6 ERP trends for 2026 and beyond: CIOs rethink core systems

The market for enterprise resource planning (ERP) systems is entering what some industry experts are calling an upgrade “supercycle,” fueled by a convergence of key factors.

Grandview Research predicts global ERP software sales will grow 9.5% annually from 2026 to 2033. Fortune Business Insights puts the growth rate from 2026 to 2034 at 13%. And Morgan Stanley analyst Chris Quintero is even more bullish, saying the ERP market will grow by 17% annually.

This projected growth spurt is significant because, as Forrester analyst Faram Medhora points out, “The ERP solutions market is mature, saturated in large enterprise adoption, and driven primarily by modernization rather than net-new ERP buying.”

Quintero adds that 50% of CIOs in a recent Morgan Stanley survey indicated they planned to upgrade and modernize their ERP systems over the next few years.

For many organizations, inertia is a powerful force. If the finance, supply chain, manufacturing and HR software are fully paid for and doing the job, then there’s little incentive to embark on a costly, risky upgrade. But the days of running mission-critical business processes on decades-old software are quickly coming to an end. Here’s why.

1. AI is having a transformative impact

Medhora, who uses the term “supercycle” to describe the rapid pace of ERP modernization, says, “AI-driven automation is the main innovation trend, moving ERP toward active orchestration across a federated application estate connected by APIs.”

Gartner analyst Johan Jartelius adds that AI “is transforming ERP systems from transactional to intelligent platforms that provide insights while reducing the need for human intervention in routine tasks.” Gartner predicts that by 2030, over 50% of foundational ERP tasks will be autonomously executed by AI, reducing human involvement in finance, supply chain, and HR.

But So Chan, US enterprise performance leader at Deloitte, cautions that AI’s rise is by no means marginalizing the centrality of ERP.

“AI isn’t the death of ERP; ERP is actually what enables the value of AI. That’s what we’re seeing,” Chan says. “The way we’ve been articulating it with our clients when we think about how their ecosystem works is this idea of a core, the systems of record, and that’s ERP. Then we have this outer layer that we are defining as systems of action. These are the agentic AI-enabled processes that wrap around the core system of record.”

To the question of where AI should be deployed, either into ERP systems or sitting on top, “what we’re finding is that being embedded in the transactional process is where you’re going to get that really important notion of context that is required to unlock AI value,” Chan says. “With legacy ERP systems you need to modernize the core before you layer on AI capabilities. Modernizing ERP isn’t a cost; it’s actually a catalyst to unlocking the value that you’re looking to achieve.”

Organizations that have integrated AI into their ERP systems have reported significant operational improvements, including a 25% reduction in delivery times and a 15% decrease in operational costs, according to Mordor Intelligence.

2. End-of-life deadlines loom large

ERP vendors that have been trying for years to nudge customers off legacy, on-premises systems and onto cloud platforms have found a new, highly effective tool: announcing end-of-support deadlines.

SAP announced it will end support for SAP Business Suite 7 on Dec. 31, 2027. And Microsoft said it will end support for Dynamics GP on Sept. 30, 2029. Running mission-critical software without a support contract means no new security patches, which constitutes an unacceptable risk for most enterprises.

“Legacy on-premises systems are approaching end-of-life, creating a ‘forcing function’ for cloud migration,” says Morgan Stanley equity strategist Simon Clark, adding that an estimated 60% to -70% of SAP’s support base has yet to move to the cloud.

These deadlines leave CIOs with the choice of migrating to the cloud on the incumbent vendor’s platform or switching to an entirely new vendor. Because it can take 18 to 36 months, not to mention millions of dollars, and considerable effort in areas such as data integrity and change management, to complete a cloud migration, CIOs need to start making those decisions now.

Chan adds that from her experience advising enterprise clients, the end-of-life deadlines are more of an impetus to start the upgrade conversation than an actual threat. From the vendor side, it’s more about “how do you envision unlocking the value that you are trying to achieve as an organization and how best can we get you there,” she says.

But the deadlines are having the intended effect of getting those conversations started.

3. Data sovereignty, geopolitics reshape cloud deployment decisions

Regulatory pressures, particularly in Europe and Asia/Pacific, are forcing CIOs of multinational enterprises to rethink their ERP strategies, particularly when it comes to the sensitive data contained in finance and HR applications.

