The Big 3 are still setting themselves apart with full ERP offerings, but the competition to add AI and industry-specific capabilities is really heating up.
Back-office ERP systems are becoming more strategic as companies are looking to digitize and automate their business processes, modernize their application stacks, move to the cloud, and speed up their operations.
The ERP Vendor Landscape: IDC Insights
In its latest MarketScape report on SaaS and cloud-enabled large enterprise ERP worldwide, IDC says the pace of innovation is accelerating. According to IDC, “The pace of innovation is increasing, and ERP vendors focused on AI, ML, NLP, chatbots, RPA, and genAI are the partners to consider for the digital future. This will reset the use of ERP systems for years to come. By 2028, 85% of enterprises using intelligent applications will have evolved into autonomous organizations, redefining the technology resource usage within the business.”
Industry Differentiation
According to IDC, anchoring to ERP and extending into industry differentiation is becoming the new norm. ERP integration with other applications is changing how we interact with technology. Autonomous processes eliminate the need for extra employee clicks and decision points and change the business experience.
Choosing the Right ERP
Choosing the right ERP is critical for organizations. IDC says by mid-2024, 30% of global organizations will use human-like interfaces in their enterprise applications to get insights faster and decision velocity. By the end of 2024, 70% of the Global 2000 will prioritize reducing the time between events and decision-making to gain a competitive advantage.
ERP Vendor Selection Criteria
When choosing an ERP vendor, organizations typically navigate two dimensions: the size of the organization and the specific ERP modules required. Some vendors serve the small and medium-sized business (SMB) market, while others serve the largest global enterprises. Some vendors focus on accounting, finance, and HR aspects of ERP (e.g., Workday and Sage), while others are industry-specific for product-centric industries like manufacturing (e.g., Epicor and IFS).
genAI in ERP
All vendors agree that genAI must be embedded in their ERP systems. Some, like Microsoft with Copilot, are already ahead of the curve, while others are playing catch-up.
Market Share: The Big 3 vs. Others
In terms of market share, there is a clear split between the Big 3 (SAP, Oracle, and Microsoft) and the rest. The Big 3 want to offer the broadest ERP suites, while the smaller vendors want to differentiate themselves by offering deep insights into business processes for specific verticals.
SAP: Rebuilding for AI
SAP is a pure play and the market share leader in ERP with a huge installed base of large enterprises. The company is moving its customers from its old, rigid, on-premises ERP to S/4 HANA Cloud, a fully managed SaaS ERP solution with all the ERP modules. The company is doing this by offering deep discounts and various incentives to make it more attractive to existing customers.
Big Moves
SAP doesn’t rest on its laurels. The company has just announced a company-wide transformation program and restructuring to focus on strategic growth areas, including AI. This is SAP’s way of staying ahead of the curve and leveraging AI to enhance its offerings.
Numbers
8,000 positions will be impacted. SAP will achieve this through voluntary leave programs and internal reskilling to manage the transition and retain the talent.
Results
On April 22, SAP reported Q1 results, and they were impressive. Revenue was up 24%, and Cloud ERP Suite revenue was up 32%. Profits were up 27%. CEO Christian Klein said, “We’re off to a good start in 2024, and we will hit our targets for the year. Looking forward, we have strong growth drivers—business AI, cross-selling across our cloud portfolio, and winning new customers, especially in the midmarket.”
Klein also mentioned the strength of the cloud backlog, which is growing at a record pace, and the transformation program is on track to capture growth and increase operational efficiency.
Microsoft: genAI Integration
Why?
Gartner has recognized Microsoft as a visionary in the latest Magic Quadrant for ERP for service-centric organizations. Microsoft Dynamics 365 is a SaaS solution hosted as a managed service. One key benefit is the seamless integration of ERP with the broader Microsoft ecosystem, which includes the Azure cloud platform and applications like Power BI, Power Apps, and Dataverse. Dynamics 365 is an ERP and a CRM that can integrate across sales, marketing, and customer service functions.
