First Take on 2018 Cloud ERP Applications Market With Oracle Leading the Pack

A year of robust growth in Cloud ERP adoptions amid thousands of digital transformation implementations

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Preliminary results show the Cloud ERP applications market is on pace to expand significantly in 2018 with a growing number of customers adopting Cloud-native back-office software for the first time, or in many cases upgrading and replacing their on-premise systems with the latest Cloud releases as their digital transformation initiatives gather momentum.

Based on the current run-rate of the top 10 Cloud ERP applications vendors and recent customer purchases of these mission-critical products for finance and operations management, ARTW is projecting the market to soar 40% to reach more than $17 billion in Cloud subscription revenues for 2018.

Top 10 Cloud ERP Software Vendors and Market Forecast

Buoyed by Oracle ERP Cloud and NetSuite ERP cloud applications, Oracle is expected to clinch the No. 1 spot with about 10% share in the Cloud ERP market, as shown in Table 1.

Rank Vendor 2017 Cloud ERP Revenues, $M 2018 Projected Cloud ERP Revenues, $M 2018 Projected Market Share, % Growth, % Key Cloud ERP Applications Number of Cloud ERP Customers Key Vertical
1 Oracle Subscribe Subscribe Subscribe 30% Oracle ERP Cloud, NetSuite ERP 22000 Enterprise
2 athenahealth Subscribe Subscribe Subscribe 10% Athenahealth EHR 111000 Healthcare
3 RealPage Subscribe Subscribe Subscribe 33% RealPage OneSite 12500 Real Estate
4 Intuit Subscribe Subscribe Subscribe 51% QuickBooks Online 3.6 million subscribers Accounting
5 Infor Subscribe Subscribe Subscribe 19% Infor Cloud Suite 9000 Enterprise
6 SAP Subscribe Subscribe Subscribe 20% S/4HANA Cloud, Business ByDesign 8000 Enterprise
7 Blackbaud Subscribe Subscribe Subscribe 14% Financial Edge, Raiser’s Edge 35000 Non-profit
8 Workday Subscribe Subscribe Subscribe 35% Workday Financial Management 550 Enterprise
9 Xero Subscribe Subscribe Subscribe 40% Xero ERP 1.6 million Accounting
10 Sage Subscribe Subscribe Subscribe 30% Sage Intacct, Sage Business Cloud 12000 Accounting
Subtotal Subscribe Subscribe Subscribe 26%
Other Subscribe Subscribe Subscribe 54%
Total Subscribe Subscribe Subscribe 40%

Source: Apps Run The World, 2018

The leadership position coincides with Oracle’s securing more than 22,000 Cloud ERP customers including nearly 6,000 for Oracle ERP Cloud and 16,000 for NetSuite. In its most recent quarter ended November 30, Oracle’s ERP and HCM applications reached annualized SaaS revenues of $2.6 billion, up more than 25%, said CEO Mark Hurd during the earnings call.

Each quarter Oracle is migrating at least 200 customers of its on-premise ERP systems like E-Business Suite to the Cloud. Furthermore, Oracle’s SaaS net bookings of high 30% in 2QFY19 were the highest for a three-month period that was not its fourth quarter, traditionally its biggest selling window, Hurd said.

What it boils down is the fact that Oracle’s Cloud ERP strategy is resonating with its existing customers and prospects including new Cloud ERP wins at MGM Resorts, Indiana University Health Center, Johnson Controls, Securitas, and Toyota Europe during its most recent quarter.

Based on our Buyer Insights Database, of the 2,300 customers pursuing digital transformation initiatives, Oracle products are featured 292 times, or 13% of total. Among these 292 digital transformation projects using Oracle products, Cloud ERP accounts for more than one-third of such implementations. See below for samples of digital transformation projects using Cloud ERP applications. You can read the continuously updated catalog of these use cases in our Customer Database section.

Oracle is not the only one benefitting from customers accelerating their migration to the Cloud. Intuit, Xero and Sage are all experiencing a strong interest among customers wanting to adopt Cloud ERP for the first time, or migrating from their existing systems whether they come from the same vendor or one of their rivals. QuickBooks Online subscribers – many of whom are small and midsized companies –  running the Cloud-based accounting system from Intuit now top 3.6 million, up from 1.6 million two years ago. On the other hand, QuickBooks Desktop unit sales have been dropping from 183,000 to 114,000 during the same period.

