supplemented with additional research to verify market size, shipment totals and pricing
information. Sources of data used by Gartner include, but are not limited to, the following:

■ Interviews with manufacturers, distributors and resellers

■ Information published by major industry participants
■ Published company financial reports
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■ Government data or trade association data
■ Published product literature and price lists
■ Relevant economic data
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between data and numbers provided by Gartner and those provided by other research
organizations.

Gartner publishes all market share research in U.S. dollars. Our methodology converts the income
statements of non-U.S. vendors into U.S. dollars using the exchange rates provided in “Market
Share: All Software Markets, Worldwide, 2018.” Consequently, the reported growth rates and
market share for non-U.S. vendors in this report reflect a combination of actual native-currency
performance and the movement of other currencies versus the U.S. dollar. Historical quarterly and
annual exchange rates are calculated from appropriate averages of monthly exchange rates
reported by the Federal Reserve Bank of New York and the Pacific Exchange Rate Service.

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 Additional Notes

Non-U.S.-headquartered vendors generally base and judge their annual performance in their home
currency rather the U.S. dollar. But for the purposes of comparison Gartner uses the U.S. dollar.
Gartner collects market share data for individual vendors in the vendor’s local currency. Data
reported in currencies other than the U.S. dollar is converted to U.S. dollars for the purposes of
cross-country comparisons and aggregation using average exchange rates. The impact of the
exchange rate changes can include the following:

■ Vendor growth measured in U.S. dollars may differ from the vendor growth measured in the
currency in which the vendor reports.
■ Occasionally, exchanges rate changes may have an influence on the market share positions,
where one vendor gets a beneficial effect of the exchange rate changes and another suffers an
adverse effect.
■ Changes in exchanges rates for the current year compared with the prior year mean that, when
measured in U.S. dollars, growth rates for revenue accrued in a foreign currency differ from
growth rates that are shown in U.S. dollars.

Individual Vendor Revenue Reporting

As a result of ASC606/IFRS15 adoption, which varies from vendor to vendor, Gartner has opted not
to restate financial history at the individual vendor level regardless of the method the vendor has
chosen to adopt.

We believe our approach to each vendor is the most equitable way to handle the anomalies
resulting from this industrywide change in revenue recognition standards.

Total Market Growth Reporting

We have made adjustments such that overall market growth trends are still reflected accurately.

More details regarding this approach will be detailed in the upcoming Market Definitions and
Methodology Guides for each market.

This document is published in the following Market Insights:

Software Applications Worldwide

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