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The ERP Market in China is part of Netscribes’ Information Technology Industry Series reports. The market will be boosted by increasing demand from small and medium businesses (SMBs), expansion of ERP in new industries together with the rising need for management effectiveness.
The report begins with the definition of ERP and its key characteristics followed by its historical evolution and framework. The market overview section provides global market size with growth potential for the period 2009-15. It also presents the revenue of global ERP vendors from ERP software in 2010 and their market shares. Domestic ERP market overview provides details on market size in terms of revenue and its growth for the period 2010-16. This section further illustrates the average sales revenue per enterprise during 2008-10. Further, the report exhibits the market share of major ERP vendors in the high-end ERP segment in 2009 and the four distinct groups of ERP vendors existing in the market.
The report discusses the major aspects of ERP selection criteria, followed by the various cost components of ERP installation.
The report covers the benefits of ERP implementation followed by the factors influencing Chinese companies while during their decision making. It also lists the Critical Success Factors (CSF) in ERP implementation in China.
Key factors driving the growth of ERP market in China include wage inflation, increasing demand from SMBs, penetration of ERP in new industries, rising need for management effectiveness, rising automobile production, and opportunity from cloud computing.
The report finds that wage inflation will be a catalyst for expanding ERP usage in China. ERP is increasingly gaining popularity among the SMBs that account for nearly 99% of the total Chinese enterprises. With the major enterprises entering into new industries, usage of ERP will increase to enhance their management systems. China’s enterprise management software market witnesses rapid growth owing to rising need for cost-effectiveness. Growing automobile sector in China at 10% CAGR during 2007-20 will drive software demands for automakers. Additionally, Chinese government had invested over USD 100 mn in five cities for cloud computing advancement in 2011.
Players operating in the market also face challenges which are impeding their development and growth. Major challenges identified in the report include high cost of ERP implementation, cultural issues, lack of ERP experience, communication barrier and profitability concerns for ERP vendors.
The report finds that lack of ERP adoption in China is primarily due to high cost of implementation. ERP strategic benefits in China tend to get restricted due to difference in management culture coupled with cultural fragmentation in the market.
2. Executive Summary
ERP market in China is the largest segment of the Chinese Enterprise Applications market
Market ERP market in China has shown strong growth generating USD ‐‐ mn in 2010, and is expected to grow at x%
during 20‐ ‐20‐
Drivers: Challenges:
LE
‐ Wage Inflation ‐ High Cost of ERP Implementation
‐ Increasing Demand from SMBs ‐ Cultural Issues
Drivers &
Challenges P
‐ Penetration of New Industries
‐ Demand of Enterprise Management System
M
‐ Rising Auto Sales
‐ Lack of ERP Experience
‐ Communication Barrier
A
‐ Profitability Concerns for ERP Vendors
S
‐ Opportunity from Cloud Computing
‐ Stricter Regulation of Resource Consumption & Carbon
Emissions
Emergence of Chinese ERP Software Vendors as Dominant Players
