ERP Implementation Budget and Duration Overruns Drop as Companies Get Smarter About Benefits Realization
In today’s cost-conscious business environment, companies implementing enterprise resource planning (ERP) software are controlling budgets and timelines better and reaping more business benefits from their systems than they did in 2010, according to the 2012 ERP Report issued today by Panorama Consulting Solutions, an independent ERP consulting firm in Denver. Fifty-six percent of ERP implementations went over budget (compared to 74-percent in 2010) and 54-percent went over schedule (compared to 61-percent in 2010). Ninety-four percent of respondents indicated that they realized some business benefits from their ERP system and 50-percent realized greater than 50-percent of benefits (an increase of eight-percent from 2010).
While this data shows a positive trend, respondents also indicated a number of troubling points. Implementations that went over budget did so by more than $2 million dollars, or a quarter (25-percent) of the total estimated ERP implementation budget ($8,362,984 planned compared to $10,468,500 actual). Nearly one out of three respondents (29- percent) had yet to recoup costs of their ERP investment. Further, 63-percent had difficulty in addressing process or organizational change issues and 29-percent soldiered on without top-level management commitment.
“While it is gratifying to see organizations taking control of their ERP implementation budgets and timelines and realizing better benefits, it should not come at the price of ignoring key organizational change issues that can and will have a negative impact on the business moving forward,” said Eric Kimberling, president of Panorama Consulting Solutions. “Companies that don’t have strong methodologies in place to cope with changes in processes and organizational design wrought by ERP systems – or the top-level buy-in necessary to mitigate these risks – often find benefits sag or disappear as time goes on.”
Of equal note is that 41-percent of organizations surveyed indicated they had changed business processes to accommodate their ERP software and nearly one out of five (19- percent) had very little or no focus on business processes during the project.
“I frankly don’t know what’s worst – not focusing on business processes or changing too many processes to fit the software,” said Kimberling. “Not only is business blueprinting and process mapping an absolute requirement when it comes to successfully implementing ERP systems, but also companies must only change business processes to fit ERP software in areas that are non-differentiating, such as human resources or accounting. Too often we see organizational backlash and loss of competitive advantage when companies change integral processes to fit the software they have selected.”
To offer further analysis of the study results, Kimberling will present a free webinar on Thursday, February 2 at 10 a.m. MST. Registration is open at //www.panorama-consulting.com/resource-center/erp-webinars/.
About Panorama Consulting Solutions 2012 ERP Report
The 2012 ERP Report was conducted by Panorama Consulting Solutions via online polling on its website. Information was collected from January to December 2011. The 246 participants represent organizations from 64 countries that have implemented ERP solutions within the last year. The full report can be accessed at: //www.panorama-consulting.com/resource-center/2012-erp-report/.
About Panorama Consulting Solutions
Panorama Consulting Solutions is an IT consulting firm specializing in the enterprise resource planning (ERP) market for mid- to large-sized organizations around the world. Independent of affiliation, Panorama facilitates the evaluation and selection of ERP software, manages ERP implementation, and expedites all related organizational change to ensure that each of its clients realize the full business benefits of their ERP systems.