Top trends and forecasts of development of the world market of ERP systems for mechanical engineering

As "machine-building" solutions are either a basis of many modern ERP systems, or the industry solutions constructed based on a universal core of such systems, it is quite possible to say that all engineering and technology changes happening in the market of ERP systems in general fully belong also to ERP systems for mechanical engineering. As for market trends, according to these IDC, about 40% of sales in the world market of ERP systems, at the same time, are the share now of solutions for the industry according to IndustryWeek, the enterprises with the discrete nature of production make about 70% of users of "industrial" ERP systems. Respectively, about 28% of sales are the share of ERP systems for mechanical engineering in the world.

According to a position of IDC sounded in updating to the report of "Worldwide Enterprise Application 2007 - 2011 Forecast", the present status of the world market of ERP systems can be described as follows.

Recently significant growth is mentioned among the largest vendors which could expand significantly the customer base due to a number of acquisitions.

The sizes of the bargains concluded by developers of solutions within the SaaS model as large customers began to use even more often it instead of the traditional "installed" applications grew. It led to serious revenue growth of the increasing number of SaaS solution providers who also strengthened the offer for the purpose of obtaining large contracts.

Globalization of the market of business applications allowed many vendors to increase the income at the expense of entry into the markets of fast-growing regions of Southern Afriky, oil-producing countries, industrial conglomerates of China that allowed to compensate problems low or even the reduced demand in the advanced countries, such as the USA. Even in Western Europe orientation of the offer of vendors of ERP systems to support of Pan-European business of customers allowed to provide growth indicators, above an average.

Further development of the world market of ERP systems will have to be defined by the following factors.

Increase in interest rates around the world and effects of "mortgage crisis" to the USA and also increase in prices for energy carriers can become in the next several years the reason of cost reduction of the companies (including, and on IT). It as analysts consider, will lead to the fact that customers will begin to pay special attention to reduction of an implementation time of ERP systems, predictability of economic results of the planned projects and business process optimization at design of the information systems.

With transition of the process of consolidation of the market of ERP systems continuing three years to a new phase the vendors which "bought" the solution of independent developers are faced the need to repay debts on loans, "swelling" of product portfolios and increase in demand for service maintenance and technical support. In these conditions, according to IDC, should work well both vendors, and customers until joint efforts approve expectations of both parties concerning such things as total cost of ownership, requests for expansion of the main functionality, support of Web services, etc.

Despite the happened market consolidation, developers of business applications best-of-breed quite successfully compete with the much larger competitors. According to the experts, the successful combination of ease and convenience of using of solutions, with industry expertize, permanent innovations and also their price availability to consumers with any amount of business and in any industries will allow best-of-breed "select" solution providers of the transaction at large vendors whose products still do not conform to requirements of customers, especially in the field of ease of use.

Giants of the market of ERP, such as SAP, Oracle and Microsoft, undoubtedly, will have a serious impact on its development, thanks to the image, resources and "ecosystems" which are "grown up" by them. But, despite all this, analysts consider that future results of these vendors will depend very strongly on their capability to win round business users, to see them "painful points" and as appropriate to rebuild the products, but not to continue traditionally to be guided by tactical needs of representatives of IT departments.

Consumers in the Pacific Rim, Eastern Europe and in the Middle East will provide high growth rates to vendors of business applications as in these quickly developing enterprise regions, reaching the international level, begin to adopt quickly enough the western experience of business process reengineering and optimization of management of labor and money resources and also the business risks.

Separate factor which can influence development of the world market of ERP systems is the announced plan of the CEO of Oracle Larry Ellison to achieve income in 50 billion dollars in the next 5 years. By estimates of analysts, for achievement of this purpose of corporation it will be necessary to treble the financial result of 2006 (5 billion dollars) that by 2011 to receive at least 15 billion if to try to exceed this indicator, then the annual growth of business of Oracle should be not less than 25%. Experts believe that such indicators are hardly really achievable for corporation even if not to consider the competition to SAP. At the same time, if efforts in this direction are made nevertheless, it, anyway, will have to lead to changes in the market of business applications and, naturally, can affect also realness of today's forecasts of its development.

The world market of business applications in general, according to the forecast of IDC, will have to grow for 6.6% annually and by 2011 will have to reach volume in 112.8 billion dollars. At the same time, the American markets will provide sales approximately for 63 billion dollars, EMEA region — approximately for 36 billion dollars, and Asia-Pacific — approximately for 14 billion dollars.

Forecasts of growth of the market of business applications in general and the market of ERP systems are published also by ARC Advisory Group company. They differ from forecasts of IDC, in particular regarding assessment of market size. So, according to the forecast of ARC Advisory Group, the world market of business applications (ERP+SCM+CRM+SRM+PLM) will annually grow for 8.3% and by 2011 will reach volume in 43 billion dollars. As for the market of ERP systems, its annual growth should be 6.7%, and volume by 2011 — 25 billion dollars.

Anyway, even despite differences in forecasts, analysts are uniform that the market of ERP systems will grow also at quite good rates. In practice it will mean development and an output to the market of new versions of software products, their "internationalization", expansion of support of different types of productions and different traditions of their organization, accumulation of bigger experience of implementation of difficult and large projects and also development of global networks of technical support and maintenance of ERP systems of the vendors working at international market.