IDC MarketScape: Cloud ERP for Midmarket Businesses — Trends, Challenges, and Market Leaders 2024–2025

Study Overview

This summary presents the key findings of the IDC MarketScape 2024–2025 analytical study focused on the cloud-based ERP market for midmarket businesses.
The material outlines the main industry trends, current challenges faced by organizations transitioning to SaaS models, and provides a comparative analysis of leading ERP vendors.
It also includes IDC’s positioning of market participants, strategic recommendations for companies planning digital transformation, and highlights the strengths of top performers, with SAP recognized as a key player in the midmarket ERP segment.

IDC Perspective

Midmarket companies are the “middle children” of the global business ecosystem. They are larger and operate with more complex technical stacks, headcounts, and geographic footprints than small businesses, but remain less extensive and diversified than large enterprises. They occupy a broad “middle” category, combining attributes of both small and large organizations.

Many midsize firms have grown rapidly in recent years, transitioning from small to medium categories. As a result, many no longer perceive themselves as “midmarket,” but rather as larger and more sophisticated entities compared to their previous scale.
According to IDC’s Small and Medium Business Survey 2023, 41% of midmarket companies have been in operation for 10–20 years, and 31% for over 20 years. As these firms evolve, they increasingly seek robust cloud ERP systems to serve as a single source of truth across expanding departments, providing secure, anytime-anywhere access for distributed teams.

IDC defines midmarket companies as those with 100–999 employees — a broad spectrum, yet united by a common priority: ERP investment.
Based on the IDC Small and Medium Business Survey, 51% of midmarket respondents ranked “migrating key data (e.g., spreadsheets, document repositories) into business applications such as CRM, ERP, or HCM” among their top investment priorities for the next 12 months — the second most frequent response out of 15 options.
Moreover, 60% of these organizations plan to increase their technology budgets over the coming year.

Key Considerations When Selecting ERP for Midmarket Companies

Be Strategic About the Cloud

Many organizations have already realized the advantages of cloud ERP over on-premise systems — lower upfront costs, reduced IT workload, greater computing scalability, and accessibility for remote or hybrid teams.
However, given their more complex IT environments, midmarket firms must carefully evaluate how existing on-premise systems will interoperate with new cloud ERP platforms.
In fact, 53% of midmarket respondents listed “integrating on-premise capabilities with cloud/hosted environments” among their top cloud implementation priorities for the next year.
Even cloud advocates are likely to proceed incrementally, migrating specific systems as they age or when additional capacity is needed.
Integration planning should be a core evaluation criterion when selecting an ERP vendor.

Assess Artificial Intelligence Pragmatically

Midmarket businesses are eager to leverage AI-driven innovations. According to IDC’s SMB Survey 2024, nearly 40% identified non-generative AI (e.g., machine learning, chatbots, image recognition) as a top technology priority, while 37% cited generative AI (GenAI).
Many ERP vendors claim AI capabilities, but midmarket buyers should differentiate genuine value from marketing hype to avoid becoming beta testers for immature features.
They should request demos, pilot projects, and references from organizations of similar size and industry.

AI depends on continuous data inflows — companies must ensure clarity on data sources, usage policies, and security measures.
Since AI is inherently data-hungry, collection and governance processes must be airtight.
Given their larger staff sizes, midmarket firms should consider forming internal AI committees — cross-functional teams of early adopters to evaluate, learn, and evangelize AI initiatives internally.

Evaluate Your Footprint

Many midmarket organizations operate across multiple time zones, regions, and languages, or are on the path to doing so.
It’s essential to assess both current and projected geographic reach and verify whether the prospective ERP can support it:

• Does it comply with local regulations? 
• Does it handle multi-currency and multi-language environments? 
• Does the vendor provide local sales, support, and technical staff in your regions of operation? 
• If expansion is planned, can the ERP scale to future business models or verticals? 

Prioritize Advanced Reporting

One of the main reasons companies migrate to cloud ERP is the need for a single source of data truth.
As organizations expand, departmental silos emerge — finance, HR, and project management often rely on different datasets.
To address this, companies should select ERP solutions with built-in analytics and reporting capabilities, allowing all users to view consistent data through role-relevant lenses.
Engage power users and teams early to identify critical reporting needs or a “wish list,” and select a platform that meets most of these requirements.
This approach improves both productivity and employee satisfaction.

Be Ready to Adapt Business Processes

With higher transaction volumes, revenue, and workforce complexity than small firms, midmarket businesses often resist process changes due to time and training costs.
However, ERP systems perform best with minimal over-customization. Custom code increases system complexity, dependency on external developers, and long-term maintenance risk.
Discuss with your vendor which processes should be adapted to fit ERP standards — doing so will pay off in scalability and access to future innovations.

Leverage a Strong Partner Ecosystem

Because midmarket firms typically have limited internal IT capacity, they should favor ERP vendors with robust partner ecosystems to support integration, configuration, and implementation needs.

