ERP Implementation Project Costs and Durations Down, Business Benefits Up
Forced to cut ERP implementation budgets and duration periods during the latter half of 2010, companies nonetheless realized significantly more business benefits from their enterprise software than they did in 2009, according to the 2011 ERP Report issued today by Panorama Consulting Group, an independent ERP consulting firm in Denver. The average ERP implementation cost dropped from $6.2 million to $5.48 million and the average project duration dropped from 18.4 months to 14.3 months. 2010 figures show an increase in the percentage of companies (42-percent) who realized between 51- and 100-percent of business benefits when compared to 2009 (33-percent), as well as a significant decrease in the percentage of companies who realized 30-percent or less of anticipated benefits (55-percent in 2009 to 21-percent in 2010). The report also reveals a large upswing in the number of companies reporting project overruns (61.1-percent) and budget overruns (74.1-percent) when compared to 2009 (35.5-percent and 51.4-percent, respectively).
“The spike in ERP benefits realization just might be the one good thing to come out of this economic crisis,” said Eric Kimberling, president of Panorama Consulting Group. “It troubles me, however, to see that it is tempered by an increase in mismanaged project expectations. In my experience, companies that mandate high performance without committing proper resources eventually experience employee backlash and poor end-user system adoption.
The report also shows an increase in activities to ensure the chosen ERP software serves the buyer’s specific needs and processes. More companies in 2010 chose to customize their ERP software and to build business cases to better their implementation
strategies than they did the year before. In 2010, the percentage of companies who chose not to customize their solution at all (15-percent) was nearly half what it was in 2009 (28.3-percent). The percentage of companies who developed a business case as part of their implementation process rose from 85-percent in 2009 to 97-percent in 2010.
“CIOs often believe they’ll be able to avoid the risk, complexity and cost of customization and rely instead on ‘out-of-the-box’ software solutions to run their individualized business processes,” said Kimberling. “But as these numbers show, customization is the new norm and companies must allocate for it from the beginning to avoid blowing budgets, missing deadlines and overwhelming staff. Third-party consultants can mitigate the effects of customization by helping organizations select the best fit software, develop realistic expectations and implement efficiently.”
To offer further analysis of the study results, Kimberling will present a free webcast on Thursday, February 24 at 10 a.m. MST.
About Panorama Consulting Group 2011 ERP Report
The 2011 ERP Report was conducted by Panorama Consulting Group via online polling on its website. Information was collected from June 2010 to December 2010. The 185 participants represent organizations from 57 countries that have implemented ERP solutions within the last year. The full report (and additional industry research) can be accessed at: //www.panorama-consulting.com/resource-center/2011-erp-report/.
About Panorama Consulting Group
Founded in 2005, Panorama Consulting Group is a niche consulting firm specializing in the enterprise resource planning (ERP) market for mid-sized companies across the world. Independent of affiliation, Panorama helps firms evaluate and select ERP software, manages the implementation of the software, and facilitates all related organizational changes to ensure that each of its clients realize the full business benefits of their ERP implementation. More information can be found on its website, www.Panorama-Consulting.com