The coronavirus pandemic is reshaping the ERP market this year, disrupting companies previously-planned transformation efforts or investments.
With some industries such as travel and entertainment facing bleak futures, and others like healthcare and biotech more needed than ever, ERP projects will shift based on who has the resources and demand to be nimble.
"Outdated legacy systems will fail when being pushed to a breaking point. This is an extreme and unusual breaking point, but highlights the need for the modernization of core systems," Liz Herbert, vice president and principal analyst at Forrester told CIO Dive in an interview.
How companies handle ERP will depend on their position before the crisis. Some are vaulting ahead because of previous implementations; others will slow down or be ripe for acquisition. ERP vendors are also offering discounted or free services to meet new, vital demands.
Here's how the ERP market is shaking out.
Some projects will pause — others will rocket ahead
Companies facing massive layoffs will most likely pause big IT projects, said Herbert. Companies experiencing a slowdown without the same kind of bleak projections could use this time to do IT projects now to prepare them for the future.
For others, "this will be a time they're going to invest more. Look at the healthcare industry. Look at government. ERP is a critical enabler," she said.
Herbert points to Moderna, a biotech company that has quickly developed a COVID-19 vaccine already in Phase 1 clinical trials in the U.S. Before the COVID-19 outbreak, Moderna had invested heavily in its ERP.
In a 2017 case study, SAP wrote that, with its solution, Moderna "has fully integrated inventory management, materials management, purchase-to-pay processes, and accounting processes."
Healthcare companies "have extra resources right now because they're considered very critical. ERP investment will not only continue, but it will accelerate," Herbert said. She also expects companies that need more flexibility right now — such as Ford, GM and Tesla which are shifting operations to produce ventilators — to invest in ERP "because ERP systems are behind all that."
Acquisitions will continue
The ERP market saw a handful of key acquisitions in 2019, Chris Devault, manager of software selection at Panorama, told CIO Dive:
Microsoft bought Citus Data, PromoteIQ and Movere
Oracle acquired Oxygen Systems and CrowdTwist
IBM bought Red Hat
Salesforce acquired Tableau and ClickSoftware
Devault expects this to continue in 2020, particularly "field service-type applications that have a good space in the marketplace but they're laggard in technology." A larger company could buy them and make the kinds of investments that just haven't happened yet.
Given economic volatility, some smaller ERP companies might need the cash to keep their doors open, said Herbert.
"If those companies run into tight times, and they're in a very different spot, they become more affordable," she said. "Some of the giants out there have more resources to carry on, even if they do take a hit to their business."
ERP to go discounted or free
Cloud service providers are changing their offerings right now too, across multiple industries.
PerfectServe is offering its patient and family messaging services for free to hospital and physician groups. Curogram, a telehealth platform, is offering its virtual clinic telemedicine program to children's hospitals and smaller hospitals for free. Educational technology companies are offering free services to meet the huge spike in demand for remote teaching.
Herbert expects cloud providers to possibly suspend maintenance payments, and reduce payments where companies are not using the same capacity.
"It wouldn't be a surprise if you saw some big tech leaders continue to do what Salesforce is doing with free software," she said. "It's just giving businesses a break in the same way we're seeing with banks right now."