2011 ERP Report: ERP Implementation Project Costs and Durations Down, Business Benefits Up

Our 2011 ERP Report, published today, unveils some interesting data about ERP implementations during the last six months of 2010. One thing is remarkably clear from the findings: economic woes had a major impact on how companies chose to implement solutions during the recession. But we’re pleased (and somewhat surprised) to report that not all of the news was bad. Indeed, we discovered that although companies were forced to cut ERP implementation budgets and duration periods, they nonetheless realized significantly more business benefits from their ERP software than they did in 2009.

Key comparative findings from the study include:

  1. The average ERP implementation cost dropped from $6.2 million to $5.48 million.
  2. The average project duration dropped from 18.4 months to 14.3 months.
  3. The percentage of companies who realized between 51- and 100-percent of anticipated business benefits increased from 33-percent to 42-percent.
  4. The percentage of companies who realized 50-percent or less of anticipated business benefits decreased from 67-percent to 48-percent.
  5. The percentage of companies who realized 30-percent or less of anticipated business benefits decreased from 55-percent to 21-percent.
  6. The percentage of companies reporting project overruns (61.1-percent) and budget overruns (74.1-percent) increased significantly from 2009 (35.5-percent and 51.4-percent, respectively).
  7. 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).
  8. 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.

Companies’ growing tendencies to customize ERP solutions indicate a willingness to take on the additional risk and cost in order to achieve the best ERP solution for their business. On the flipside, it appears that increased customizations, smaller budgets and shortened timeframes wreak havoc on ERP project assumptions.

No matter which way the economic winds are blowing, it’s critical that executives create realistic and manageable expectations for themselves, their implementation and their system end-users. Cutting the budget and instituting deadlines is one thing; holding people to unrealistic and ever-changing goals is another.

For further analysis of the 2011 ERP Report, please join me for a free webinar on February 24 at 10 a.m. MST. Click here to register. The 2011 ERP Report and additional industry analyses are available here.

About Eric Kimberling

After 15 years of ERP consulting at large firms including PricewaterhouseCoopers and SchlumbergerSema, Eric realized the need for an independent consulting firm that really understands ERP. He began his career as an ERP organizational change management consultant and eventually broadened his background to include implementation project management and software selection. Eric’s background includes extensive ERP software selection, ERP organizational change and ERP implementation project management experience. Throughout his career, Eric has helped dozens of high-profile and global companies with their ERP selections and implementations, including Kodak, Samsonite, Coors, Duke Energy and Lucent Technologies. In addition to his extensive ERP experience, Eric has also helped clients with business process reengineering, merger and acquisition integration, strategic planning and Six Sigma initiatives. Eric holds an MBA from Daniels College of Business at the University of Denver.

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2 Comments

  1. The one key point i see missing is 9. “Proven ROI increased from x to 2x” (as an example). Do we have view on this or is it premature to ask for this ?

  2. Interesting report!

    Could the findings be influenced by the move towards verticalisation?

    We find that having industry specific functionality coupled with in-depth domain expertise greatly reduces the deployment time. It also ensures that the customer satisfaction levels are much greater.

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