SYSPRO, IFS, and Infor Among Top ERP Vendors?
We recently launched our online ERP database, where web-site visitors can review vendor data and rate ERP vendors on a number of criteria. This database asks visitors to rate their ERP vendor on variables such as functionality, pre-sales support, technical support, and a number of other key factors. While the ERP database is relatively new, initial responses are trickling in and some of the results are interesting.
First, when we originally launched the database, SYSPRO quickly became the top-rated vendor in terms of overall rating, with an average score of 9.4 out of 10. Cove, IFS, xTuple, and Infor were all not far behind with averages scores of 9.4, 9.2, 9.1, and 8.9 out of 10, respectively. While the data has shifted slightly, the initial results have stayed fairly constant.
Top Ten ERP Vendors According to ERP User Reviews
| Software Vendor | Votes | Rating |
| EZ Ware Technologies | 5 | 10.0 |
| IFS North America, Inc. | 2 | 9.6 |
| Open ERP | 1 | 9.5 |
| Cove Systems Inc. | 1 | 9.4 |
| xTuple | 8 | 8.8 |
| SYSPRO | 31 | 8.7 |
| Ramco Systems | 1 | 8.7 |
| Infor Global Solutions | 6 | 8.4 |
| Minotaur Software | 2 | 8.4 |
| Apprise Software, Inc. | 2 | 8.4 |
Note: This table is set to dynamically update as new results are recorded.
There are a few interesting points about this data. First, the current top ten ERP vendors are all considered Tier II and Tier III solutions; none of the larger Tier I ERP vendors are at the top of the charts (e.g. SAP, Oracle, and Microsoft). An open source ERP provider (xTuple) is even among the top-rated ERP solutions.
Second, Tier II and Tier III ERP vendors were the first ERP providers to obtain the largest number of responses. Could this suggest that customers of these smaller ERP vendors are more engaged and satisfied with their solutions?
Although these are very preliminary results with fairly small sample sizes, it is interesting to see the patterns emerge. This is one of several useful data points that can be used as part of an effective ERP selection and evaluation process. We use a number of other proprietary tools and data points when helping clients choose the right ERP software, but this free online resource provides a good starting point.
What are your thoughts on your current ERP software vendor? Visit our online ERP database and share your ratings for your current software provider.
Canary in a Coal Mine: 13 Signs That Your ERP Implementation Project May Be in Trouble
I’m a big fan of ’80s rock. I am also guilty of quoting more than my share of classic rock songs in my blog.
So when I heard “Canary in a Coal Mine” by The Police on the radio the other day, I instantly thought about ERP projects. The song title refers to the phrase stemming from the fact that coal miners would rely on canaries to warn them of dangerous gas leaks that they may not otherwise detect in time to get out alive. The canary was singing when all was well. When it stopped singing, it was usually because it was dead, warning them to get out of the mine before the fumes killed the miners as well.
ERP projects have a similar potentially unnoticeable dynamic. We’ve all heard about massive ERP failures over the years, but those failures didn’t just happen overnight. Instead, a number of toxic “leaks” built up over time until the projects were doomed.
So what are the warnings that you may have a dead canary or two on your hands? Here are a few signs that your ERP project may be in trouble:
- You’re not reviewing the project with your executive team on at least a bi-monthly basis. This will spell trouble, because you need involvement from your management team to ensure the project is aligned with their expectations, key decisions are being made in a timely fashion, and resources are being directed appropriately. This problem area is also likely to become a root cause for many of the other warning signs listed below.
- There is no dedicated project team. It is very difficult for your employees to do their day-to-day jobs and also participate effectively in a project as important as this. Many of our clients hire us to ease workloads off their staff, but there needs to be a small internal core that is dedicated to the project.
- There is no training scheduled until less than 90 days before go-live. Training is an iterative process and should begin well before go-live. The core team needs to be trained early in the project; superusers should be trained prior to and during conference room pilots and end-users should be trained in multiple ways prior to go-live.
- Your organizational change management plan only consists of end-user training. Training is important, but it is only one small portion of organizational change management. Organizational design, employee communications, process and organizational gap analysis, and organizational readiness are just some of the key activities too often overlooked during ERP implementations.
- You have no contingency budget. You don’t know what you don’t know when you budget for the project and things never go exactly as planned. You will find that one part of the software that doesn’t fit your business and needs customized. You will find that one business process that takes a while to get right and causes delays. It is also much easier to ask your Board for money up front rather than after you’ve blown through your budget. Depending on risk and complexity, we often budget up to 15 to 20% of a total budget be set aside for contingency.
