ERP projects still failing to deliver
Most enterprise resource planning (ERP) projects are still taking longer than expected, are costing more than expected, and are failing to deliver the expected business benefits.
This is one of the biggest takeaways from the "2013 ERP Report", released yesterday by Panorama Consulting, an ERP consultancy firm.
According to the report, 53% of ERP implementations exceeded their anticipated budgets; 61% exceeded their anticipated timelines; and the majority (60%) received 50% or less of the benefits expected.
James Robertson, SA-based industry consultant from James A Robertson and Associates, says many ERP projects run way over time and budget, and fail to deliver promised value.
However, he says with proper planning and a rigorous procurement approach, coupled with appropriate strategic input, it is possible to scope and procure projects on a fixed-price basis that deliver high-value outcomes that meet or exceed client executive expectations.
Robertson says successful IT implementations generally, and ERP implementations in particular, are more about psychology than technology. Technology obsession is a major factor in failed implementations, he notes.
He adds that precision configuration is the fundamental deliverable in ERP. "After all is said and done, all that remains of an ERP implementation is the configuration of the software and the level of expertise or lack of expertise of the personnel who operate the system and consume its outputs."
Despite these results, the Panorama report also notes that 86% of respondents are satisfied with the ERP system itself and 60% indicate their ERP projects were a "success". Nearly seven out of 10 respondents (69%) also indicate at least some level of satisfaction with their chosen ERP vendors.
"The leadership of almost any organisation implementing ERP software is sophisticated, savvy and aware of both the complexities of an ERP implementation and the benefits it should bring," says Eric Kimberling, managing partner of Panorama Consulting Solutions.
"But the delta between actual ERP implementation results and the self-reported satisfaction levels indicates that companies are setting expectations of the business benefits they should achieve from an ERP system far too low, and are likely neither developing the performance measurement indicators they need to accurately determine ROI nor sharing those indicators with their employees."
The report also notes that of important consideration is the average duration of an ERP implementation, which has increased to 17.8 months, the highest level reported since 2009.
More than one quarter of respondents (27%) also indicated that their organisations have not recouped the costs of their ERP software implementations.
"ERP project fatigue can affect even the strongest teams," says Kimberling. "When durations stretch and scope increases, it can be tempting to stop working towards goals established in the beginning of the initiative or to change the definition of success as 'getting the system up and running'.
"Independent third-party consultants can provide invaluable assistance by properly planning the initiative, conducting audits and measuring results back to the business case to ensure the ERP system provides maximised returns."