SAP also announced growing adoptions of its Cloud-based S/4HANA systems. For example, Shell has gone live on S/4HANA Cloud during its latest quarter, while CPFL, Delaware International, Keytree and The Emirates Group have all adopted its S/4HANA Cloud applications, according to our Buyer Insights Database.

In terms of the outlook, the Cloud ERP market will see stiffening competition in 2019 as the incumbents reposition themselves and the upstarts become more aggressive in delivering a full suite of ERP applications.

For example, athenahealth, the No. 2 vendor specializing in Cloud-based EHR systems and practice management systems for physicians and healthcare providers, is going private following its $5.7-billion purchase by Veritas Capital and Evergreen Coast Capital, a subsidiary of Elliott Management. athenahealth, now with former GE CEO Jeff Immelt as the chairman, could benefit from its new owner Veritas’ April 2018 purchase of GE Healthcare assets by migrating those GE customers to the Cloud.

Workday, in the meantime, is parlaying its successes in the Cloud HCM market to Cloud ERP with its Workday Financial Management as well as its $1.6 billion purchase of Adaptive Insights for enterprise performance management earlier this year. Migrating some of 3,800 customers of Adaptive to a full suite of Cloud ERP will be among its top priorities.

Similarly, upstarts like Acumatica, FinancialForce, Plex and Zoho are all investing heavily to build out their Cloud ERP offerings, while going up market by expanding their presence among some of the biggest ERP users in the world as their systems are scalable and robust enough to handle their demanding requirements.

A clear motivation is that despite its projected explosive growth in 2018, Cloud ERP still has plenty of runway to take off. Based on our latest Cloud Top 500 survey, the Cloud ERP market accounts for about 20% of the overall ERP Financial Management and ERP Services Operations Management market, which is projected to top $85 billion in 2018.

Digital First 500 research project is the industry’s most comprehensive repository that documents the world’s 500 foremost and visionary organizations as they pursue a range of digital transformation initiatives. The goal of the project is to recognize their vision, trials, and tribulations along with their achievements before a global audience.