- You don’t have at least three iterations of conference room pilots or integration testing. Most ERP software is flexible and robust out-of-the-box, so defining your business processes and workflows can be challenging. Just as you would’t introduce a new product or manufacturing process without extensive testing, you don’t want to introduce an entirely new business software into your organization without testing and refining.
- Your budget assumes that software license costs are a majority of your total implementation costs. Software is the relatively easy and low-cost portion of your budget. Even with an accelerated implementation, you have configuration, hardware, internal and external resources, integration, and a number of other budgetary line items that you don’t want to be surprised by later on.
- You don’t have a strong program management team with at least several dozen implementations collectively under their belt. Every organization has a few people that either implemented software in their previous lives or “have a friend” that did so. However, there is no substitute for a team of experts that have done it a million times.
- The software techies are running the project. If the business isn’t driving the project, then you’re in trouble. This will lead to software that doesn’t fit the business, employees that resist the software, cost overruns, or all of the above. Hands-on functional and technical expertise is important, but these resources shouldn’t be running the project.
- You don’t have a business case, performance metrics, or a benefits realization plan. Hopefully you’re not implementing ERP just for the fun of it. Assuming you’re not, then you should have metrics to define how you expect the new system to improve your business, along with a plan of how you are going to measure actual results. It doesn’t stop here, either – since you won’t achieve business benefits on day one, you’ll need a plan to introduce continuous improvements.
- Your definition of success is: “Just get the damn thing up and running.” It’s easy to fall into this trap after the project has been dragging on for months or years. However, this is a slippery slope. Once you start cutting corners, costs, and time just to get the project done, you are driving up long-term costs and risks.
- You have very little margin for error to miss customer shipments at go-live. You don’t want to assume that you are going to have problems at go-live, but according to Panorama’s independent research, over 50% of manufacturing software implementations create operational disruptions. If you don’t have much slack in your inventory or lead times, then this can magnify the risks of the project.
- You will not customize the software, under any circumstances. Unless you are a start-up with absolutely no existing business processes, this is a bigger risk than many will admit. While the line in the sand may be drawn for good reasons, it is not realistic – less than one in four companies implement with little or no customization. In addition, adopting business processes baked into the ERP software can create misfits with your business needs and/or magnify organizational change management challenges. These aren’t necessarily things that can’t be worked through, but most organizations are not prepared to deal with the consequences.
These are a few signs that your project may be in trouble. Just as the canary that stops singing in the coal mine served as an important warning, each warning sign that you head off at the pass will ensure that you have a successful ERP implementation.
What do you think? Take a poll below to share your experience with your most recent ERP implementation.
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From Magic Quadrant to Top 10 ERP Vendors
Each year, Gartner publishes its magic quadrant of ERP vendors. This view of leading ERP software solutions is widely cited by software vendors when they are favorably represented in the quadrant, and it also makes for an appealing PowerPoint graphic. However, software vendors pay Gartner for its research, so the magic quadrant analysis isn’t necessarily 100% independent. While it may be a useful data point in an ERP selection process, the findings are subjective based on dimensions that may or may not indicate a ERP solution’s true position in the market. For these reasons, it can be difficult to draw meaningful conclusions from the quadrant by itself.
On the flip side, our team at Panorama uses a number of quantitative analyses to compare leading ERP vendors. According to our independent 2010 ERP Report published earlier this year, vendors vary fairly significantly in their positions in the marketplace, average implementation costs, benefits realized, and a variety of other metrics that measure true results and vendor viability. One of many key findings from our report is that certain ERP systems have higher rates of being short-listed and selected than others.
