Once again this year Panorama Consulting conducted its annual ERP Report, and once again, the results are revealing and worth noting to anyone implementing or considering an enterprise software solution. In this post, we’ll take a look at some of their key findings and break it down for you.
A few key takeaways from this year’s report…
Panorama’s survey – which encompassed 192 respondents — reports a wide range of sizes of ERP implementations, including some very large ones. This skews the numbers somewhat, and yields a very high dollar-per-implementation. Still, the lessons are much the same, whether a large install or small.
Project cost overruns provide a good example. Over the past three years, the percent of projects that exceed their budgets remains within a very narrow range. Unfortunately though, that number is a big one: somewhere between 53% and 56% of projects reported being over budget. The figure for “duration” (i.e., timeline) overruns was slightly higher and, in fact, appears to be trending worse the past three years.
Furthering the Bad News department, the percent of respondents indicating they are receiving less than half the benefits they expected has been rising steadily each year, to the point that two-thirds of respondents in the most recent year (2013) reported receiving half or less of the expected benefit.
It’s worth noting that the number one reason among those exceeding their duration – and that was more than half of all companies – was “organization issues.” As it turns out, most of those same folks spent a relatively small part of their budget on organizational change or on “business process management.”
In other words, they failed to commit sufficient resources to what still proves to be the critical first step in any ERP implementation: the Business Process Analysis.
As well, this may be why only 8% of respondents reported “excellent buy-in” among employees.
As Panorama sums it up in their report:
“The facts remain: organizations that do not allocate enough of their budget to organizational change and business process management are more likely to face organizational issues, such as low buy-in, often leading to extended durations.”
In our next post we’ll look at the key reasons cited for implementing ERP and overall satisfaction levels.