Traditional ERP systems will be transformed by bolt-on cloud-based services that allows legacy IT to serve new business needs, analysts are predicting.

Many businesses have invested too much money in ERP systems to make it worth their while to consider completely replacing these systems with a cloud-based alternative any time soon.

Instead analyst house Gartner is predicting that existing ERP systems will gradually be augmented by cloud-based business process as a service (BPaaS) offerings – automated, remote services accessed via the internet that are designed to meet specific business needs, such as payroll or procurement.

Gartner calls these BPaaS add-ons PETS (Process Enhancement Technologies and Services) in its report Market Trends: Cloud Business Process as a Service Outsourcing Trends. It groups PETS into three classes of technologies, serving increasingly complex business needs.

Level one PETS are, Gartner says, aimed at getting supplier, customer or employee data into an organisation’s core applications – such as electronic invoicing and scanning services. Level two PETS are focused on enhancing the functionality of core enterprise applications, such providing additional talent management or payroll services for HR or interactive voice response tools for customer service. Level Three provide analytics capabilities for data gathered throughout an organisation or across different organisations, and augment existing analytics tools based on SAS and IBM SPSS.

However while enterprise steers clear of adopting full ERP BPaaS – an integrated suite of HR, procurement and finance and accounting tools – suites of cloud-based core business services are being adopted by small and medium-sized businesses.

The largest segment of the existing BPaaS market is for HR services, the report says, estimated to be worth $10bn at the end of 2011 thanks to the large number of payroll providers offering services via the net. E-commerce and payment services, are the next biggest sectors, each valued at $4bn. The report adds the payment BPaaS market is being driven by PayPal and Alipay and tools such as Pingit from Barclays to provide consumer payments