In analyzing our data for 1,600 ERP selection and implementation projects across the globe, we found that SAP is the most commonly short-listed ERP system, short-listed by 20% of the companies in our study. SAP is followed by Microsoft Dynamics (15%), Oracle eBusiness Suite (10%), and Epicor (8%). The top 10 ERP vendors are outlined in the table below, ranked by their frequency of being short-listed by organizations in our study:
Top 10 Short-Listed ERP Vendors
| ERP Vendor | Short-Listed Rate |
|---|---|
| SAP | 20.4% |
| Microsoft Dynamics | 14.9% |
| Oracle eBusiness Suite | 9.8% |
| Epicor Software Corporation | 7.9% |
| Infor Global Solutions | 4.1% |
| Oracle JD Edwards | 3.1% |
| Oracle PeopleSoft | 2.6% |
| IFS North America | 2.2% |
| Sage North America | 1.9% |
| Activant Solutions, Inc. | 1.4% |
However, a slightly different pattern emerges when we look at the rate software packages are selected from short-lists. As outlined in the table below, Peoplesoft is selected at a very high rate when the solution makes a short-list – 67% of the time it is on a company’s short-list. Peoplesoft is followed by Oracle’s eBusiness Suite (54%), SAP (54%), Infor (39%), and JD Edwards (38%).
Top 7 Selected ERP Vendors
| Selected ERP Vendor | Selection Rate |
|---|---|
| Oracle PeopleSoft | 66.7% |
| Oracle eBusiness Suite | 54.2% |
| SAP | 54.1% |
| Infor Global Solutions | 38.5% |
| Oracle JD Edwards | 37.5% |
| Epicor Software Corporation | 33.3% |
| Microsoft Dynamics | 22.9% |
Interpretation of the above data offers a couple of potential hypotheses. First, the fact that SAP is short-listed so often suggests that it’s strong brand name and leading market position could provide ERP buyers with a strong reason to consider the software. Second, the fact that Oracle products are selected at a higher rate suggests that the product may offer a stronger functional fit for companies represented in the study.
Although the frequency of short-list or selection may not be a good indicator of how well a particular software package fits an organization’s unique business requirements, it can be a useful quantitative and objective data point in assessing market trends among ERP vendors.
How would you evaluate your ERP vendor? Contribute to our research by participating in our 2010 ERP Benchmark Study or by rating your ERP vendor in our free online ERP database.
Great Expectations: Why Do We Expect So Much From Our ERP Software?
Charles Dickens wasn’t the only one with great expectations and an occasional let down along the way. As we’ve written in our blogs and ERP research, 72% of ERP projects fail in one or more three key dimensions: cost, duration, and/or realized business benefits. Much like the characters in Dickens’ novel, those trying to select and implement ERP software are faced with high hopes and great expectations, only to face significant challenges and some bad decisions along the way.
One of our recent posts outlined some extreme cases of ERP failures, which had gotten to the point of legal action (see the blog: “An Appetite for Destruction: The ERP Lawsuits Continue…“). While not all ERP challenges are this extreme, it is clear that “mismanaged expectations” is a key driver of ERP failure. In one of our recent polls, 25% of respondents cited “realistic ERP implementation expectations” as the most important requirement to avoiding failure.
The good news is that there are some lessons to keep expectations aligned with reality. It’s important to watch for the pitfalls and landmines that often lead to unrealistic expectations. For example, how many of the following statements sound familiar?
- “We’ll get this implementation done in no time.” Software vendors and consultants are notorious for over-simplifying the implementation process. Most sales reps don’t know (and in some cases, don’t care) what it takes to do an ERP implementation right, but they do know they want to make the sale. So it is naturally in their best interests to downplay the time, costs, and risks associated with the project. Most projects take longer than expected and/or cost more than expected, so make sure you’re not basing your timeline and budget (and career) on overly optimistic and unrealistic estimates. Instead, use benchmarks of what other companies similar to you have actually achieved, such as Panorama’s 2010 ERP Report. A more realistic expectation: ERP implementations are difficult and complex business transformations, so budget time, money, and resources accordingly.
- “We’re not going to customize a thing.” Most companies, including our clients, draw this line in the sand early in the ERP evaluation and selection process. While it is a noble and rational goal, it’s not realistic and it is far from reality. According to our study of 1,600 ERP implementations across the globe, only one in four ERP implementations leverage out-of-the-box ERP software without any customization. In addition, only 6% of respondents in one of our polls indicate that ERP customization is the most important factor to avoiding ERP failure. A more realistic expectation: Customize only when absolutely necessary to preserve your company’s core competencies and competitive advantages.
- “This is going to change our whole business.” And it should, but it’s not going to happen overnight. Realizing actual benefits requires more than expecting them; they also need to be measured with metrics closely aligned with business processes. Our research shows that over half of companies that have implemented ERP software fail to realize at least 30% of the measurable business benefits they expected. Again, it is okay to expect a lot, especially in this arena, but it takes some work to get there. A more realistic expectation: Expect high business benefits, but set targets and put in the legwork required to realize those benefits.
