At the start of the new year, Panorama Consulting will publish the results of its 2008 ERP benchmark study. The study, which consists of over 1,000 organizations across the globe, analyzes various aspects of organizations’ ERP implementations, including average cost, implementation time, and overall satisfaction.
One of the interesting findings that will be published in the study is that only half of organizations are satisfied with their current ERP software. A mere 57% say that they are either fairly satisfied or very satisfied with their software. The remaining organizations indicate that they are either fairly dissatisfied, very dissatisfied, or neutral.
This data poses a troubling question: why do companies spend millions of dollars for software that they are just as likely to be unhappy with than not? Many clients we work with have no choice; they are growing quickly and their current business processes and systems cannot keep up. However, other companies have a choice and choose new ERP systems with high hopes. In either case, most executives are smarter than to spend millions of dollars for a 50/50 chance of being successful.
It is clear from these results, as well as other data to be published in Panorama’s study, that companies invest heavily in ERP software with the expectation that it will improve operations and profitability. However, that goal simply doesn’t come to fruition as often as it should. The problem is typically not with the software itself: the problem is with the way it is implemented.
As we outline in several of our ERP white papers and viewpoints, the main failure points include things like insufficient business process definition, lack of a formal benefits realization structure, poor project management, and inadequate executive buy-in. These failures during implementation contribute to the relatively low satisfaction level of ERP.
More detail will follow in the full report to be published in January, but in the meantime it is clear that organizations need to become more effective in their ERP software selection and ERP implementation processes to ensure a higher ERP satisfaction level.