Software Localization
Shift towards High‐end, Large‐scale Clients
Trends
Shift in ERP Focus to Business Processes
Increasing Mergers & Acquisitions
Major Domestic Players
Company A Company B Company C
Competition Major Foreign Players
Company D Company E Company F Company G
ERP MARKET IN CHINA 2012.PPT 2
3. •Introduction
•Market Overview
Global
China
LE
P
•ERP Selection Criteria
M
S A
•Benefits of ERP Implementation
•Drivers & Challenges
•Government Initiatives
•Trends
•Mergers & Acquisitions
•Competition
•Key Takeaways
ERP MARKET IN CHINA 2012.PPT 3
4. Enterprise Resource Planning (ERP) ‐ Definition
LE
Enterprise Resource Planning (ERP)
P
ERP is an accounting oriented information system needed to acquire, create, distribute
and account for customer orders for classifying and planning the enterprise resources
M
SA
Key Characteristics of ERP Systems
Common Access to a Single Set
Standardized Data Definitions Beyond the Company Scope
of Data
• ERP system should support an
• Single set of data is to be maintained
• Same data definition across all ERP organization's online services to
in a basic design objective across
application modules is shared by external units instead of
all business processes within
the ERP business processes confining to an organization’s
an organization
boundary
System Flexibility Open System Architecture
• With the changing needs of an • Any ERP module can be interfaced
enterprise an ERP system should be or detached when required without
flexible which is facilitated by affecting other modules and should
client/server technology to run support multiple hardware
across different database back‐ends platforms for companies that use
through Open Data Base heterogeneous systems, including
Connectivity (ODBC) some third‐party add‐ons
ERP MARKET IN CHINA 2012.PPT 4
5. Evolution of ERP
Since, 1960 Information Technology has offered solutions which are intended for facilitating smoother and faster
business operations within an organization, some of which can be illustrated as below:
Inventory
Material Requirement
LE Manufacturing
Enterprise Resource
P
Management & Requirements
Planning (MRP) Planning (ERP)
Control Planning (MRP II)
1960
S AM
1970 1980 1990
• Development 1 • Development 1 • Development 1 • Development 1
• Development 2 • Development 2 • Development 2 • Development 2
ERP MARKET IN CHINA 2012.PPT 5
6. Framework of ERP System
Purchase
Manufacturing
HR / Payroll
LE
MP ERP Console
A
Vendor Management
CRM
S
Sales Accounting
Inventory Management
ERP MARKET IN CHINA 2012.PPT 6
7. Global ERP Market is expected to grow at 3.8% during 2009‐
13, reaping significant benefits from various factors
Global ERP Market – Overview
(CAGR) of x% during 20‐ ‐20‐
LE
• Global ERP Market in terms of sales is expected to reach USD ‐‐ bn by 20‐ with a compound annual growth rate
P
• Global ERP market in SaaS is expected to reach ‐‐ bn USD in 20‐ from ‐‐ bn USD in 20‐ with a CAGR of y%
• Rising revenues for maintenance fees, new acquisitions, penetration of new industries, and emerging markets such as
S AM
China, will extend development and new growth over the coming years
Global ERP Sales and Growth Global ERP Market (SaaS)
USD bn x% USD bn
a6 a7 y% b2
50 a3 a4 a5 2.0
a2
a1
40 1.5 b1
30
1.0
20
10 0.5
0 0.0
20‐ 20‐ 20‐e 20‐e 20‐e 20‐e 20‐e 20‐ 20‐e
Note: SaaS refers to Software as a Service which is a sub‐segment in ERP
ERP MARKET IN CHINA 2012.PPT 7
8. The top 10 global ERP vendors generated almost half of the
total revenues from ERP software
Global ERP Software Revenues (20‐) Software Revenue Share (20‐)
