This summer we are on a journey to look at technologies that are making an impact in the construction industry. We have highlighted topics such as the metaverse and generative AI (artificial intelligence) and now we are exploring tried-and-true construction processes that can be enabled by technology. Such is the case with ERP (enterprise-resource planning) technology.
At its core, ERP technologies combine data from a number of different areas of a business, including, but not limited to, accounting/job costing, project management, sales and CRM (customer-relationship management), project management, human resources, service, and more. Naturally, different companies will have different needs when it comes to an ERP implementation, which can be costly and time intensive.
Here at Constructech we have been covering the ERP landscape for more than 20 years, exploring new trends, implementation strategies, and all the latest technologies. With this rich history, is ERP still predicted to see an upward trajectory for the construction industry? To answer this question, let’s look at two different reports.
Market research firm Facts & Factors released a report earlier this year that digs into the state of the ERP software market. The market was valued at $53.77 billion in 2022 and is expected to grow 11.1% by 2030. That is $123.42 billion on the table in less than a decade. There are a number of reasons for this growth including the need for digitization and automation.
Part of the challenge, as I mentioned previously, is the high cost associated with expansion of ERP technologies, which Facts & Factors suggests could hinder growth. Also, the integration of legacy systems can be complicated, also causing stunted growth. Finally, we see cybersecurity risks are also a rising concern for many companies.
Looking a bit more granularly at the report, we see the cloud was the leading type of deployment in 2022 and North America was the leading revenue generator. Vertical industries most likely to leverage ERP include retail, healthcare, manufacturing, government, telecom, aerospace and defense, and construction, just to name a few. Looking to the future, North America is still expected to lead the market.
Breaking It Down
Now, let’s turn our attention to another report from Grand View Research, which predicts a similar growth trajectory. This organization suggests the market will grow 11% from 2023 to 2030, alongside the need to make data-driven decisions and the rise of mobile and cloud applications.
Grand View Research makes a lot of similar points as Facts & Factors and adds there is an increase in demand for cloud-based ERP solutions, especially from small and medium-sized businesses.
The benefits are clear too, as Grand View Research says ERP implementation can reduce inventory costs by 25-30% and raw material costs by around 15%. Naturally, this results in increased profitability for construction companies.
Breaking it down a bit further, we see the finance segment held the largest share of the market, with more than 25% in 2022. HR (human resources) and supply chain also accounted for a significant part of the market.
Interestingly, Grand View Research suggests the on-premise segment held the largest share of more than 70% marketshare in 2022, but cloud is estimated to dominate the market by 2030 with significant growth rate. The large enterprise segment held the largest share of more than 39% of the market in 2022 and the medium enterprise segment will witness significant growth by 2030.
Looking to the future, construction companies have big opportunities to leverage ERP to better business practices. Now it is a matter of making the commitment—both time and money—and creating the right processes to enable better business insights and profitability for the long haul.
Do you have transformative technology designed specifically for the construction industry? We want to hear about it! Consider submitting it for our 2024 Constructech Top Products award program. Make sure to enter your product for consideration before the Oct. 6, 2023 deadline.