“Geopolitical pressures are shaping cloud ERP choices: Increasing geopolitical tensions and regulations are driving organizations to use more local and regional cloud providers, especially in Europe, Asia/Pacific, and Canada, which is having a flow-on effect for ERP selection,” says Gartner analyst Neha Ralhan.

She points out that cloud sovereignty issues are also being driven by specific business and application requirements, which can vary by country, industry, and workload. Gartner recommends organizations “establish a sovereignty strategy by assessing legal, industry, and workload-specific requirements, and evaluate cloud vendors based on their ability to meet these needs in a sustainable manner.”

4. Cloud migration accelerates

Those three factors — AI, end-of-life deadlines, and data sovereignty requirements — are driving CIOs to rethink their ERP strategy, which in most cases means migrating from on-prem to the cloud.

The cloud ERP market is projected to expand from $56.53 billion in 2026 to $138.56 billion by 2031, a 20% growth rate, according to Mordor Intelligence. “The market continues to transition from traditional on-premises environments toward multitenant, consumption-based architectures that deliver faster time-to-value and lower total cost of ownership,” Mordor’s report says.

Morgan Stanley’s Clark adds, “As organizations seek to leverage generative AI, cloud infrastructure becomes essential. This need is prompting enterprises to fast-track their cloud strategies. For example, SAP SE has seen increased adoption of its S/4HANA cloud offering, driven by demand for AI capabilities.”

Deloitte’s Chan says, “Sitting and watching in a market that is moving so fast with the options and the technological advancement available is not really a sound business plan or strategy.” The discussion she has with clients is not whether to move to the cloud, but the pace of adoption and how to make that move while infusing AI into the mix.

At the same time, private cloud isn’t dead yet. Mordor Intelligence reports that private cloud ERP is growing at 22% a year, reflecting regulatory requirements, particularly in banking and healthcare.

“Cloud is now the architectural standard, but hybrid is the default in many regulated environments that require on-premises ledgers,” Forrester’s Medhora notes.

5. Monolithic apps are getting unbundled

When organizations take a step back and analyze cloud migration options, one approach is to break up their monolithic ERP platform into smaller, composable pieces.

“The obvious assumption is that the key beneficiaries of this ERP upgrade cycle will largely be the same companies with their cloud-equivalent offering,” says Justin Overdorff, a partner at Lightspeed Ventures.

But that’s not necessarily the case. “As organizations modernize, many are moving away from expensive on-premises ERP vendors like SAP and Oracle and towards modern cloud-based systems that support digital transformation and AI-readiness,” Overdorff says. “But, instead of adopting next-gen versions of these monolithic, do-everything systems, enterprises are opting for an unbundled, best-of-breed stack across finance, HR, procurement, supply chain, CRM, and more — tools that snap together like Lego pieces.”

6. The door opens to ERP startups

Lifghtspeed’s Overdorff argues that the acceleration of cloud ERP deployments combined with the breakup of monolithic ERP systems presents a unique opportunity for startups to capture market share in specific functional domains.

“This is more than just a tech refresh; we believe it’s an opportunity to turn the $150 billion ERP market on its head and reset the cost structure and performance of core business operations for the next decade,” he says.

He adds that the “all-in-one approach created high barriers to entry for new competitors (few could build such a broad system), and it locked customers into a single vendor’s ecosystem. However, we are now seeing a shift toward disintermediation of the enterprise OS, as companies opt for more modular point solutions. Rather than trying to build an entire ERP suite, many new entrants are targeting subsegments — individual functional areas traditionally served by a module of a big ERP — and doing them better.”

For example, the growing list of challengers offering cloud-native, AI-driven ERP specifically for accounting and finance includes Rillet, Pennylane, Ramp, Light, DualEntry, Campfire, Everest, and Digits.

Overdorff adds that there is also an opportunity for startups at the orchestration layer that sits above individual modules. “With agentic AI, such a platform can ingest semi-structured/unstructured data, reason across multiple workflows, and route tasks to the right tool with minimal human intervention, delivering maximal output and efficiency,” he says.