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ERP alternatives poised to take the stage in 2021
The momentum for companies to adopt cloud-first and industry-specific ERP systems has created an opening for alternative ERP companies.
The ERP market continues to be dominated by industry giants SAP, Oracle, Microsoft and Infor, but ERP alternatives abound.
Indeed, many industry observers believe 2021 could be the year that companies look to these ERP alternatives, as the cloud becomes more prevalent and industry-specific best-of-breed applications become more attractive.
Further, giants like SAP and Oracle face the prospect of migrating customers that have been running legacy, on-premises systems onto modern cloud-based ERP systems, potentially creating opportunities for more flexible ERP alternatives.
This is particularly pertinent for SAP, which has struggled to move its considerable customer base off of legacy ERP systems like SAP ECC onto S/4HANA, said Alan Salton, director of innovation at Panorama Consulting Group, an enterprise advisory firm in Denver.
"Because SAP is ending support for its legacy products by 2027 [or 2030 in certain cases] and [wants to] move them onto S/4HANA, their customers may start to say, 'If we have to go through this big migration, is it the time to start looking at other products?''' Salton said. "So, we may see some of the SAP customers, especially in the midmarket, start to do that."
ERP alternatives with deep industry functionality
Options are plentiful for companies considering such a move. Many of these ERP alternatives focus on vertical industries and can provide deep functionality, said Eric Kimberling, CEO at Third Stage Consulting Group, an independent enterprise applications consulting firm in Denver.
"Deacom, IFS and Odoo are three that I would keep an eye on in 2021," Kimberling said.
Deacom is a good option for small and midsize manufacturers, he said, while IFS provides upper midmarket to larger manufacturers with an alternative to SAP, Oracle and Microsoft Dynamics. Founded in Sweden and based in London, IFS has a large customer base in Europe and has been making a strong push to gain customers in North America.
Industry-specific focus boosts alternative ERPs
IFS fits the trend toward industry-specific ERP functionality, Kimberling said. IFS focuses on five specific industries -- manufacturing, utilities and energy, aerospace and defense, engineering and construction, and services. It also has a strong focus on field service capabilities, which was enhanced by the acquisitions of field service vendors Clevest in 2020 and Astea in 2019.
"Any organization that has field service technicians should consider IFS," Kimberling said.
Another of these industry-specific vendors is Delmiaworks, formerly IQMS, which was acquired and rebranded by Dassault Systèmes in 2018.
"Delmiaworks is looking into [Dassault's] industrial manufacturing base to focus on with CAD-MES-ERP integration," he said.
Salton is keeping an eye on Priority Software, which was originally based in Israel and is making some inroads into the U.S. ERP market.
"Priority has a pretty robust and very functional product, so we might see some interesting stuff coming out of them over the next year," he said. "They are squarely in manufacturing and distribution."
Cloud momentum continues for ERP
The momentum toward cloud-based ERP systems will continue in 2021, and COVID-19 has made the cloud an imperative, said Cindy Jutras, president of Mint Jutras, an enterprise systems research and advisory firm in Windham, N.H.
"For anyone who questioned the value of the cloud, SaaS and digital transformation at the beginning of 2020, there should be no doubt now that this is the direction in which you must head," Jutras said. "Cloud computing and advanced technology that supports connectivity, collaboration, automation and agility steps out of the realm of the nice-to-have and become table stakes."
Epicor and Acumatica, two vendors that could cash in on the cloud movement, have taken different paths, Jutras said. Epicor is an ERP pioneer, founded in 1972, that grew by acquiring several on-premises ERP systems but has made a strong cloud commitment in recent years. One of the company's selling points may be its decision to move customers to the cloud only when they are ready.
"Many of Epicor's customers are still running older on-premises [applications]; its recent investments in cloud computing is changing this," Jutras said.
Epicor was slow to move to the cloud, but is trying to catch up, according to Salton.
"They've invested a lot into this cloud framework, they have new owners who are looking to put some money into it, so they may be doing some stuff," he said.
Cindy JutrasPresident, Mint Jutras
Acumatica, on the other hand, is a pure cloud SaaS ERP aimed at small to midmarket manufacturers that has shown strong market momentum, according to Jutras. This is because the SaaS model has become particularly valuable during the COVID-19 economic disruption.
Acumatica is an ERP alternative to watch, agreed Shawn Windle, founder and managing principal of ERP Advisors Group, a firm in Lakewood, Colo. that focuses on ERP systems evaluation and implementation.
"Acumatica is becoming more diverse and functional across many industries, such as construction, manufacturing, wholesale distribution and even services," Windle said. "The pricing point for Acumatica is attractive because it's not as high as some of the bigger ERPs. That is a trend that can be expected with the smaller vendors, where the pricing is approachable for a new company or an organization that's coming off a legacy application that was paid for many years ago."
Salesforce a growing force in ERP
Cloud ERP momentum and industry-specific functionality will likely be the most prominent trends in 2021, Windle said.
"Almost all our clients are looking at best-of-breed, SaaS-based solutions to augment their ERP," he said. "Whether it's field services for a construction business or grant management and fundraising software for nonprofits, these best-of-breed applications are also a point of entry."
Another potential SaaS ERP alternative comes from CRM giant Salesforce, which has been acquiring pieces that extend its platform to incorporate more ERP functionality. The Salesforce platform includes ERP vendors Rootstock and Kenandy, as well as FinancialForce for core financial capabilities.
"They will absolutely compete against SAP and Oracle," Salton said. "Rootstock is actually a pretty good ERP for the right customer -- manufacturing and industrial -- and Kenandy is also pretty good ERP. If you bolt on FinancialForce, you can then start to put together a true best-of-breed platform and know that all the integration works because they're all using the same tool sets and APIs."
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