Manufacturing ERP Costs Remain High, Panorama Says

November 12, 2013 Alex Woodie

Manufacturers spend about $1.6 million more on their ERP installations than companies in other industries spend, largely due to high levels of complexity and customizations, according to a recent report by Panorama Consulting.

According to Panorama’s 2014 Manufacturing ERP Report, manufacturers spend an average of $11.4 million to implement their ERP systems, compared to $9.8 million for the average ERP implementation across all industries. Most ERP installations go over budget in every industry, but manufacturers spend about $3 million more than planned, or $1.3 million more than the average for all industries, the report found.

Manufacturers also tend to go heavier on the modifications compared to non-manufacturers. According to Panorama, 13 percent of manufacturers customize more than 50 percent of their ERP systems, compared to only 6 percent of companies across all industries.

Manufacturers should be aware of this tendency to go over budget and plan accordingly, says Eric Kimberling, managing partner at Panorama. “Manufacturing organizations that fail to develop and execute a strong implementation plan often encounter unexpected costs related to integration, customization, and change management,” he says.

SAP and Oracle are the top dogs when it comes to ERP software providers, with 17 percent and 14 percent shares of the market, respectively. It also identified Microsoft, which had 7 percent of the market share in Panorama’s study, as a tier one ERP provider. However, Infor, which also had 7 percent market share, was relegated to tier two status, along with Epicor (5 percent), ABAS (5 percent), IFS (2 percent), and Unit 4 (2 percent).