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:
- The average ERP implementation cost dropped from $6.2 million to $5.48 million.
- The average project duration dropped from 18.4 months to 14.3 months.
- The percentage of companies who realized between 51- and 100-percent of anticipated business benefits increased from 33-percent to 42-percent.
- The percentage of companies who realized 50-percent or less of anticipated business benefits decreased from 67-percent to 48-percent.
- The percentage of companies who realized 30-percent or less of anticipated business benefits decreased from 55-percent to 21-percent.
- 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).
- 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.
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.