Market ERP overview
Software analysts, publishers, consulting organizations, systems integrators and industry media organizations use a continuum of terms and definitions for describing either the same or slightly overlapping business software customer market segments. Here are some definitions and understanding to the three most commonly used business software tiers.
Here is a chart showing ERP License Revenue Share by Customer Company Size:
Tier 1: Fortune 1000, Global 5000 or Enterprise Market. The terms to describe 'big' enterprises have evolved as big businesses keep getting bigger. Several years ago, the term 'Fortune 1000' was frequently cited. As those companies grew and more large companies came into the fold, the term 'Fortune 2000' became commonly used as that next 1000 companies were unquestionably businesses beyond the middle market category. As big business growth continues unabated, the term 'enterprise' has become the de facto standard for many in the ERP software industry and other technology industries. Tier 2: Mid-Market, Middle Market or Mid-Range. Any one of these customer market terms may be randomly used depending upon the speaker or industry. While some market segments and industries simply categorize themselves as either SME/SMB or Enterprise, several other industries - including the business software industry - recognize the significant customer differences between small business and big business and therefore use this in-between category. From a ERP software perspective, there are several profound differences (e.g. software scope, software functionality, software utilization, system integration, customization, support, etc.) between 'small' and 'medium' customer segments. Therefore the term 'middle market' is frequently used, while the SME or SMB terms are frequently replaced with just the 'Small Business' term.
Tier 3: SME or SMB. SME (small and medium enterprises) and SMB (small or medium sized businesses) are often used interchangeably. SME is more of a globally used term (and is the official market phrase for internationally-based enterprises such as the United Nations, World Bank, World Trade Organization and the European Union (EU). While several EU member countries have varying SME market size definitions, the EU is near in creating a recognized standard market segment definitions. Per the EU's new convention, 'Small' companies have fewer than 50 staff and 'Medium' companies have between 51 and 250 staff. In North America, the terms SME and SMB are used as equals. However, North American definitions for Small and Medium sized enterprises are larger than in the EU. By North American standards, a small business has less than 100 staff and a medium sized business is generally defined as between 101 and 500 employees. The term SOHO (small home / home office) is also commonly used in North America to describe companies with less than 10 staff. In the United States, there are over 5.1 million owner-operated, self-funded small business
companies that employ about half of the US worker population and create the majority of new jobs. Most of these small businesses do not use a central ERP system and instead operate a number of manual and disjointed systems which include bookkeeping software, small custom built databases, spreadsheets and paper files. This inefficiency leads to repeated errors, longer cycle times and a lack of data for analysis and business decision making.
Tier 3
Annual revenues: Staff: Less than 100 staff ERP user count: 5 to 30 users IT staffing: One or a few; many times a single person with multiple responsibilities
Tier 2
Tier 1
Enterprise Over $1B
Small Business Market Mid-Market $5 million (M) to $100M $100M to $1B 101 to 500 staff 31 to 250 users group Small of several people; often lack executive participation and long term strategy
IT skills:
Very modest; often learning on the job Very high. This market routinely uses outsourcing for HR, payroll and administrative functions. This grop is willing to outsource ERP information systems management to competent resources with greater skills.
Propensity to use SaaS:
Customization preferences:
More willing to accept a generic or less customized ERP system, although this community views user-configured customization as a big plus. This group normally does not achieve competitive advantage with systems.
Over 500 staff Over 250 users Full IT line of business staffing; normally with executive participation and CIO with board participation Generalist skills; A portfolio of broad and generally lack specialty specific skills skills High. The SaaS Medium to high. While concept is nothing new this customer market or novel for this group. doesn't use outsourcing SaaS is viewed as an with the same frequency extension of traditional of SMB or middle outsourcing services. market companies, it SaaS generally doesn't has shown a surprisingly replace an internal IT high propensity to use department, but is used SaaS business for specific applications. applications, niche tasks or competencies. This market expects a This market also high degree of expects a high degree of integration and integration and customization for their customization for their business requirements and requirements. The normally have majority expect the technology preferences SaaS software - such as SOA (service company to customize oriented architecture), their hosted XML web services, etc. application.
http://www.erpsoftware360.com/software-markets.htm
ERP markets and latest development - Segmenting / diversifying of ERP Market:
Due to saturation at top end, ERP vendors were trying to penetrate medium and small market segments. The market thus got segmented into tier 1(large organization), Tier 2(medium organizations) and tier 3 (small organization). Major ERP vendors started offering products for lower end of the market either through extension/rationalization of their products or through acquisition. ERP vendors were also diversifying their product to different verticals. Whereas, manufacturing provided the major chunk of their revenue, the focus area turned to retail, public sector, utility, financial sector, and telecom.
http://wenku.baidu.com/view/0eb714020740be1e650e9ab3.html
Potentials of developing mid-markets in imerging markets:
Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Currently, there are around 28 emerging markets in the world, with the economies of China and India considered to be the largest.
With the opening up of the Indian economy, there has been a phenomenal growth of the mid market companies. These have in the industrial segments like Services, Utilities, Software, Trading, Manufacturing, Pharmaceuticals and Projects etc. Associated with this is rising competition and the need to continuously provide and increase value added services to
attract an ever increasing customer base. Improving efficiency and speed of operations, cost optimization, improve manpower utilization, faster access to market trends, need
for readily available business intelligence have compelled organizations to adopt processes and solutions that will help sustain their competitive advantage.
http://www.pwc.com/en_IN/in/assets/pdfs/erp-implementation-in-mid-market.pdf
Other reference: http://www.zemynos.puslapiai.lt/sweden/wp-content/Henriksson_Visockas.pdf http://www.softresources.com/software-market-overview http://www.managementstudyguide.com/erp-vendors.htm