Big Moves
On April 12, Microsoft announced its first price increase for Dynamics 365 in five years, reflecting the value and capabilities being added to the platform.
Numbers
17%: The per-user, per-month price increase for Dynamics 365 modules, including ERP features like supply chain management and finance.
Outlook
Microsoft Dynamics 365 has several advantages that make it attractive in the market. Depending on the organization’s needs, it can be deployed on-premises or in the cloud. It has a mobile app that users can access on the go. It integrates with the Microsoft productivity suite, which is widely used in enterprises.
Through its partnership with OpenAI, Microsoft is an early adopter of generative AI. Microsoft Copilot AI is being embedded across various applications, including the Bing search engine, Office 365, and Dynamics 365 CRM and ERP solutions. This allows customers to use generative AI across their enterprise business processes to increase efficiency and decision-making.
Oracle: The Two-Headed ERP Monster
Why?
Oracle’s unique position in the market is due to its two offerings: Oracle Fusion Cloud ERP for large enterprises and Oracle NetSuite for smaller companies. This one-two punch allows Oracle to cover a wide range of customers. Gartner has recognized Oracle Fusion Cloud ERP as a leader in the ERP space. It’s modular and configurable and can run in Oracle data centers, Oracle cloud, or on customer premises.
Big Moves
A significant strategic move for Oracle was the acquisition of Cerner in 2022, enabling the company to deliver ERP software for the healthcare market. This acquisition not only added to the portfolio but also made Oracle a major player in a market that is increasingly looking for integrated solutions.
Numbers
In its latest earnings release on March 11, Oracle announced:
$800 million: Fusion Cloud revenue is up 18% yearly.
$800 million: NetSuite revenue up 21%
These numbers show Oracle is strong and growing in both segments.
Outlook
Oracle stands out in the ERP space by being strong in both service-centric and product-centric ERP modules. While many vendors focus on accounting, finance, and HR or procurement, logistics, and supply chain, Oracle has a capabilities suite that covers both. This allows Oracle to cover the diverse needs of its customers.
Also, Oracle has made significant progress in AI, industry-specific AI capabilities that enhance its ERP offerings. With solutions for various market sizes, Oracle covers the entire spectrum from large enterprises to small businesses through Fusion Cloud and NetSuite.
Infor: Industry Solutions
Why?
Infor doesn’t shy away from competing for big accounts; it carves out a niche with industry-specific ERP solutions. What sets Infor apart is its ability to combine technology with a deep understanding of business processes across various industries, including healthcare, aerospace, and manufacturing. According to Forrester analyst Liz Herbert, “Companies that are larger generally go to Infor because they find it to be a good solution that is more affordable and a vendor that is easier to do business with than SAP or Oracle but still has credibility and proof points in large and global enterprises.”
Big Moves
On April 9, Infor launched Infor GenAI and ESG Reporting. These new offerings will help organizations use artificial intelligence to increase productivity and report on sustainability initiatives. This shows Infor is investing in the latest technology in its solutions as the demand for AI-driven insights and sustainability reporting grows.
Numbers
Infor has a large reach, with over 60,000 organizations in 175 countries using its ERP solutions. This large user base shows Infor’s global presence and the trust it has in various industries.
Outlook
The latest IDC MarketScape report puts Infor in the leadership category. IDC says, “Infor’s cloud ERP solutions deliver industry-specific capabilities without extensive customizations or integrations by combining the Infor cloud platform built on Amazon Web Services (AWS) and Infor OS innovation services.” This shows that Infor can deliver solutions that meet the unique needs of various industries with minimal complexity in ERP implementations.
Workday: Human Capital
Why?
Workday is a leader in Gartner’s Magic Quadrant for service-centric ERP because of its strong focus on HR through Workday Human Capital Management and finance through Workday Accounting Center. According to Gartner, Workday Enterprise Management Cloud is for upper mid-market, large, and global enterprises but also serves many customers with annual revenue of less than $150 million. This wide range of customers shows that Workday can serve various business sizes and needs.
