Market Overview

With enterprises' high willingness to invest in IT due to changes in the business environment and favorable corporate profits, and the promotion of digital transformation shifting from the strategic stage to the implementation stage, the ERP solution package licensing market in 2022 was stable at 129,620 million yen, up 9.5% year on year (end-user price basis). The support for small and medium enterprises (SMEs) in responding to the newly established Invoice System or the revisions of the Electronic Books Maintenance Act also contributed to the market expansion.

Underpinned by continued robust IT investments by enterprises, the ERP solution package licensing market in 2023 expanded to 141,980 million yen, up 9.5% YoY. The growth factors are the following five, the same as the market trend in 2022:
1) Digital transformation initiatives are moving from the strategic to the implementation phase due to changes in the business environment and strong corporate earnings.  
2) Increased motivation to invest in enterprise IT, driving the replacement of legacy systems and investment in corporate resources as a part of digital transformation.

3) Rapidly increasing demand to respond to the established Invoice System and/or the revised Electronic Book Preservation Act especially among SMEs.
4) Increase in the number of companies switching the production management system from in-house development (on-premises) to packaged solutions.

5) The ERP projects grew larger, as companies began to adopt multiple ERP modules. This increased the number of companies using cloud ERP.

Noteworthy Topics

Progress in Use of Cloud-Based Software

The market size of the cloud-based ERP solutions (including IaaS, PaaS, and SaaS) has reached 81,176 million yen in 2023, accounting for slightly less than 60% of the total ERP solution package licensing market, an uptrend from the previous year. As the cloud-based solutions are likely to continue to grow, the market is projected to account for more than 60% by 2024.

Software-as-a-Service (SaaS) ERP software and solutions have been on the rise in recent years, including from new entrants. The market for SaaS ERP, among cloud-based ERP solutions, is expected to grow as existing users (companies) of on-premises ERP solutions consider migrating to SaaS ERP and vendors plan to offer SaaS ERP solutions.

In addition to ERP vendors developing optimal products for each industry, the widespread idea of "fit to standard" (i.e., making the tasks fit the system rather than the traditional way of making the systems fit to the tasks) is contributing to the increase in SaaS ERP adoption.

However, the adoption of SaaS ERP by large companies tends to require a long-term view, as there are complicated specific requirements, and it is sometimes difficult to fit every task into the ERP. On the other hand, SMEs are more likely to choose SaaS ERP solutions because of the benefits such as data alignment between subsidiaries within the corporate group.

To efficiently manage the company's resources (people, goods, and money), it is effective to integrate the resources into a single data-driven infrastructure (including alignment of systems, etc.)
This makes it easier for the company to efficiently formulate the management strategy, enabling the company to have a competitive edge. Cloud-based ERP, which adds AI applications to the above, is expected to further increase adoption.

Future Outlook

The ERP solution package licensing market is forecast to grow by 8.2% year-on-year to 153,660 million yen (end-user price basis) in 2024. Although 2024 sees no major events such as the Invoice System in 2022, there are increasing cases for ERP implementation, such as the replacement from legacy systems and the adoption triggered by digital transformation. The effects from physical sales activities in addition to online are likely to continue the favorable market.

Future global conditions and the impact of overseas economies, among other factors, may slow down the market growth, but there are many domestic growth factors, such as the progress in the use of cloud-based software, the adoption of digital invoices, and the effectiveness of ERP in calculating CO2 emissions to realize carbon neutrality. Therefore, the market is expected to be on an expansionary trend.  

Research Outline