The No. 1 software company, Microsoft Corp., a relatively new entrant into the so-called enterprise resource planning (ERP) software market, could overtake Oracle Corp. in fresh licence sales of business software in India by 2010, helped by its focus on small and medium businesses, according to experts tracking the market.
ERP software helps companies streamline different parts of their business including inventory, operations, budgeting and human resources. Three software firms dominate the ERP market in India: SAP AG, the world’s biggest business software firm (through its Indian unit, SAP India Pvt. Ltd), leads with a 48.3% share, followed by Oracle India Pvt. Ltd at 24.9% and Microsoft India Pvt. Ltd at 12.2%, according to a late 2007 analysis of the previous year’s data by research firm Frost and Sullivan.
The market for fresh ERP licences sold each year in India, $54.2 million (nearly Rs240 crore) in 2006, is expected to expand at around one-fifth annually to touch $80 million by the end of this year, and reach almost $185 million by 2013, the report predicted.
Over half the demand for ERP solutions come from small and medium enterprises or SMEs, a segment which will continue to drive the market in the future, it added.
Tech vendors define SME customers differently; some club clients below $100 million in this category, while others count organizations with less than 1,000 computers as SME clients.
The ERP business is typically split into fresh licence sales, software updates and maintenance revenues. New licences flag the growing reach of an ERP vendor and the other two bigger components follow.
“Microsoft can emerge as the No. 2 player in the overall Indian ERP market beating Oracle in the next couple of years because of its strong focus on SMEs. SMEs are growing faster than the overall ERP market,” said Praveen Sengar, senior manager, software and services research, at research firm International Data Corp. (IDC).
While SAP, Oracle and Microsoft will continue to dominate the market in the future, the possibility of Microsoft overtaking Oracle in the next two years is very likely, another analyst said.
“SAP, with its large spread, has been very aggressive in the SME market in the last one year and has shown strong growth. While Oracle is strong in manufacturing, Microsoft has been able to identify specific requirements of SMEs, and design solutions around these needs,” said Sourabh Kaushal, industry manager of the information and communications technology practice, South Asia and West Asia, at Frost and Sullivan.