Big Moves
In February, Workday made a big move by acquiring HiredScore, a leading provider of AI-powered talent orchestration software. This acquisition will help Workday in talent management and recruitment and further cement its position in the HR technology space.
Numbers
Workday reported strong fiscal 2024 results with total revenue of $7.3 billion, up 17% from fiscal 2023. This shows the demand for Workday’s solutions and its ability to expand its footprint.
Outlook
Workday underwent a major leadership change when Carl Eschenbach became co-CEO in 2022 and then sole CEO on February 1. Under his leadership, Workday has accelerated its innovation efforts with many product announcements and an expanded partner ecosystem. Eschenbach’s experience at VMware will bring new perspectives and drive Workday’s growth.
Innovation Focus
With innovation at the forefront, Workday will likely continue to enhance its products, especially in human capital management and financial solutions. The integration of AI capabilities, especially after the HiredScore acquisition, will enable Workday to provide more advanced tools for talent management and workforce optimization.
Epicor Software: Cognitive ERP
Why?
Epicor Software is moving fast in the ERP space with its Industry ERP Cloud, which has industry-specific packages for various sectors: Kinetic for manufacturers, Prophet 21 for distributors, and Eagle and Propello for retailers. Most of Epicor’s customers are midsize companies in the automotive, building supply, distribution, manufacturing, and retail industries. Epicor’s strategic roadmap is focused on AI-enabled supply chain data and analytics, genAI, and sustainability to drive operational efficiency.
Big Moves
On April 9, Epicor hit a major milestone of $1 billion in annual recurring revenue. This shows the company’s growth and increasing presence in the ERP space.
Numbers
In fiscal 2023, Epicor’s SaaS-based cloud revenue grew 42% year over year. This is a significant growth and shows the demand for Epicor’s cloud solutions and its ability to attract new customers and retain existing ones.
Outlook
Epicor is built on a composable platform on Microsoft Azure, which provides essential infrastructure services like integration, low-code and full-code development, AI/ML capabilities, and advanced analytics. This foundation allows Epicor to reimagine how ERP software can serve critical industries through the power of artificial intelligence, which they call cognitive ERP.
Cognitive ERP Vision
“Expectations for how ERP will deliver value through AI are changing fast,” says Vaibhav Vohra, Epicor’s Chief Product and Technology Officer. “This isn’t just another tool in the tech stack — we believe cognitive ERP will change how businesses operate by embedding contextual intelligence and automation into the very fabric of their operational workflows. In short, we see ERP itself moving from a system of record to a system of action.”
IFS
Why?
IFS Cloud is an ERP system designed for industries like manufacturing, aerospace, defense, construction, engineering, energy, utilities, food and beverage, and chemicals. IFS primarily serves midsize companies but also competes for large enterprise contracts. IFS is a visionary in Gartner’s Magic Quadrant for product-centric ERP. It invests heavily in manufacturing-centric features like digital twins, innovative factory capabilities, and shop floor integrations for real-time planning and execution.
Big Moves
On January 9, IFS made a leadership change and appointed Mark Moffat, previously chief customer officer, as the new CEO. Moffat replaces Darren Roos, who has become the chair of the board. This should bring new perspectives and more innovation to the company.
Numbers
In its Q1 2024 results announced on April 25, IFS had 26% year-over-year growth in recurring revenue. This is big growth and shows that the company is executing well, and that demand for its cloud solutions is increasing.
Outlook
IFS has moved a big chunk of its customer base to the cloud and is now poised for growth driven by its ability to deliver solutions for specific use cases like supply chain management and connected workers. Moffat says, “Industrial AI is a big opportunity for our customers, and we are well placed to help them exploit it. We have been developing industry-specific AI solutions that integrate with our existing products and leverage the data we have to deliver outcome-changing results.”
AI in IFS’s Strategy
The addition of AI to IFS’s products will improve operational efficiency and drive innovation across its customer base. By focusing on industry-specific AI solutions, IFS will give their customers tools that will make them more productive and enable better decision-making and resource management.