Customer Industry Empl. Revenue Country Vendor New Product
Community Health Center of Lubbock Healthcare 141 $20.0M United States Blackbaud Blackbaud Financial Edge NXT
The Vista School Education 110 $10.0M United States Blackbaud Blackbaud Financial Edge NXT
Watami Co Retail 2825 $843.0M Japan Infor Infor CloudSuite Food & Beverage
Mattex Group Manufacturing 800 $120.0M United Arab Emirates Infor Infor CloudSuite Fashion
CHRISTUS Health Healthcare 33000 $4.92B United States Infor Infor CloudSuite Healthcare
Xometry Manufacturing 140 $20.0M United States Infor Infor CloudSuite Industrial (Syteline)
Capital Region Medical Center (CRMC) Healthcare 1600 $200.0M United States Infor Infor CloudSuite Healthcare
The CSL Group Inc Transportation 1000 $250.0M Canada Oracle Oracle ERP Cloud
Arcadis Construction and Real Estate 27000 $3.40B Netherlands Oracle Oracle ERP Cloud
Unilab Life Sciences 6000 $1.10B Philippines Oracle NetSuite OneWorld
Sunmoon Food Company Consumer Packaged Goods 700 $45.0M Singapore Oracle NetSuite OneWorld
West Midlands Police Insurance 10884 $728.0M United Kingdom Oracle Oracle ERP Cloud
Adventist Health Healthcare 35000 $3.60B United States Oracle Oracle ERP Cloud
athenahealth Professional Services 4668 $924.0M United States Oracle Oracle ERP Cloud
Caesars Entertainment Leisure and Hospitality 65000 $4.85B United States Oracle Oracle ERP Cloud
Kentucky State University Education 1600 $53.0M United States Oracle Oracle ERP Cloud
San Bernardino Community College District Education 14253 $12.37B United States Oracle Oracle ERP Cloud
UW Health Healthcare 18000 $2.90B United States Oracle Oracle ERP Cloud
Prophet Professional Services 550 $30.0M United States Oracle NetSuite OneWorld Professional Services Automation
Bankrate, Inc Banking and Financial Services 384 $434.0M United States Oracle NetSuite OneWorld
Veolia ANZ Professional services 4000 $1.10B Australia SAP SAP S/4 HANA
Stockland Construction and Real Estate 1440 $2.60B Australia SAP SAP S/4 HANA
Delaware International Professional services 1800 $263.0M Belgium SAP SAP S/4 HANA
KENGEE Consumer Packaged Goods 3000 $500.0M China SAP SAP S/4 HANA
Chimelong Group Co. Ltd. Leisure and Hospitality 10000 $950.0M China SAP SAP S/4 HANA
HMD Global Oy Manufacturing 600 $2.06B Finland SAP SAP Business ByDesign
Schnellecke Distribution 19000 $1.20B Germany SAP SAP S/4 HANA
StepStone Professional Services 900 $262.0M Germany SAP SAP Business ByDesign
Waberer’s International Nyrt Distribution 7600 $675.0M Hungary SAP SAP S/4 HANA
Vectus Industries Limited Construction and Real Estate 1300 $75.0M India SAP SAP S/4 HANA
Salvatore Ferragamo Consumer Packaged Goods 4000 $1.39B Italy SAP SAP S/4 HANA
ABeam Consumer Packaged Goods 4961 $660.0M Japan SAP SAP S/4 HANA
MINISO Co. Ltd. Retail 10000 $1.80B Japan SAP SAP S/4 HANA
APG Groep N.V. Banking and Financial Services 4000 $1.20B Netherlands SAP SAP S/4 HANA
Ballance Agri-Nutrients Retail 728 $547.0M New Zealand SAP SAP S/4 HANA
Indus Motor Company Automotive 3200 $1.05B Pakistan SAP SAP S/4 HANA
Choví Food Group Consumer Packaged Goods 135 $45.9M Spain SAP SAP S/4 HANA
JTI Consumer Packaged Goods 40000 $10.50B Switzerland SAP SAP S/4 HANA
Penti Retail 3000 $600.0M Turkey SAP SAP S/4 HANA
The Emirates Group Transportation 103363 $27.88B United Arab Emirates SAP SAP S/4 HANA
Arm Limited Professional services 6250 $1.35B United Kingdom SAP SAP S/4 HANA
Quorn Foods Consumer Packaged Goods 650 $100.0M United Kingdom SAP SAP S/4 HANA
Transport for London Transportation 23478 $2.00B United Kingdom SAP SAP S/4 HANA
Centrica Utility 60000 $36.50B United Kingdom SAP SAP S/4 HANA
Liberty Speciality Markets Insurance 1700 $200.0M United Kingdom SAP SAP S/4 HANA
Northern Gas Networks Utility 2658 $200.0M United Kingdom SAP SAP S/4 HANA
pladis Global Consumer Packaged Goods 26000 $6.00B United Kingdom SAP SAP S/4 HANA
Scotts Miracle-Gro Company Consumer Packaged Goods 5500 $2.80B United Kingdom SAP SAP S/4 HANA
Berry Bros. & Rudd Consumer Packaged Goods 450 $100.0M United Kingdom SAP SAP S/4 HANA
De La Rue Distribution 3500 $603.0M United Kingdom SAP SAP Business ByDesign
The Coca-Cola Company Consumer Packaged Goods 61800 $35.41B United States SAP SAP S/4 HANA
Moderna Therapeutics Life Sciences 600 $910.0M United States SAP SAP S/4 HANA
Microsoft Professional services 131300 $110.00B United States SAP SAP S/4 HANA
doTERRA Retail 2300 $1.50B United States SAP SAP S/4 HANA
Point Loma Nazarene University Education 1250 $300.0M United States Workday Workday Financial Management
Zillow Construction and Real Estate 3334 $1.08B United States Workday Workday Financial Management
Caliber Collision Automotive 2800 $1.20B United States Workday Workday Financial Management
Care.com Professional Services 600 $146.0M United States Workday Workday Financial Management
Denny’s Leisure and Hospitality 8900 $529.0M United States Workday Workday Financial Management
Best Western Hotels & Resorts Leisure and Hospitality 5000 $7.00B United States Workday Workday Financial Management
The Ohio State University Education 30000 $4.00B United States Workday Workday Financial Management

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