Due to the COVID-19 pandemic, there has been increased adoption of enterprise resource planning (ERP), customer relationship management (CRM), and other entrepreneurial software. In 2020, many companies accelerated their plans to begin using these systems, and the market for them remains hot, particularly for Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) models. COVID forced most businesses to digitize their offerings in real-time as consumers began turning to online shopping and employees started working remotely—both trends that are expected to continue into the future.
Additionally, companies are gaining more insight through analytics that show that customer experiences are improving from the use of constantly connected technology. In fact, businesses that do not keep pace with the ongoing digital shift face a grim future. Per a 2019 white paper by Infosys Limited, almost half of Fortune 500 enterprises are not expected to exist in a decade as a result of falling behind the wave of digital transformation. ERP and CRM platforms are no longer a shiny novelty but an increasing business necessity.
ERP Software in a Changing World
Back in 2019, the global ERP market was valued at $39.34 billion. By 2027, it is projected to reach $86.30 billion, registering a CAGR of 9.8% from 2020 to 2027.
Companies are now using ERP software to address several key business challenges, as data-driven analytics empower greater visibility of critical areas and online customer engagement has become more important than ever. The software offers businesses access to real-time data and allows critical operations to run more efficiently. Organizations can integrate, automate, and maintain data on their products, customers, and locations, all in one place. ERP systems can also help reduce errors, cut costs, and boost productivity.
Supply chain management has become more important than ever due to pandemic-related shortages. Businesses require real-time transparency to properly handle supply chains. ERP software enables them to track weather problems, port delays, and supplier issues, and respond immediately. They also help to run operations with fewer workers. Reconfiguring warehouses has also become more important to offer flexibility in shipping quantities.
Businesses are also using ERP software for finance tracking, procurement, and human resources needs. Companies have come to rely on advanced automation that calls for fewer but more qualified workers, and those who can work remotely. Employees need proper remote working and digital-collaboration tools, and must be in compliance with the latest cybersecurity standards.
Another trend that companies now need to address is the explosion of consumer data amid changing consumption patterns. This requires the flexibility to ship smaller quantities of goods to more residential areas and properly handle more returns.
Work ecosystems have also become more open and collaborative. Businesses need to work digitally with suppliers to address changing supply needs, and replace offshore vendors that have ongoing transportation obstacles.
The Rise of CRM Adoption
The global CRM market is expected to reach $128.97 billion by 2028, that’s up from $58.04 billion in 2021, at a CAGR of 12.1%, with North America leading the market, closely followed by Europe.
By application, the market is segmented into:
- Lead generation and customer retention
- Marketing and sales automation
- Customer management
- Customer support and contact centers
The increasing focus on digitization is expected to continue to bolster the demand for CRM software worldwide to enhance customer experiences and drive high operational efficiencies. The rapidly expanding implementation of advanced technologies such as artificial intelligence (AI), the Internet of things (IoT), smart devices, and big data will keep fueling demand for CRM software.
Also, cloud-based software is likely to gain more traction because of its broad accessibility and relatively simple integration. For small and medium-sized companies, the cloud offers several advantages, including cost efficiency and virtually no equipment costs.
Based on verticals, the CRM software market is categorized into:
- Banking, financial services, and insurance (BFSI)
- IT and telecom
- Retail and consumer goods
- Transportation and logistics
Each of these verticals is expected to continue to see exponential market growth, led by the BFSI vertical due to the need for customer-specific software and growing online banking services. IT and telecom is using more CRM software to manage huge client bases and better understand market trends. Adoption is growing in retail and consumer goods due to data from online shopping platforms and mobile that boosts their understanding of business growth, market trends, customer needs, and experiences.
In healthcare, steady growth stems from enormous private and confidential data sets used for management and monitoring, as well as the increased use of connected medical devices.
M&A IT Due Diligence
When it comes to mergers and acquisitions, the use of ERP and CRM software is certainly playing a role in the due diligence process. Applications can be a large part of a reason why a buyer targets a certain company for a sale, and they can even be a deal breaker. An acquirer isn’t going to want to spend a significant amount of capital on upgrading IT systems. Expect buyers to look at your company’s ability to scale and integrate, your approach to security and disaster recovery, infrastructure and hardware, and your IT operating budget.
Americas: Sam Smoot at +1 (813) 898 2350 / Smoot@BenchmarkIntl.com
Europe: Michael Lawrie at +44 (0) 161 359 4400 / Enquiries@BenchmarkIntl.com
Africa: Anthony McCardle at +27 21 300 2055 / McCardle@BenchmarkIntl.com
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Benchmark International’s global offices provide business owners in the middle market and lower middle market with creative, value-maximizing solutions for growing and exiting their businesses. To date, Benchmark International has handled engagements in excess of $8.25B across various industries worldwide. With decades of global M&A experience, Benchmark International’s deal teams, working from 14 offices across the world, have assisted thousands of owners with achieving their personal objectives and ensuring the continued growth of their businesses.