We all want our ERP implementations to go extremely well, deliver high business benefits, and incur the lowest possible time and cost. However, ERP projects are not technical, they are business transformations, so it’s important to treat them as such. Whether you are using traditional on-premise ERP software, Software as a Service (SaaS), or software implementation accelerators, changing your business processes and organization requires a great deal of skill and work.
What are your thoughts? Take our poll below to share your thoughts about the most important ERP implementation factor to avoid project failure for your ERP software initiative.
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Five Steps to Define Your Enterprise Applications and IT Strategy
Although our company focuses on ERP selection, implementation, and organizational change management, many of our clients ask for help defining their IT strategies as a precursor to a broader ERP software selection process. Since it is difficult to choose an ERP vendor without having a clear IT strategy in place, this approach makes perfect sense. A lot of legwork needs to happen prior to defining an ERP strategy.
Five Steps to Develop an IT Strategy and Framework
- Define current enterprise systems inventory. The first step is to identify the systems you have in place, which can be difficult to do if you are a larger or more complex organization. Companies that have grown quickly and/or acquired one or more other companies are more likely to have a hodgepodge of ERP systems, spreadsheets, and other business software to run their operations. We often see companies with several hundred enterprise systems running their business, including a number of unauthorized “black market” systems that your IT department isn’t even aware of. It is hard to determine a logical path forward without first understanding where you’re starting.
- Rationalize current systems. Once the systems have been inventoried, attention then needs to turn to which ones are core to the business or are providing competitive advantage to the organization. It is also important to assess each system’s maintenance costs, pain points, flexibility, and scalability for future growth. It is also important to evaluate the opportunity costs associated with business benefits that are lost due to poor systems. Once the systems have been evaluated using these and other key criteria, you can then move on to identifying what to do with each of them.
- Identify low-hanging fruit. This is where the real fun begins. Once you have the quantitative assessment of each of the IT systems in your portfolio, you can then start prioritizing which systems can or should be consolidated, upgraded, or replaced. Typically there is significant “low hanging fruit,” or systems that can have an immediate and measurable impact by improving or replacing them. In addition to identifying the projects that may have immediate value, you will also want to prioritize the non-low-hanging-fruit.
- Identify your applications strategy. Once you have your priorities in place, your attention should then turn to your overall applications strategy. Based on your priorities, you will want to consider whether to pursue a single, consolidated ERP system, a best-of-breed solution, or a hybrid of both. This applications strategy should take not only your highest and most immediate priorities into consideration, but also the more intermediate and long-term priorities as well. Another key consideration is your hosting strategy: will you pursue Software as a Service (SaaS) or cloud solutions, on-premise software, or a combination of both? Single or multiple instance?
- Develop an IT strategy roadmap. The above four steps will be crucial to developing your overall IT strategy roadmap. These inputs will help you identify a three- to five-year plan for improving your enterprise systems infrastructure. In most cases, the plan will entail evaluation of potential ERP systems or other enterprise applications. In addition, the plan should identify how new systems will integrate to legacy systems, data consolidation and strategy, infrastructure upgrade requirements to support the new strategy, and organizational change management activities to support the new plan forward.
This is obviously a very simplified overview of how to develop an effective IT strategy but provides a good starting point. Contact us to find out more about our 4-week IT strategic assessment.
Winning is Everything: Five Lessons from a Successful ERP Implementation
A few weeks back, we highlighted some of the lessons shared by one of our clients that had recently engaged in an ERP selection and implementation process. In the podcast interview, this particular client shared several lessons learned from the selection process.
In this same podcast interview, this same client shared additional lessons learned from the company’s ERP implementation process. As it turns out, evaluating and selecting the right ERP software solution was only half the battle; the other half of the battle was effectively implementing the selected software.
Below are some of the highlights and lessons shared in the interview:
- Focus on organizational change management. At first, the client didn’t realize how important organizational change management would be to the ERP implementation. However, it quickly became clear that this would be a critical success factor for the project. We helped the client deploy a comprehensive organizational change plan, beginning with identifying gaps between processes in the old legacy systems relative to the ones in the new ERP system. These process and organizational changes were communicated repeatedly to employees, culminating in a conference room pilot and end-user training process to help end-users become comfortable with the software. The client also found it effective to clearly communicate to employees that there was no turning back to the old system and way of running the business.