Current ERP Trends for Midmarket Businesses

Change Management and Continuous Updates

A major advantage of cloud ERP lies in automatic updates and immediate access to new features without reimplementation.
However, some businesses may struggle with UI changes during critical seasons (e.g., retailers during holidays).
As a result, more ERP vendors now offer update deferral options, allowing companies to enable updates at convenient times, which is vital for seasonal or high-demand operations.

Flexible Pricing Models

To accommodate varying usage structures, vendors are introducing alternative licensing models — such as revenue-based or consumption-based pricing rather than per-seat licensing.
For example, temporary workers can use the system without requiring full user licenses.
Tiered licensing is also common: “light users” (e.g., payroll-only access) pay less, while “power users” pay more.
In times of rapid change, flexibility in payment models offers a critical advantage.

Modular Architecture

Modern ERP systems are increasingly modular and composable — built from interoperable application components (“building blocks”) that accelerate time-to-value.
Composable applications are divided into independent, task-specific modules, providing an appealing alternative to custom development, especially given the shortage of full-stack developers.
In SaaS models, the vendor manages support and updates, reducing customer maintenance burden.
Modules can be combined via APIs from prebuilt, legacy, or custom components, enabling organizations to assemble tailored solutions and extend functionality as they grow.

Artificial Intelligence (AI) and Machine Learning (ML)

Given their smaller IT teams and budgets compared to large enterprises, midmarket companies can use AI, ML, and automation to drive efficiency and minimize manual work.
However, resource limitations mean most will need to rely on experienced vendors.
According to IDC’s Worldwide SMB Survey 2024, 87% of midmarket companies with in-house IT staff have four or fewer specialists.
The AI transformation journey is just beginning, making vendor expertise crucial.

Top AI/ML Use Cases in ERP Today

• Automation of routine tasks — auditing, invoicing, and similar activities — saving time, reducing errors, and improving employee morale. 
• Predictive analytics — analyzing large historical and real-time datasets to forecast spending, inventory, and supply chain trends. 
• Content generation — using Generative AI to produce text and imagery for business documentation and communication.

SUPPLIER INCLUSION CRITERIA IN IDC MARKETSCAPE

Suppliers are included provided they meet ERP functional requirements:

• Availability of a modern cloud offering (SaaS or equivalent). 
• Sufficient market presence and focus on midmarket organizations (at least 30–50% of revenue generated from clients with 100–999 employees), based on vendor disclosures and IDC’s own assessments of market share and ERP application forecasts. 

GUIDANCE FOR TECHNOLOGY BUYERS

The ERP market is rapidly shifting toward technologies that enable competitiveness and success in the digital world. Consider the following:

Assess internal operations and current processes. Ask yourself:

• What problems are we trying to solve with the new system? Are they technological in nature? 
• What are our current resources and competencies? How will these change with new investments? 
• How do we define a successful implementation? 
• Which internal stakeholders should be involved? 
• How will the new system transform the organization? 
• Can we achieve better end-to-end industry-specific integration from front office to order fulfillment? 

Select the right partners. Begin by defining your ERP strategy and implementation roadmap. Then choose service partners (if required) aligned with the technology vendor’s ecosystem. Ask yourself:

• Does the vendor’s product/service/scale align with our needs? 
• Can the vendor provide a hands-on demo with our actual data that demonstrates tangible business value? 
• Does the vendor understand the regulations that impact our business? How are these reflected in the product today, and how will they evolve? 
• What is the vendor’s 3–5 year strategic investment plan, and how will it strengthen our business? 

VENDOR PROFILES

SAP (Business One)

Based on the evaluation of SAP (Business One)’s strategy and capabilities, IDC has classified the company as a Major Player in the 2024 IDC MarketScape for ERP applications in SaaS and cloud-enabled deployments for midmarket companies.

SAP Business One is an ERP solution for small and midsize businesses, covering accounting and finance, purchasing, inventory, sales, reporting, and analytics. It supports both on-premises and cloud deployment models, includes embedded BI analytics, integrates with SAP S/4HANA Cloud, and enables rapid implementation. Clients select deployment models through certified partners.

All SAP ERP products are connected to SAP Business Technology Platform (BTP), where partners can build solutions once and integrate them across all three SAP ERP platforms: Business One, Business ByDesign, and S/4HANA Cloud.

Key facts about SAP Business One:

• Typical cloud implementation time: 3–6 months 
• Global reach: 50 localizations, 28 languages, deployed in 170+ countries 
• Industry focus: partner-developed industry extensions 
• Ideal customer size: up to 100 employees 
• Typical cloud contract duration: 1–3 years 
• Deployment options: on-premises, cloud, hybrid 
• Partner ecosystem: 850+ resellers and 300+ ISVs worldwide 

Strengths

• Partner ecosystem. SAP operates primarily through partners and encourages them to build extensions on SAP BTP, providing small and midsize companies access to a broad network of specialized extensions and applications. 
• Interface and integrations. Clients value the user interface—some cite it as a primary reason for selection. Integration with other systems, including Salesforce, is seamless. 
• Deployment flexibility. Customers can choose between cloud or on-premises deployment. 

