ERP Market in Japan: Key Research Findings 2019

Driven by “DX”, Investment for Mission-Critical Systems Increase Steadily

Yano Research Institute (the President, Takashi Mizukoshi) has conducted a survey on the domestic ERP (Enterprise Resource Planning) package license market and has found out the trends by ERP package vendors and user companies, the current status of cloud-based services, and the future outlook.

Transition and Forecast of ERP Package License Market
Transition and Forecast of ERP Package License Market
Transition and Forecast of Cloud-based ERP Ratio against On-Premise
Transition and Forecast of Cloud-based ERP Ratio against On-Premise

Market Overview

In 2018, the ERP packaged license market attained 112,370 million yen, increased by 4.4% from the previous year (based on end-user price). While the market growth in 2017 was almost flat with only 0.8% increase from the previous year, the market showed steady growth once again in 2018. As the user companies’ motivation for ERP investment is still at high level, the market growth is underpinned by the increasing demand for renewing mission-critical systems to adapt to changing business environment.

In recent years, there is a trend in user companies to implement business transformation especially by using IT as digital transformation (DX). In the “DX Report (“DX Promotion Indices”)” published in September 2018 by The Ministry of Economy, Trade and Industry (METI), it is pointed out that to achieve DX, reconstructing the legacy system is crucial. By rebuilding the existing ERP system that is outdated and overly-complex, the user company can achieve the benefits such as speeding up the introduction of data-driven management, simplifying operation management, and improving operational productivity.

Noteworthy Topics

Cloud-Based ERP to Expand: Ratio against On-Premise Forecasted to Reach 45.8% by 2020

Obvious progress has been seen in the development of cloud-based ERP. As of 2018, the ratio for using cloud-base ERP (including IaaS/PaaS and SaaS) against on-premise ERP is estimated to account for 28.2%. Availability of ERP as SaaS, in which the users use applications via cloud, is still limited as a product (service), and the user company’s utilization rate is low; however, the number of companies using IaaS or PaaS as the platform of their mission-critical systems is significantly increasing.

Driven by the use of IaaS and PaaS, the cloud-based ERP is forecasted to continue expanding, the ratio of which to reach 45.8% by 2020. 

Future Outlook

In 2019, the size for the ERP packaged license market is projected to grow by 3.7% from the previous year to attain 116,520 million yen, based on the end-user price. There is no sign of decline in the user companies’ motivation for investment. Led by the big trend of DX for business transformation, the market is anticipated to maintain solid growth. 

However, the growing sense of uncertainty in the economy is increasing: In addition to the global stock decline, the appreciation of Japanese Yen, and the signs of downturn in the government-announced economic indicators, there is a growing concern for the drop in domestic consumption due to the consumption tax hike scheduled to start from October 2019. Attention should be paid to the economic trend, for the economic deterioration has negative impact on ERP market. 

Research Outline

1.Research Period: May to August, 2019
2.Research Object: ERP solution package vendors
3.Research Methogology: Face-to-face interviews by the specialized researchers

ERP Market in Japan

ERP (Enterprise Resource Planning) package is the software to integrate and streamline corporate mission-critical processes across finance, HR, sales administration, production management and others. The ERP package license market in this research includes the packaged software that has some functions of a mission-critical task and that can comprise a module or a component of an ERP package.

<Products and Services in the Market>

ERP solution package software

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