0 10,000 20,000 30,000 40,000
USD mn
Company 1 a1 b3
LE
b6 b5
Company 2 a2 b7 b4 b1
16% 8% 37%
P
b2
Company 3 a3 b8
M
Company 4 a4
b11
A
Company 5 a5 b9
Company 6
Company 7
Company 8
a6
a7
a8
17% S 7% 38% b10
Company 9 a9
Company 10 a10
Company 1 Company 4 Company 7 Company 10
Other a11
Company 2 Company 5 Company 8 Other
Total a12 Company 3 Company 6 Company 9
17% 7% 38%
By 20‐, the global ERP software revenues accounted about ‐‐ bn with the top five global ERP vendors having
x% share of the market
Note: ERP vendors considered are not exhaustive
ERP MARKET IN CHINA 2012.PPT 8
9. ERP market in China is expected to be the fastest growing
market in the world with x% CAGR during 20‐ ‐20‐
China ERP Market – Overview ERP Market Size and Growth
USD mn
1,500 x% a7
a6
LE
• ERP market is expected to grow with a CAGR a5
1,000 a4
of ~x% during 20‐ ‐20‐ reaching USD ‐‐ bn by a3
a2
P
a1
20‐
500
commanding ~y% market share in 20‐
M
• ERP market in China is the largest segment of
A
the Chinese Enterprise Applications market,
S
0
20‐ 20‐e 20‐e 20‐e 20‐e 20‐e 20‐e
• Enterprise software market in China is Enterprise Software Market Growth
expected to grow to USD ‐‐ bn by 20‐ with a
USD bn
CAGR of z% during 20‐ ‐20‐
10 y% b2
• Foreign ERP vendors like SAP, Oracle and 8
others entered China attracted by significant 6 b1
business opportunities and taking control in 4
2
the Chinese ERP market
0
20‐ 20‐e
ERP MARKET IN CHINA 2012.PPT 9
10. ERP vendors are seeking growth opportunities from the
growing enterprise sales revenue
Average Sales Revenue Per Enterprise
USD mn
100
80 16% 8%
c
37%
LE c8%
c1%
Province 1
Province 2
Province 3
P
a b c2%
60 Province 4
M
c7%
c3% Province 5
A
40 Province 6
20
0
20‐ 20‐
17% S 7%
20‐
38%
c6%
c5%
c4%
Province 7
Province 8
Top eight provinces of China having x enterprises accrued USD ‐‐ mn average sales revenue
per enterprise in 20‐ demonstrates huge opportunities for both domestic and
international vendors in ERP market
Note: Eight provinces and cities with the largest number of enterprises have been studied
ERP MARKET IN CHINA 2012.PPT 10
11. Company 1 and Company 2, the top two foreign ERP vendors
accounted for more than x% market share in the high‐end ERP market
Market Share of Major ERP Vendors in the High‐End ERP Segment (2009)
Market Share
a8%
a6% a7%
LE a1% High‐end ERP market is
P
a5% a9% dominated by international
Company 1 Company 4 Company 6 vendors like company 1, company
M
a4% 2 while the local vendors who
Company 2 Others Company 7
A
dominates the low‐end are trying
Company 3 Company 5 Company 8 a3%
S
a2% to reach there
Groups of ERP Vendors
International ERP
Local Vendors – Company
Vendors – Company 1,
3, Company 4 etc.
Company 2 etc. ERP
Vendors
Industry Solutions in China
SaaS Vendors ‐ Company
Vendors – Company 5,
Company 6 etc.
7, Company 8 etc.
Note: High‐end ERP segment caters to vast and complex operations
ERP MARKET IN CHINA 2012.PPT 11
12. ERP Selection Criteria (1/4)
Selection Criteria – Major Aspects (1/2)
Finding 1
• Sub‐finding 1
LE
P
• Sub‐finding 2
S AM
• Sub‐finding 3
Finding 2
• Sub‐finding 4
• Sub‐finding 5
Finding 3
• Sub‐finding 6
ERP MARKET IN CHINA 2012.PPT 12
13. ERP Selection Criteria (3/4)
ERP – Cost Components (1/2)
Cost Components – ERP Installation
LE
MP
S A Direct Cost
Source 1 Source 2 Source 3
Necessary hardwares such as Several tools and application also
administration consoles, needs to be installed including
Basic ERP application or the
peripherals and connectivity and security softwares, software
software that needs to be
