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Key takeaways

Enterprise resource planning (ERP) refers to software applications that are used to manage day-to-day business processes. ERP systems connect and integrate these processes enabling organisations to analyse and manage a wide range of business activities such as supply chain, finance, manufacturing, sales & distribution through a central application. The ERP value chain includes software development, implementation work for new ERP systems, maintenance work for existing systems and ERP consultancy services. This research focuses on independent European ERP players that specialise in developing proprietary systems for core business operations across various sectors.


The European ERP software market is dominated by a triumvirate of SAP, Microsoft (Dynamics) and Oracle, which set a rapid innovation pace for the entire industry. Unable to keep up due to lower R&D capital, small and medium-sized ERP generalists are rapidly falling behind. These players are expected to either be acquired by larger competitors or to give up their proprietary software development activity in favour of less capital-intensive software implementation activities. The players with specialised niche expertise (e.g. specific industry focus, business vertical) stand a better chance at remaining competitive thanks to entrenched market positions.


The sector attracts a high financial sponsor interest. We believe this is generally attributable to strong margins, top-line resilience and significant customer stickiness, while selected businesses can act as buy & build platforms. However, investors must take into account the impaired cash conversion due to continuous R&D spending, as well as data security and talent shortage challenges posed.

Company benchmarking

Market growth

Statista (December 2021) estimated that the European ERP software market grew from ~€9.0bn in 2016 to ~€10.9bn in 2021, representing a CAGR of ~4.0%

Gartner (July 2021) expects the broader global enterprise software market to grow at a CAGR of 12% in 2020-2022

According to Statista (January 2020), the global market size for cloud ERP software is set to grow from $14.7bn in 2018 to $40.5bn in 2025 at a CAGR of 13.6%

Positive drivers

Transition from on-premise to cloud-enabled SaaS-based ERP platforms will improve customer lock-in, revenue visibility, scalability and profitability (interview by Gain.pro)

Upselling potential through adoption of next-generation ERP platforms integrating IoT, data analytics and digital processes (e.g. supply chain, finance, HR) (BCG, September 2020)

Margin improvement potential through customised offerings as clients demand more operational flexibility in digitalisation, planning and streamlining of operations (Kanak Infosystems, September 2021)

Negative drivers

High pace of technological development requires continuous software adaptions, wherein players lacking the spending capability suffer a slow death as customers gradually switch to newer alternatives (interview by Gain.pro)

Reluctance of companies to invest in expensive (e.g. ~$75k-750k for SMEs) legacy system transformations, where successful implementation can take 5-10 years (McKinsey, August 2019)

Increasing number of cyberattacks on ERP systems entail substantial liability risks (Sage, November 2021)

Read the full report on Gain.pro

ERP software development industry.

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ESG assessments with highlighted ESG outperformers

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