ERP Caught Up In Cloud Updrafts
April 4, 2018 Alex Woodie
Don’t look now, but ERP software is headed up – into the clouds, that is. That’s according to the latest ERP survey from Panorama Consulting, which says more than four times as many users reported adopting cloud-based or SaaS ERP than deploying on-premise enterprise software.
A quick look at Panorama Consulting‘s 2018 ERP Survey shows that cloud/software as a service (SaaS) and on-premise deployments of ERP effectively switched from 2017 to 2018. In 2017, the survey found that 67 percent of users reported deploying ERP on premise, while 33 percent reported using SaaS or cloud ERP.
In 2018, Panorama reported that 64 percent of users reported SaaS deployments, compared to 21 percent for cloud ERP and 15 percent for on-premise ERP. That gives on-premise ERP a 52 percent drop in popularity – a huge shift, to be the sure, and the first time that on-premise lost out to other delivery mechanisms since Panorama started doing the study.
“This should come as no surprise as ERP vendors are heavily pushing their customers to the cloud,” Panorama says in its report. “They are continuously building out their service platform and infrastructure to host solutions at both the business and enterprise level.”
IT Jungle asked Panorama Consulting Solutions founder and managing partner Eric Kimberling to dig into the numbers a bit more. Here’s what he said:
“It’s hard to say if this year’s result in this category was an anomaly, if last year’s was an anomaly, or if it really was that big of a jump. Part of me thinks it’s a combination of last year’s being artificially lower than reality since it had actually decreased from the year before, but I think the big vendors’ sole focus on cloud solutions over the last year could be translating to a significant jump as well. So it could be a combination of both.”
Panorama’s 2018 survey touched about 200 organizations that rolled out ERP solutions over the past year. Because of the relatively sporadic nature of ERP deployments and Panorama’s sampling of them, one must be careful about drawing broad conclusions from them. For example, as Kimberling alluded to, Panorama’s 2015 report found that 27 percent of ERP deployments were to the cloud – the highest amount dating back to 2013, and higher than the 2018 figure, too.
While’s Panorama’s survey is non-scientific, the findings regarding a shift in ERP deployments to the cloud generally gibes with broader industry trends. A recent report from Allied Market Research concluded that cloud-based ERP drove about $13.2 billion in revenue in 2016 and is on pace to hit $32.2 billion by 2023, a compound annual growth rate (CAGR) of 13.6 percent.
The key vendors driving cloud ERP, Allied Market Research found, included Oracle, IBM, Microsoft, SAP, Sage Group Plc, QAD Inc., IFS AB, Epicor Software Corp., Infor, and Aptean. In Panorama’s report, Oracle, SAP, Sage, Epicor, Infor, NetSuite, Microsoft, IFS, and IQMS were the most represented ERP vendors.
Panorama reported that the level of ERP customization was also up. In 2017, 70 percent of survey respondents reported doing “some customization,” which Panorama defines as modifying 11 percent to 25 percent of the source code, while only 4 percent reported doing “significant customization,” which was defined as modifying 26 percent to 50 percent of the source code.
In 2018, only 33 percent reported doing “some customization,” while 37 percent reported “significant customization.” What’s more, the percentage of customers embarking upon “extreme customization,” which Panorama defines as modifying more than 50 percent of the source code, went from 0 in 2017 to 8 percent in 2018.
This big uptick in customization would seem to fly in the face of the first trend noted in this story – a shift toward cloud and SaaS deployment models – because making modifications has traditionally been frowned upon and difficult to accomplish in the cloud and SaaS ERP software world. But clearly, on-premise ERP users are not the only ones who are modifying their software anymore.
“Vendors have developed more robust development tools for their products, so SaaS solutions are indeed becoming more flexible,” Kimberling says. “They’re still not as customizable as on-premise solutions, but it’s still possible to do so.”
Panorama’s 2018 ERP Report can be downloaded from the company’s website for the cost of some of your contact and demographic information.