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Next week, we will release Panorama’s long awaited 2014 ERP Report, summarizing our annual study of hundreds of ERP implementations across the globe. The study, which includes data from implementations from organizations of all sizes and industries across the globe – including manufacturing, distribution, construction, healthcare and the public sector – underscores some interesting findings in the ERP market.

To summarize, the data tells a familiar story: most ERP implementations cost more than expected, take longer than expected and fail to deliver at least half of the expected business benefits. However, there are also some interesting trends and changes from previous years’ studies, along with some silver lining to help those about to embark on a high-risk – but high-reward – ERP implementation journey.

We can’t give away the entire report just quite yet but here are a few interesting data points:

  • The average total cost of an ERP implementation is $2.8M or 4.6% of annual revenue. This is down from 5.5% of annual revenue in the prior year.
  • 56% of companies implementing ERP systems were multi-national, while 77% were multi-site.
  • A majority of ERP software purchases were for less than 100 users.
  • 83% used consultants for some or all stages of their ERP implementations.
  • 51% of organizations experienced some sort of material operational disruption at the time of go-live, such as not being able to ship product or close the books. Of those that experienced an operational disruption, approximately two out of three experienced a disruption lasting one month or more after go-live.
  • The number one cited reason for implementation overruns? In past years, increased scope was the culprit but this year, organizational change management issues was hands-down the number one implementation issue experienced by implementing organizations.
  • Another data point supporting the need for organizational change management: 63% said that managing the change was either difficult or very difficult, while only 2% said it was easy or very easy. By contrast, technical issues were said to be difficult or very difficult by only 45% of respondents. These organizational challenges may be at least partly due to the fact that most projects invested less than 25% of their resources into critical organizational change management activities.

The interesting and good news is that after all of this, most organizations are still satisfied with their implementation and their chosen ERP system. In fact, 63% said they are satisfied with their implementations and a majority said that if they could do it all over again, they would choose the same ERP software. In addition, “availability of information” was the number one post-implementation business benefit cited by respondents, suggesting a silver lining in the midst of budget overruns and timeline slips.

This positive post-implementation reaction from respondents suggests one of two things: 1) organizations don’t have a clear or agreed upon definition of what “success” means, and/or 2) ERP project teams have set the bar so low that they don’t expect much from their ERP implementations. Either way, the verdict appears to be out: ERP implementations leave much to be desired and most organizations and ERP consultants continue to underwhelm in their delivery of new ERP systems.

Our 2014 ERP Report will be released next Wednesday but in the meantime you can register for tomorrow’s webinar which will cover additional findings from the report.

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