Each year, Panorama Consulting releases its annual survey of responses about ERP systems from companies across the globe. Their 2016 report includes results from 215 companies, ranging from small companies to multi-national organizations.
This year, their editors pointed to five conclusions which they thought “really stood out.” We’ll reveal their findings in our post today.
- Business transformation is still not the top reason for pursuing ERP implementations. Panorama refers to this as a “flawed and myopic approach” to ERP. They reveal that the #1 reason is “to replace the old system” and note that, while that’s not necessarily a bad thing, “it shows that too many companies are replacing systems because they have to – not because they want to pursue a larger business transformation.” They further note that 18% did not improve business processes as a result of their implementation, and only about one in four “improved all of their business processes.” (Most however did claim to improve “key” business processes.)
- Overall project costs and budgetary overruns are increasing. We should note that the respondents in these cases were pursuing projects in the $4 million or so range on average. And while the raw costs were lower, the costs when ‘normalized’ for company annual revenue actually increased, with well over half reporting that they’d spent more than expected, another increase over last year. Expanded scope, organizational issues and underestimated project staff needs were cited as the key causes.
- SaaS ERP takes a hit, on premise holds its ground, and cloud ERP continues its growth. On-premise systems held their own – despite what you may read in the press – at 57% of installations. Cloud solutions rose to 27% but this notably includes companies that bought their own software and merely hosted it via an outside third party (We’d call that a SortaCloud solution). Finally, the report notes, “SaaS solutions appear to be losing ground to the ‘best of both worlds’ benefits of having a third-party host a traditionally on-premise ERP system.”
- Project durations increased by 50 percent. Perhaps the most startling revelation according to Panorama was that implementation timelines among surveyed firms jumped from 14 months to 21 months. This seemed to be a problem across the board, regardless to some extent of company size and complexity.
- Data issues are derailing implementation project plans. Data issues were the number one cause for implementation overruns. The results highlight what many of us in the implementation business know well: there are many complexities and risks that go along with porting “dirty” legacy data into clean new systems.
The 2016 report simply amplifies the lessons learned in past years, including the fact that change comes slowly, both in terms of management thinking and project implementation. The consolation prize may be in knowing that if any of the above characteristics describes your organization, well… you’re clearly not alone.