By Gerrit Olivier, About IT CEO
The South African ERP landscape is transforming. On-premises ERP is falling out of favor and there’s a huge uptick in demand for hybrid and public cloud ERP solutions, most notably in the mid-size market, but also in the large enterprise space.
A recent Gartner report suggests 60% of mid-size ERP will be public cloud-based by 2024 for a whole heap of reasons. They define mid-size as businesses with revenues around R750 million up to about R15 billion.
Gartner also says half that number of large enterprises will also adopt public cloud-based ERP by 2024. The reasons why underline the trend for even smaller businesses to piggyback the business revolution caused by cloud ERP, says Gerrit Olivier, CEO of About IT.
It’s not just expensive to keep traditional, on-premises ERP systems up to date. It disrupts the business. And newer systems just keep getting easier to use by more closely following the user experiences of the app world rather than legacy business systems that required lots of user training.
Plus, customers get all the latest capabilities of stuff like artificial intelligence (AI) and machine learning (ML) algorithms as they advance, without any of the integration and update hassles, all at cloud-based subscription rates substantially lowered, thanks to the economies of cloud scale.
The reason that the mid-size market is expected to adopt more cloud ERP and quicker than large enterprises is a matter of investment and the ability to pivot quicker. They have less invested in the legacy kit, fewer of them have substantial legacy systems, certainly nothing that demonstrates functional parity with what’s affordably emerging for them in the cloud today.
Mid-size and small businesses also often get functionality they’ve never had before.
Cloud ERP also powers more rapid returns on their investments (ROI) since they’re better positioned to capitalize on the growing capabilities of the built-in analytics functions. The ability to perform advanced analyses hasn’t been a core function of legacy ERP solutions, so many larger organizations have been investing in that ancillary function as a bolt-on for some time.
Small and mid-size businesses are also getting functionality like the ability to establish billing rules for different products and services. They can link billing schedules to revenue-recognition. And they get enhanced invoice categorization and processing with centralized billing.
A wealth of APIs now inhabit the better cloud solutions, as do partner apps, positioning them as ideal post-modern ERP solutions for smaller businesses seeking the efficiencies, agility, and flexibility to be competitive quickly.
Services organizations are the greatest adopters but, in South Africa, agriculture and manufacturing businesses are also keenly deploying these solutions, most notably under the software as a service (SaaS) model that is now a global standard. And small-to-medium businesses (SMB) accounted for 63% of all SaaS financial management suite revenues globally in 2018, according to Gartner.