networking tools, to support the updates and software license fees
purchased
functioning of software has to ensure a proper and secured
to be procured functioning of the ERP
ERP MARKET IN CHINA 2012.PPT 13
14. ERP Selection Criteria (4/4)
ERP – Cost Components (2/2)
Cost Components – ERP Installation
LE
MP
S A Indirect Cost
Source 1 Source 2 Source 3 Source 4
In‐house staff and IT staff
Time utilized by the company Cost incurred for testing and
needs to be trained on its Cost to convert the existing
to prepare details such as scrutiny of the solution’s
usage and other necessary data and media to the format
analysis and documentations performance and user
details, which in turn attracts supported by the ERP
relevant to the implementation acceptance before its actual
a crucial cost component
of the solution implementation
for the company
ERP MARKET IN CHINA 2012.PPT 14
15. •Introduction
•Market Overview
Global
China
•ERP Selection Criteria
•Benefits of ERP Implementation
•Drivers & Challenges
•Government Initiatives
•Trends
•Mergers & Acquisitions
•Competition
•Key Takeaways
ERP MARKET IN CHINA 2012.PPT 15
16. Benefits from ERP Implementation (1/6)
Benefit 1 Benefit 2
Improved decision making
LE
Suppliers and customers can be online communication
MP Integration of business operations and processes
A
Improve financial management Improve the labor productivity
S
Faster and more accurate transactions
Quality of information
Improved delivery times
Reducing the requirements of manpower Reduction of total operation and administration costs
Reduction of stock levels
Improved inventory/asset mgt
Reduction of real‐time information
ERP MARKET IN CHINA 2012.PPT 16
17. Benefits from ERP Implementation (3/6)
Direct Benefits from ERP Implementation
0 10 20 30 40 50 60 70 80 90 100
Direct Benefits in %
Benefit 1
Benefit 2
LE a2%
a1%
Benefit 3
M
Benefit 4
P a4%
a3%
Direct benefits from ERP
implementation in
S A
Benefit 5
Benefit 6
Benefit 7 a7%
a6%
a5% enterprises obviously act at
the level of the
improvement of delivery
efficiency prior to the
Benefit 8 a8%
improvement in purchasing
Benefit 9 a9% efficiency leading to
Benefit 10 a10% customer satisfaction and
Benefit 11 a11% escalating market share
Benefit 12 a12%
Benefit 13 a13%
Note: % share are approximation
ERP MARKET IN CHINA 2012.PPT 17
18. Benefits from ERP Implementation (4/6)
Factors influencing Chinese Companies to Implement an ERP System
• Finding 1
LE
P
• Finding 2
• Finding 3
S AM
Factors influencing Chinese Companies in ERP Implementation
a5%
Factor 1 Factor 4 a4%
Findings
Factor 2 Factor 5 a3%
Factor 3
a2% a1%
ERP MARKET IN CHINA 2012.PPT 18
19. Benefits from ERP Implementation (5/6)
Critical Success Factors (CSF) in ERP Implementation in China (1/2)
Teamwork and Composition
Top Management Support
LE
P
Business Process Re‐engineering
M
Critical Success ` S A
Effective Project Management
User Involvement
Factors Education and Training
Suitability of Software and Hardware
Effective Interdepartmental Communication
Change Management Programme & Culture
Organizational Culture
ERP MARKET IN CHINA 2012.PPT 19
21. Drivers & Challenges – Summary
LE Challenges
Drivers
Wage Inflation
MP High Cost of ERP Implementation
A
Cultural Issues
Increasing Demand from SMBs
Penetration of New Industries
S Lack of ERP Experience
Communication Barrier
Rising Need for Management
Profitability Concerns for ERP Vendors
Effectiveness
Rising Automobile Production
Opportunity from Cloud Computing
ERP MARKET IN CHINA 2012.PPT 21
22. Wage inflation will be a catalyst for expanding ERP
usage in China
Wage Inflation Impact
