Recently the research team at Panorama Consulting concluded its annual survey of satisfaction among ERP customers for their systems. Their team looked at key factors including duration of implementation, how many were over budget or long on time, and how satisfied these customers were with their systems. We thought we’d recap a few of their key findings in today’s post, given that this is the time of year when many firms give serious consideration to upgrading their own systems.
For the record, Panorama received 172 responses to their survey and we should note that about half of these companies were pretty large, in terms of revenues and thus project complexity, length and cost of deployment as well. Still, about half the respondents indicated they had under 100 users and revenues of under $50 million; about one-third overall were under $25 million. On the high end, about 30% were over $300 million in revenues, so any kind of averaging of system costs is certainly going to be skewed upwards by the companies with revenues from $300 M to one billion.
But even given the diverse range of respondents, certain conclusions stand out. For instance, over the four years of surveys conducted by Panorama, the fact is that nearly 60% of projects have exceeded their planned budgets… over half have exceeded their planned implementation durations… and only about half have received even 50% of the planned benefits they had anticipated from their software initiatives. That’s not a strong endorsement.
When we look at why companies implement a new system in the first place, no single reason stands out (the largest response were from the 17% who said “to improve business performance”) but others included replacing an old system; better integrating across multiple locations (but then, half the survey companies were multinationals); positioning the company for growth; better serving customers; ensuring compliance; and making peoples’ jobs easier. Collectively, all these factors accounted for about 85% of all the reasons given for implementing a new system.
In an interesting disconnect we noticed, there seems to be a disparity between the percent of respondents who said they did not received the anticipated benefits (over 50%) and those who in the end still reported “overall satisfaction” (86%, a 5 point improvement over 2012 results). In fact, only 60% reported their projects as a “success” but another 30% were “neutral, or did not know.” This likely points to a lack of having started with a good business case. Or it could simply represent a ‘work in progress.’ Or it might be a lack of post-implementation audit or introspection. (Maybe everyone was so exhausted at the end of the deployment that they simply didn’t want to take the time…)
Ultimately, and happily one supposes, only about 10% reported their project as a “failure.” In the end, Panorama delivers a fair assessment, which we’ll quote verbatim:
The fact that the majority of respondents self-described as “satisfied” with their ERP software selection, yet cannot translate that satisfaction into individual components, points to a cloudy definition of “satisfaction” among organizations. Companies that do not use a business case – and thus do not measure actual project results against any expected benefits – likely have a harder time defining success or failure for the company, various functional areas or even individuals. Clear communications to end users and stakeholders about the goals of the ERP project, expected benefits and actual results can create a more unified and realistic satisfaction and success measures.
In our second of four posts on this topic, we’ll take a look at what Panorama found regarding vendors, types of software and consultants. Stay tuned…