New ERP Installs Get Mixed Returns, Panorama Says

Published: March 4, 2013

by Alex Woodie

Implementing an ERP system is a notoriously difficult thing to do. By some estimates, more than 60 percent of ERP implementations are doomed to fail. And yet, companies continue to adopt them, because. . . well, they have to. The ERP watchers at Panorama Consulting recently checked into the state of enterprise software implementations with its annual ERP report, which detected the requisite unhappiness in recent ERP adopters, but also found some satisfied customers, too.

From September to January, Panorama Consulting corralled 172 of its customers onto its website to take a survey about their recent ERP installations. The company then aggregated the data, and presented it in its 21-page 2013 ERP Report, which can be freely downloaded from its website.

Panorama's report has lots of good data regarding ERP implementations, including:

• How long did the average ERP installation take (17.8 months).
• How much did the average ERP installation cost ($7.1 million).
• Why do companies embark on them (45 percent replaced old packaged ERP applications, 16 percent replaced home-grown systems, and 6 percent replaced paper-based systems).
• What ERP packages they installed (SAP, Oracle, Microsoft, Epicor, and Infor were most selected when on the short-list).
• How the software runs (61 percent on-premise, 14 percent SaaS, 12 percent hosted and managed as a cloud service).
• And how they used consultants (at the end of the day, Panorama is an IT services firm specializing in ERP selection and implementation. All the reports, blogs, and analysis are side gigs for the Denver, Colorado firm).

What stood out the most in Panorama's report, however, were the mixed messages customers gave regarding their overall satisfaction with their ERP implementation. When Panorama asked how happy customers are with the ERP outcome, 32 percent said they were moderately satisfied, 28 percent said they were satisfied, and 21 percent said they were moderately dissatisfied.

What's more, 86 percent of Panorama's survey-takers said they were satisfied with the system itself, 60 percent indicated their ERP project was a "success," and nearly 70 percent indicated "at least some level of satisfaction with their chosen ERP vendor."

But on the other hand, 53 percent of respondents reported cost overruns, 61 percent reported time overruns, and 60 percent said they had received less than half the benefits they expected. These numbers are, more or less, in line with results from past ERP reports. But they are not pretty. The fact remains that an organization is more likely to surpass its cost and timeline expectations and receive less than half of the benefits it expects from its ERP roll-out, according to Panorama.

This is quite a disparity in the data, and it raises questions about the mindset that organizations have going into an ERP implementation, and how they define "success."

"The delta between actual ERP implementation results and the self-reported satisfaction levels," states Panorama managing partner Eric Kimberling, "indicates that companies are setting expectations of the business benefits they should achieve from an ERP system far too low and likely neither developing the performance measurement indicators they need to accurately determine ROI nor sharing those indicators with their employees."

The horror stories of botched ERP implementations are widespread in the industry, and it gives every company pause before considering a new ERP system. Successful ERP rollouts have one thing in common: they all demand exhaustive planning, comprehensive controls, and endless communication among all the stakeholders involved. Instead of lowering their expectations and making do with a sub-optimal ERP implementations, companies that want to succeed with their ERP are better off investing in more planning, controls, and communications.

What are your experiences with your recent ERP implementations? Let us know by sending us a message through the IT Jungle contacts webpage.

You can download the 2013 ERP Report by signing up for a free account at panorama-consulting.com.

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