Price Forecast: ERP Software

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  • Tags : IT | ERP Software | Price trend | Price forecast | Procurement research | Category market forecast

Recent Price Trend - ERP Software

During the three years to 2017, the price of ERP software has been falling at an estimated annualized rate of 0.4%. Even though demand for ERP software has been growing, prices have been falling due to increasing competition and shifting buyer preferences.

Price declines have come steadily as vendor competition has intensified and buyers have changed their preferences for ERP software delivery. An ERP software system provides buyers with a key competitive advantage, but its total cost of ownership is high, particularly when the provider is a well-established market leader, like Oracle or SAP. Consequently, new providers have been entering the market and capturing market share by offering low-priced or open source ERP software solutions, which buyers can use for free. At the same time, buyer preferences have shifted from the SaaP delivery model to SaaS deployments, which are typically less expensive. As a result of these changes, average market prices have fallen. Although suppliers still retain some pricing power in the ERP software market, the balance of power has shifted in favor of buyers. Consequently, buyer power has increased in the past three years.

Although competition has been driving market prices down in recent years, the rate at which prices have been falling has been slowed by increases in demand. This growth has been driven primarily by private investment in computers and software and the rising number of broadband connections. As businesses have invested more in automating back-office processes, demand for ERP software has risen. This technological investment has also included growth in broadband connections. As more businesses have invested in faster internet connections, they have become more likely to purchase SaaS solutions. As a result, demand for ERP software has risen. Finally, demand for ERP software has also grown in line with a rise in the number of businesses, which represents the potential customer base for market providers. This growth in demand has prompted market providers to limit price declines.

Nonetheless, in addition to falling prices, buyers in the ERP software market benefit from low price volatility. Low price volatility boosts buyer power by allowing buyers to budget for purchases more accurately. Because market prices are falling, buyers may benefit from delaying purchasing or signing service agreements.


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