Sage: Accounting and Finance for SMBs
Why?
Sage has established itself as a leader in ERP for small and midsize businesses (SMBs), focusing on core functions like accounting, finance, HR, and payroll. With two product lines, Sage Intacct and Sage X3, they offer cloud ERP solutions for SMBs. Sage also provides services to help organizations move their applications to the cloud and smooth the transition to modern technology.
Big Moves
At Sage Transform 2024, their annual conference, they announced Sage Copilot, an AI-powered productivity assistant that improves user experience and streamlines workflows. They also announced product updates to Sage Intacct to show their commitment to innovation and customer satisfaction.
Numbers
Sage Group PLC’s revenue increased 10% in the latest quarter, with a 13% growth in North America. This is big growth and shows that they are taking market share in the competitive SMB space.
Outlook
Sage is expanding its product portfolio and moving into new verticals like construction and real estate. It has a large pool of new customers—small and midsize businesses that are aware of the need to digitize manual processes. By using automation and AI, these businesses want to improve their core operations and overall efficiency.
AI in Sage’s Strategy
The introduction of Sage Copilot shows Sage’s commitment to adding AI to its products. By giving users an AI-powered assistant, Sage will enable SMBs to optimize their workflows, reduce admin, and make data-driven decisions. This is in line with the broader digital transformation trend in the SMB space, where organizations are looking for innovative solutions to increase productivity.
Acumatica: Modular Cloud ERP
Why?
Acumatica is a leader in the small and midsize business (SMB) market by offering industry-specific modules for manufacturing, construction, distribution, retail, and general industry. As a cloud-only solution, Acumatica’s strength is its modular architecture, which allows customers to choose only what they need and scale as their business grows.
Big Moves
This year, Acumatica announced the addition of professional services to its cloud ERP platform. The Professional Services Edition includes new features to improve customer service and customer lifecycle management, expands Acumatica’s offerings, and addresses the needs of professional services businesses.
Numbers
Acumatica has over 10,000 customers. This is a big growth and shows demand for cloud ERP, and the modular approach is working for diverse industries.
Outlook
Ali Jani, Acumatica’s Chief Product Officer, says the Professional Services Edition is key as industries converge and companies adopt new processes and functions. He says AI and related technologies like analytics will be key in the future of enterprise apps. This forward-thinking approach will keep Acumatica relevant in a changing market.
Competitive Landscape
Forrester analyst Liz Herbert says Acumatica is already competing with NetSuite across multiple sectors as both are moving into professional services. As Acumatica adds more functionality, it will continue to compete with NetSuite, which is established in the ERP space.
QAD: Manufacturing and Supply Chain Innovation
Why?
QAD is a visionary in Gartner’s Magic Quadrant. They are known for their Adaptive ERP product suite, which has administrative and operational ERP on one platform. They focus on six key manufacturing industries: automotive, consumer products, food and beverage, high-tech, industrial and life sciences. This allows them to tailor their solutions to the specific needs of those industries.
Big Moves
QAD bought Redzone, a workforce software solution that connects employees on the factory floor. This will help QAD in the manufacturing sector by improving communication and collaboration among workers and driving operational efficiency.
Numbers
QAD’s acquisition of Redzone was big—$1 billion. This shows QAD’s commitment to adding more functionality and providing complete solutions for manufacturers.
Outlook
Anton Chilton, CEO of QAD, says, “With Redzone, we now have a complete end-to-end solution for manufacturers to fully realize the potential of the adaptive enterprise, from the shop floor to the top floor and from supplier to end customer.” This will allow QAD to help manufacturers optimize their operations across the entire supply chain.
QAD also announced its Industrial Transformation Platform to optimize people, processes, and systems in manufacturing and supply chain scenarios. This platform facilitates digital transformation in the industry so manufacturers can adapt to changing market demands and be more efficient.
Why Adaptive ERP?
QAD’s focus on adaptive ERP allows manufacturers to respond to market changes and operational challenges. By adding workforce management to their ERP, they add more value and make manufacturers more agile.