• Finding 1
• Finding
LE
Sub‐finding 1
Sub‐finding 2
• Finding 3
Sub‐finding 3
Sub‐finding 4
MP
Labour Costs
S A Growth in Average Monthly Wage
Country 1 a1 USD
Country 2 a2 China has 2nd 400 x%
Country 3 a3 highest total labour b2
Country 4 a4 cost in Emerging 300 b1
Country 5 a5 Asia
Country 6 a6 200
Country 7 a7
Country 8 a8 100
Country 9 a9
0
Note: :Per capita Average Annual Salary (USD) has been considered as of Oct 2010
20‐ 20‐
ERP MARKET IN CHINA 2012.PPT 22
23. ERP is increasingly gaining popularity among the SMBs that
account for a1% of the total Chinese enterprises
Increasing Demand from SMBs Impact
• Finding 1
• Finding 2
LE
• Finding 3
Sub‐finding 1
P
Sub‐finding 2
S AM
Share of SMEs in Total Chinese Enterprises
a2%1%
Demand from the SMBs is increasing to
improve their infrastructure and with
spreading out of operations
a1%
Small & Medium enterprise Others
In the presence of healthy economic outlook, increasing competitiveness among SMBs
In the presence of healthy economic outlook, increasing competitiveness among SMBs
is leading to more aggressive ERP growth
is leading to more aggressive ERP growth
Note: SMB refers to Small & Medium Business
ERP MARKET IN CHINA 2012.PPT 23
27. Lack of ERP adoption in China is primarily due to high cost of
implementation
High Cost of ERP Implementation Impact
•Finding 1
•Finding 2
Sub‐finding 1
Total Cost of ERP
Company Size ERP Users
Ownership
Total Cost of an ERP Small ‐ USD ‐‐
finding 1
Solution
Medium ‐ USD ‐‐
Big ‐ USD ‐‐
Company Size ERP Users Hardware Costs
Hardware Costs of an Small ‐ USD ‐‐
ERP System finding 2
Big ‐ More than a mn USD
ERP MARKET IN CHINA 2012.PPT 27
29. Trends – Summary
Emergence of Chinese ERP
Software Vendors as Dominant
Players
P LE
Increasing Mergers &
Acquisitions
S AM Key
Software Localization
Trends
Shift in ERP Focus to Business Shift towards High‐end, Large‐
Processes scale Clients
ERP MARKET IN CHINA 2012.PPT 29
30. Domestic ERP vendors like company 1, company 2 and company 3
accounted for more than x% of ERP market share
Emergence of Chinese ERP Software Vendors as Dominant Players
• Finding 1 Local ERP vendors
LE
are dominating the
• Finding 2 market
Sub‐finding 1
Sub‐finding 2
MP
Market Share of Major ERP Vendors (2010)
2010 a1%
S A a2% a3% a4% a5% a6% a7% a8% a9% 100%
Top three foreign ERP
Top five domestic ERP vendors holds y% market
vendors holds z% of the
share gaining competitive edge
market share
Company 1 Company 2 Company 3 Company 4 Company 5 Company 6 Company 7 Company 8 Others
Motivation behind Development of Domestic ERP Market
• Motivation 1
• Motivation 2
• Motivation 3
Note: Market share is in context with overall ERP market
ERP MARKET IN CHINA 2012.PPT 30
31. With a1% ERP market client share in China, large‐scale
enterprises…
Shift towards High‐end, Large‐scale Clients (1/2)
• Finding 1
China’s ERP market
• Sub‐finding 1
is shifting towards
LE
• Finding 2 the high‐end
clients
P
• Finding 3
Sub‐finding 2
S AM
China’s ERP Market Client Structure (20‐)
By 20‐, China’s ERP market captured a1%
of the large enterprises evidently showing
a1% the shift towards high‐end, large scale
Client 1 Client 4 a5% clients
Client 2 Client 5
Client 3
a4%
a3% a2%
Note: SME – Small & Medium Enterprises
ERP MARKET IN CHINA 2012.PPT 31
32. Mergers & Acquisitions (M&A) (1/3)
Announced Date Closed Date Target Buyer/Investors Sellers Size (USD mn)
Jan‐16‐20‐ Jan‐11‐20‐ Target Company A Investor Company A Seller Company A USD X mn
LE
P
Sep‐6‐20‐ Jan‐4‐20‐ Target Company B Investor Company B Seller Company B USD X mn
Sep‐22‐20‐ N.A.
