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South Korea Mid Market ERP Software Market
Frost & Sullivan, July 2004
Strong Opportunities for Mid Market ERP Vendors in South Korea
Small and medium businesses (SMBs) are driving the mid market enterprise resource planning (MERP) software market in South Korea. However, with revenues between $10 million and $150 million, SMBs demand enterprise functionality at a low cost. Limited sources induce SMBs to reject vendors not possessing focused functionality, implementation, or delivery models that keep initial and recurring costs low. Interestingly, the SMB target strategies of large ERP vendors have not been as successful as expected in South Korea. Tier II vendors seem better positioned to cater to this highly fragmented segment where each SMB requires unique modules depending on its vertical and organizational focus. Tier I ERP vendors will face tough competition and will need to stress upon the localization of their products to succeed in this difficult market.
This study explores the South Korean mid market ERP software market. It focuses on addressable opportunities in the mid market space with an in-depth understanding of various vendor issues, growth, and strategies. The segments covered include ERP applications for financial management, manufacturing, sales and distribution, HR and payroll, and eERP.
Strategic Benefits of MERP Drive Adoption
MERP solutions - acknowledged as one of the best ways to weed out inefficiencies - streamline business processes and decision making. Drivers influencing the growth of MERP software market include higher return on investment (ROI), ease of integration with legacy systems, low customization of software, and successful reference sites.
In 2003, SMBs continued to demand highly tailored solutions that address functionality requirements inside the enterprise and enable management of escalating B2B integration and communications requirements being mandated by their customers, says the analyst of the research. Vendors have cashed in on this by aligning products and solutions that best match the needs of the South Korean SMB market.
Manufacturing and Technology Verticals Promise Market Revenues
The total ERP software market in South Korea was $145.9 million in 2003, and is expected to reach $351.6 million in 2010 with revenues growing at a compound annual growth rate (CAGR) of 13.4 percent between 2003 and 2010. The manufacturing sector - which dominates in South Korea - is at the forefront of MERP adoption as the sector strives to improve its operational efficiency and technology quotient. The other major vertical that is likely to drive MERP expansion in South Korea is the technology and high-tech vertical. A significant number of SMBs fall under this vertical, and hence, the potential for MERP growth in this sector is immense.
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