Challenges

• Rigid requirements. Some customers desire less rigid workflows and simpler customization options. 
• Performance and responsiveness. At the upper end of the target company size, system performance may slow down. 
• Roadmap transparency. Clients report limited direct communication from SAP regarding upcoming functionality and often must seek out information independently. 

Consider SAP (Business One) if you are a midmarket organization seeking an out-of-the-box solution with a strong partner ecosystem, a broad range of extensions, and an intuitive UI for non-technical users.

SAP (S/4HANA)

Based on IDC’s evaluation, SAP (S/4HANA) has been classified as a Leader in the 2024 IDC MarketScape for SaaS and cloud-enabled ERP for midmarket organizations.

SAP differentiates itself through an integrated, end-to-end portfolio. The company provides customers with a unified suite of products and partners focused on integration, AI, UX, localization, and operational excellence in the cloud.

Through SAP BTP, SAP delivers a business-centric platform enabling process innovation and data-driven decision-making both within and beyond the SAP landscape. Clients consistently recognize its strong industry operational capabilities, end-to-end process coverage (CX, SAP Ariba, SAP Fieldglass, SAP SuccessFactors, SAP Concur), and embedded AI features (digital assistants, intelligent process automation, predictive analytics).

SAP S/4HANA Cloud is an intelligent, integrated ERP built on SAP HANA, supporting 26 industries, global operations, and a vast partner ecosystem. It is delivered with a unified semantic model and consistent user experience as a service, managed by SAP in its own data centers or via selected IaaS providers.

There are two cloud editions: SAP S/4HANA Cloud, Private Edition and Public Edition. This flagship solution forms the foundation of RISE with SAP and GROW with SAP, each tailored to distinct audiences.

SAP also supports sustainability by offering a portfolio of solutions for zero emissions, zero waste, and zero inequality, along with advanced ESG reporting. Solutions for climate action, circular economy, and social responsibility are industry-specific and integrate environmental, operational, and financial insights directly into core business processes. For example, “carbon accounting” mirrors financial accounting by creating a carbon ledger.

Key facts about SAP:

• Employees: 107,000+ 
• Customers: 425,000+ 
• Global presence: operations in 180+ countries across six continents 
• Industry coverage: packaged solutions for 26 industries and 12 business domains across on-premises, cloud, and hybrid models 
• Ideal customer size: small, midsize, and large enterprises 
• Average implementation time: varies by company size, project scope, and legacy migration 
• SaaS/Cloud model: Public Cloud Edition — SaaS with multi-tenant architecture (infrastructure, database, application) 
• Partner ecosystem: 25,500 partner companies in 140+ countries; 370+ SAP and partner industry solutions extending S/4HANA Cloud and SAP Business Network; 2,100+ partners developing on SAP BTP 

Strengths

• Brand strength. High recognition and reputation; many long-standing SAP customers remain loyal with no intent to migrate elsewhere. 
• Financial innovation. Predictive liquidity, supplier delinquency risk scoring via AI, intelligent invoice matching, automated payment release, and automated GL postings. 
• Financial expertise and best practices. Strong linkage between finance and manufacturing, comprehensive industry best practices, and additional features that enhance financial processes across production and supply chains. 

Challenges

• Support. Accessing the right technical support can sometimes be slow; in Public Edition, processes may feel overly complex. 
• Implementation. Migration from legacy on-prem SAP to S/4HANA Cloud can be challenging despite available migration assessment tools. 
• Packaging. Customers often struggle to understand the differences between S/4HANA Cloud editions: RISE with SAP typically targets existing customers (Private Edition), while GROW with SAP addresses new customers (Public Edition). Migration from SAP ECC to Private Edition resembles an upgrade with additional optimization tools; Public Edition always implies a greenfield implementation supported by tools such as SAP Discovery Assessment and Cloud ALM. 

Consider SAP (S/4HANA) if you are an existing SAP customer or an industry-focused organization seeking a modern, intelligent, cloud-native ERP.

IDC MARKETSCAPE METHODOLOGY

The selection of criteria, weightings, and vendor assessments represents IDC’s expert judgment, based on structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are derived from user interviews, buyer surveys, and IDC analyst expertise.

The evaluation of each vendor — and ultimately their position in the IDC MarketScape — is based on detailed vendor surveys/interviews, publicly available data, and end-user experiences, ensuring accurate and consistent assessment of each vendor’s characteristics, behavior, and capabilities.

MARKET DEFINITION

Enterprise Resource Planning (ERP) refers to a packaged, integrated suite of business applications sharing common data and process models that digitally support administrative, financial, and operational processes across industries. These processes manage resources, including (wholly or partially): people, finances, capital, materials, suppliers, production, supply chains, customers, products, projects, contracts, orders, and assets.

ERP suites and related applications are used to run day-to-day operations, typically starting with finance, including procurement and inventory/asset management. They may also include HCM, order management, manufacturing, distribution, services, engineering, PLM, and supply chain management.

Software can be industry-specific or cross-industry. ERP systems are generally designed as integrated sets of business rules and metadata, with access to a common data set (logical or physical) through a unified and consistent interface. ERP solutions are available in on-premises, hybrid, and cloud (SaaS) deployment models.