S AM
Target Company C Investor Company C Seller Company C USD X mn
Sep‐20‐20‐ Sep‐16‐20‐ Target Company D Investor Company D Seller Company D USD X mn
SAMPLE
ERP MARKET IN CHINA 2012.PPT 32
33. Major Domestic Public Companies – Summary (1/2)
Net Profit
65 Size of the Bubble represents Market
60 Capitalization in USD mn
55
50
LE m1
P
45
m2
M
40
A
35
S
30
25
20
15
10
5 m3
0
‐5
‐10 Total Income
140 160 180 200 220 240 260 280 300 320 340 360 380 400 420 440 460 480 500 520
Company 1 Company 2 Company 3
Note: Revenue and Net Profit figures are in USD mn for the year ending Dec 31st 2010; Market Cap figures for UFIDA Software Co., Ltd. is for Feb 1st 2012, for Kingdee
International Software Group Company Limited is for Jan 20th.2012 and for Inspur Group is for Feb 23rd 2012
ERP MARKET IN CHINA 2012.PPT 33
35. Domestic Company – Company A
Company Information Locations – China
Company 5
Corporate Address x, y Avenue, City 5, City 5 Pin‐code,
Country
LE
Tel No. xxx‐yyy‐zzz
Fax No. xxx‐yyy‐zzz
Website
Year of Incorporation
‐
19
MP
Ticker Symbol
Stock Exchange
Products and Services
xx
yy
S A Headquarters
Other Offices
Category Products/Services
Software Products Enterprise resource planning, Key People
information security software
Name Designation
Development Web groupware, Web application
Platform Products framework, business service platform, Person 1 Chairman of the Board, CEO &
business process management, model President
driven architecture
Person 2 Vice Chairman & General Manager
Tax‐control Products Chipsets, cashing machines, controllers,
Person 3 General Manager & Director
printers
Person 4 CFO & Secretary
ERP MARKET IN CHINA 2012.PPT 35
36. Domestic Company – Company A
Financial Snapshot Key Ratios
y‐o‐y change
Particulars 2010 2009 2008 2007
Total Income Total Income Profit (2010‐09)
USD mn USD mn Profitability Ratios
Profit / Loss
200 a4 6 Operating Margin ‐ ‐ ‐ ‐ ‐
a1 a2 a3
Net Margin ‐ ‐ ‐ ‐ ‐
LE
150 4
Profit Before Tax Margin ‐ ‐ ‐ ‐ ‐
100 2
Return on Equity ‐ ‐ ‐ ‐ ‐
P
50 0
Return on Capital Employed ‐ ‐ ‐ ‐ ‐
0 ‐2 Return on Working Capital ‐ ‐ ‐ ‐ ‐
M
20‐ 20‐ 20‐ 20‐ Return on Assets ‐ ‐ ‐ ‐ ‐
A
Financial Summary Return on Fixed Assets ‐ ‐ ‐ ‐ ‐
Cost Ratios
to net loss of USD ‐ mn in FY 20‐
S
• The company earned a net profit of USD ‐ mn in FY 20‐, as compared
• The company reported total Income of USD ‐ mn in FY 20‐,
registering an increase of x % over FY 20‐
• The company earned an operating margin of y % in FY 20‐ an
Operating costs (% of Sales)
Administration costs (% of
Sales)
Interest costs (% of Sales)
Liquidity Ratios
Current Ratio
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
increase of z percentage points over FY 20‐
Cash Ratio ‐ ‐ ‐ ‐ ‐
• The company reported debt to equity ratio of ‐ in FY 20‐, an increase Leverage Ratios
of a % over FY 20‐ Debt to Equity Ratio ‐ ‐ ‐ ‐ ‐
Debt to Capital Ratio ‐ ‐ ‐ ‐ ‐
Financial Summary
Interest Coverage Ratio ‐ ‐ ‐ ‐ ‐
Indicators Value (23/02/2012) Efficiency Ratios
Market Capitalization (USD) x1 mn Fixed Asset Turnover ‐ ‐ ‐ ‐ ‐
Total Enterprise Value (USD) Asset Turnover ‐ ‐ ‐ ‐ ‐
x2 mn
Current Asset Turnover ‐ ‐ ‐ ‐ ‐
EPS (USD) x3 Working Capital Turnover ‐ ‐ ‐ ‐ ‐
PE Ratio (Absolute) x4 Capital Employed Turnover ‐ ‐ ‐ ‐ ‐
Improved Decline
ERP MARKET IN CHINA 2012.PPT 36
37. Domestic Company – Company A
Key Business Segments Key Geographic Segments
Segment A Western China North China
The company operates South China East China
100% through single
