Selecting ERP can be a hard process.
There are lots of maybe’s involved in initial selection; who will be using your system? Which departments need to access your ERP? Does replacing a system have any impact on purchasing an ERP?
We’ve analyzed our report data to give you a breakdown of which businesses are currently using ERP, how many users they expect their new system to accommodate, budget expectations, and how this varies depending on the industry.
Check out our findings below.
On average, 42% of companies purchasing ERP are replacing an existing system
The average shows that few businesses already have an ERP in place, drawing light on the fact that, overall, 58% of companies were first-time buyers of ERP.
It’s unsurprising that small businesses were most likely to be implementing an ERP for the first time. Only 26.2% of businesses with 0 to 49 employees were replacing an existing system with the main reason for implementing was to increase efficiency. This figure almost doubles when compared to companies with 50 to 249 employees, which could suggest that businesses see value in implementing an ERP and reinvesting in newer technology.
Further, as the business size grows beyond 250 employees we see another jump in current ERP usage building to 61.7%. This category shows the majority of businesses of this size use an ERP, suggesting it is a relatively widespread software.
On average, 37% of employees use a company’s ERP
The percentage of employees actively using the ERP ranges significantly dependant on business size.
Small businesses have the highest percentage of employees using their system with 55% of employees listed as users. Smaller businesses are more likely to have employees performing duties across departments with many responsibilities as they have fewer employees. Businesses with more than 50 employees are likely to have formed departments with distinct boundaries and responsibilities meaning the ERP doesn’t need to be adopted beyond a smaller percentage of their workforce.
While companies with more than 250 employees have the lowest percentage of employees using their system, these companies will have the highest user numbers compared to smaller businesses. These businesses are more likely to be replacing a system, and their main reason for implementing a new system is to consolidate disparate systems according to our ERP research. This suggests that businesses of this size are searching for solutions to replace specific functionality, therefore have solid requirements based on existing systems, with the aim to combine or reengineer processes in one system potentially for full-scale business visibility.
Distribution businesses have the highest percentage of employees using ERP
The percentage of employees using ERP broken down by industry presents some interesting comparisons with the overall averages we discussed previously.
The data above shows that companies in the distribution and retail sectors are above the average percentage of users across businesses of all sizes. The manufacturing sector is marginally above average, perhaps surprisingly, with most other sectors falling just short of this figure.
Businesses in the distribution, retail, and manufacturing sector share some common requirements including 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.
How does current ERP usage impact cost?
Although the figure for those currently using ERP is not far off our average budget of $7,200 per user for ERP software, the expected cost of the system is higher for those already using an ERP compared to those purchasing for the first time.
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.
To read more insights about the ERP software market, please visit our ERP report.