New analysis from Frost & Sullivan (ITservices.frost.com), South African ERP Software Market, finds that the market earned revenues of $450.0 million in 2006 and estimates this to touch $885.0 million by 2013. The economic slowdown is however expected to keep growth at a constant rate though 2009.
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"The demand for ERP systems from South African users continues to rise," says Frost & Sullivan ICT industry analyst Lindsey Mc Donald. "This growth is boosted by the low cost systems available to the mid and low-end enterprise markets. With the increased saturation at the high-end, it is anticipated that more products will be developed to meet the needs of this market base."
Similarly, the development of new, value-added products and services will provide new revenue-generating streams from the high-end market. ERP providers that realise these needs and fulfil them early stand a better chance of accelerating growth across all enterprise types.
The mid- and low-end enterprise markets account for the biggest client base in the country. Over 700,000 enterprises are represented in this category, compared to less than 60,000 in the high-end enterprise market. At present, only a fraction of small and medium enterprises uses ERP systems.
However, barriers such as the slowdown in economic growth, high infrastructure and telecom costs, low speed of business transformation and integration complexities are inhibiting the growth of the ERP market. Small industry participants are further restrained by the strong branding of the big international vendors, which makes market penetration difficult to achieve.
"The ongoing business transformation is aggravating these challenges," states Mc Donald. "The ability to innovate or develop a unique differentiation factor is not moving at the speed required to ensure that companies can remain competitive in this industry."
Providers are still relying on differentiation factors such as market specialisation, short lead deployment time and spectrum of services. As the industry continues to push its products downstream, cost is becoming a critical factor.
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South African ERP Software Market / M257