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ERP research: Compelling advice for the CFO

Summary New research offers important lessonsfor chief inancial officers when buying and

implementing enterprise technology

By Michael

Krigsman

for Beyond

IT Failure

I February 22, 2013

--

17:38 GMT (09:38

PST

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the ZDNet

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New research on the success of

ERP

implementations reveals mixed results. Although respondents are satisfied

with

their

choice

of

software,

the

survey shows

most

ERP projects run over budget and buyers are do not

fully

receive expected benefits. Nonetheless, few respondents characterized

their

ERP project

as

a failure.

For chief financial officers, the survey offers compelling insights and is worth reading carefully.

Read more

from the

Beyond IT Failures blog

http: / / - .zdnet.com/blog/project fa i luresl)

System integrator, Panorama Consulting Solutions

http://panorama-consulting.com/resource-center/erp-industry-reports/)

,

conducted the research survey during the four-month period of September, 2012

to

January, 2013. The results

are based on data from 172 respondents who completed a survey on

the

Panorama website. Seventy-one perce

reported revenues of 300 million

or

less and 21 percent of respondent companies had revenues of 1 billion

or

higher.

Cost, duration, and benefit

summary.

Although project duration and cost fluctuate from one year to the nex

three points stand

out

about the current data:

Over 50 percent

of

projects experienced cost overruns

Over 60 percent experienced schedule overruns

Fully 60 percent

of

respondents received under half

of

the expected benefit from

their

ERP

implementation

This

chart

summarizes the top-level results:


2/10

2013

ERP

Re

port

Findings

Sol


3/10

1611

Implementation Costs

On budget

Over budget by

25

0< less

26 o v r budget

Under budget

51

7S over budget

Over bud et by more than 76

o u r c ~

Pnorama

Consult

n(s

2013

ERP

Ropcn

Copyfich t l 2013 Panor.Jma n w

SOlutions

Regarding schedule,

61 ~ o

respondent

ERP

proJects went beyond planned time duretlon:

ERP Project Duration

On schedule

Over schedule

by 25%or

less

Over schedule by 51

to

75%

ver schedule by

mo

re than 76%

v r schedule

by

26%50%

Earlier than scheduled

Source: Panorama Consulting's 2013 ERP Report

COpyright

0 2013 Panorama

Co

nsulting

Sol

utions

The survey

shCiw.s

a slgnlfleant prDblem

with

resped:

lD

11 4llzlng benefits fram

the ERP

lmpll lnent.atkln:

27 percent Df respondents realized less than third Df anticipated pt ojet::t benefits

11

percent

rwtllze no benefit at alll"nlm their ERP lmpleml fttetlan


4/10

22

pei Clllnt achieved

between

a third and one-hair their

1DII

beneftt

In

otherwords, full'( 60 penltlnt or

the ERP

projects In

the

survey nlllllzed

1888

than half their desired benefit. By

any

reasonable measure, t projec:ts

are

problematic:

Percent of Benefits Realized

0-30% of projected benefits

31-50%

of

projected benefits


We d

id

n t have a business case

No measurable benefits

to date


SOurce

: Panorama Consulting s 2013

ERP R@pol1

CopyrigjltCl 2013 Panorama Consulting

So

lutions

I RP

u

ad cult&

merAt1al'ec:U1tn. e

survey makeva distinction

between

Implementation

o u ~ m

and "customerSlltlst'actlon.

As

the

f'ollowlng dlart shows,

only 10 percent of tile respondents mlled the ERP

Implementation failure, meaning 90 percent eltller did not know

or betreved

their

pnJjed: to be

successful:

Implementation Outcome

Success

Neutr

al

or ''I don t

kn

o

w

Fai

lure

Source: Panoram a Consulting s

2 13 ERP

Report

Copyright 2013 Panorama Consulting SOl utions


5/10

At the slime time, various sures relatlld

to ERP

softwarv, vendors, lind Implementation results showed poor

satlsl\lcilon:

Implementation service ofvendor: 40 percent

satlsftlctlon

Implementation serviceof hlrdparty: 25 pei'Oll\t satlsllldlon

Ability

to

meet

business

needs: 4 1 pei'Cilnt lllltlllllldlon

Employae adopaon: 35 percant satlsftlctlon

Overall lmplemeii iBtlon experience: 44 pei'Cill\t aallsfacilon

I RPvendor "acllan. As

lhe

following graplllllllows,

the

primary candidates for

ERP

software were

SAP,

Orad

Microsoft, Eplcor, and

Infllr:

Percentage

of

Times Vendor IsSelected When on Short Ust

r

a n o r a m . a ( O O S ~ J

t l n e

Z0 13 fRP Repon

Cowri&it 0 lOU iooclr.):Ju h I S

Solvtione

_c l oud 11111Btlon.

Despite

the hype,

only

14

percent t

e s p o n d e n t ~ ~

are using

ERP

delivered as Software es

Service SliiS). Although the best cloud vend0111 mn deliver superior e a ~ r l t y and reliability t111n most Internal

I

departmentll, market momentum

to

ERP

In the

doud

Is not there

yet.

the following dl1gr1m lllustmes:

Type

of

ERP Software

On

-Pr

emise

ERP (Traditional)

S o f t w a as

a

Se

rvice (SaaS)

Cloud

ERP

{

ho

sted and managed off-site)

Other

Source: PanoramaConsulting.'s 2013 ERP Report

Copyrig

ht

2013 Panorama

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