100% 100% a4% b4%
LE
reportable segment a3% b3%
namely, Segment A
a2% b2%
P
50% 50%
a1% b1%
0%
Key Recent Developments
20‐
S AM 0%
20‐ 20‐
Description News
• Company A provides various information technology (IT) products and services in China and
Overview internationally
• Company A is one of the major domestic ERP vendors in china accounting 10.4% market share in 2010
• Ministry of Science and Technology (MOST) has approved China's Company A to establish the national
Approval
engineering technology research center for information storage in recent days
• Company A and Comarch Semiramis have agreed on a joint venture for entering into the Chinese ERP
Joint Venture & Acquisition market together in 2010
• Company A acquired 49% stake in LC Genersoft, an ERP company inh 2008
ERP MARKET IN CHINA 2012.PPT 37
38. ERP market in China is expected to be the fastest growing
market in the world with x% CAGR during 20‐‐ ‐ ‐‐
Despite various challenges, future of Chinese ERP market is optimistic
Initiatives Taken by
Trends in the Market Market Size
Players
LE
Local ERP vendors are USD mn
P Players are taking
gaining competitive edge 1,500 x% a7
a6
over their foreign steps to upgrade the
M
a5
counterparts particularly 1,000 a4 quality of their
a3
A
in low‐end, with 5 a2
a1 products and after‐
Chinese domestic
companies holding 53%
share of the market
By 2010, China’s ERP
market captured 36% of
500
0 S
20‐ 20‐e 20‐e 20‐e 20‐e 20‐e 20‐e
sales services along
with development in
software outsourcing
services
the large enterprises
evidently showing Challenges Though the ERP
increased focus on high‐ spending is till low,
end solutions for large ERP vendors are
scale clients • High Cost of ERP Implementation developing through
• Cultural Issues M&A to improve
ERP focus is shifting from
• Lack of ERP Experience their products and
finance and accounting
satisfy the
to business process • Communication Barrier multiplying demands
related modules such as
• Profitability Concerns for ERP Vendors of customers
CRM, SCM and PLM
ERP MARKET IN CHINA 2012.PPT 38
39. Appendix (1/2)
Ratio Calculations Ratio Calculations
(Operating Current Assets / Current
Operating Margin Current Ratio
Income/Revenues)*100 Liabilities
LE
Net Margin (Net Profit / Revenues) *100 {(Cash & Bank Balance +
Cash Ratio Marketable Securities) / Current
P
(Income Before Tax / Revenues Liabilities)}
Profit Before Tax Margin
*100
Total Liabilities / Shareholders
M
Debt to Equity
(Net Income / Shareholders Equity
A
Return on Equity (ROE)
Equity)*100
S
{Total Debt / (Shareholders
Debt to Capital Ratio
EBIT / (Total Assets – Current Equity + Total Debt)}
Return on Capital (ROCE)
Liabilities)*100
Interest Coverage Ratio EBIT / Interest Expense
(Net Income / Working Capital)
Return on Working Capital
*100
Fixed Asset Turnover Sales / Fixed Assets
Return on Assets (Net Income / Total Assets)*100
Asset Turnover Sales / Total Assets
Return on Fixed Assets (Net Income / Fixed Assets) *100
(Operating Expenses / Sales) Current Asset Turnover Sales / Current Assets
Operating Costs (% of Sales)
*100
Administration Costs (% of (Administrative Expenses / Sales) Working Capital Turnover Sales / Working Capital
Sales) *100
Capital Employed Turnover Sales / Shareholders Equity
Interest Costs (% of Sales) (Interest Expenses / Sales) *100
ERP MARKET IN CHINA 2012.PPT 39
41. Thank you for the attention
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ERP MARKET IN CHINA 2012.PPT 41