- Ensure effective project controls and manage scope. One of the challenges of the implementation was managing the scope of the project. Because the company had a custom legacy system with an organizational mindset that requested functionality could be developed on the fly, it was very tempting to give in to the desires of end-users to change the software rather than leverage out-of-the-box functionality. It took a great amount of discipline to ensure that the company leveraged best practices from the software while at the same time changing the software where applicable to accommodate the company’s competitive advantages.
- Focus on business processes and workflows. Not only were business processes in the new system clearly defined and documented, but employees repeatedly simulated the system against these business processes until they got it right. End users and employees were involved early in the ERP selection and implementation process to clearly define, test, and train on the business processes and workflows of the new system.
- Go-live is not the finish line. The company decided early on that they were not simply going to implement the software and call it a day; instead, they viewed their ERP initiative as a continuous improvement initiative. Once the software was implemented, they constantly measured benefits and made improvements to the system and associated processes. Some of the key business benefits realized by the client include streamlined business processes, more consistent standards, easier employee training on the new system, and better customer service.
- Independent ERP consultants are crucial to the success of the ERP implementation. The company found that involving outside ERP experts was instrumental in making the ERP initiative successful. In this case, ERP consultants from Panorama Consulting Group provided the expertise. This allowed the company to leverage outside expertise, manage the ERP vendor, and ultimately reduce overall project costs while increasing business benefits. In addition, this outside help enabled the company to embark on the ERP selection and implementation initiative without disrupting day-to-day operations.
These are just handful of lessons shared in this informative interview with a client who recently completed an effective ERP implementation. Click on the audio player below to listen to the full interview with the client.
The Best ERP Blogs of 2010 (So Far)
Ever since Panorama started in 2005, frequent blogging has been one of our keys to sharing insights and client experience with the ERP community. Over the years, we have focused on sharing best practices around topics ranging from ERP software selection, ERP implementation best practices, and organizational change management. This year, we’ve upped the ante by expanding our author base to include more of our 25+ employees.
Since we have posted so many good blogs and articles this year, I thought I would share a few of my favorites so far:
- Your Existing ERP Software System Can Bring a Happy New Year for Purchase Part Savings! – One of our first postings of the year, this provides a very tangible example of how companies can leverage their ERP system to realize a tangible improvement to their business operations.
- The Marathon Man of ERP Implementations – I’m a fan of sports analogies and this entry from Cliff Simms, our Director of Organizational Change Management, highlights the ways that ERP implementations require conditioning, focus, and effort that isn’t unlike training for a marathon.
- Are ERP System Customizations Starting to Feel Like a Build-a-Bear Workshop? – Written by Haoyan Sun, our Research Analyst, this is a good article highlighting the realities and dark side of ERP customization, a topic on the minds of most executives and project managers about to embark on an ERP implementation.
- When Jumping into an ERP Project, It’s Sink or Swim! – Our clients often struggle with how to mobilize resources for an ERP project, and this entry provides some tangible tips on how to best prepare your team.
- Six Steps for Executing Successful ERP Requirements Workshops – Another good entry with very tangible and real examples of how to define ERP business requirements, whether your are in the process of selecting, designing, or implementing a new ERP system.
- Winning in 2010: The Goal Line – Another good analogy of how ERP implementations are like sports, this one focused on how to focus your end-goal on tangible and measurable business benefits.
- ERP Software Clash of the Titans: SAP vs. Oracle – Of the blogs that I have written so far this year, this is easily my favorite. I can’t even keep track of the number of times clients ask me to summarize the strengths and weaknesses of SAP and Oracle, so I wrote a blog to address some of the key points.
- Powell’s Message: Insights on ERP Software – One of our more recent blogs, this is a good one because it relates leadership messages from Colin Powell and applies them to leading a successful ERP initiative.
In addition, below are the top five most-read blogs on our web-site so far this year:
- Top Ten ERP Software Predictions for 2010
- One Key Reason Why 72% of ERP System Implementations Fail
- The 2010 ERP Vendor Analysis Results Are In, and the Winner Is…
- Organizational Change Management Tips for Global ERP Software Implementations
- Welcome to the Jungle: Lessons from ERP Software Implementation Failures
We will publish a more comprehensive year-end list later in the year, but we hope that these blogs provide some good summertime reading in the meantime.
Manufacturing Software Showdown: Functional Comparison of SAP vs. Oracle
As recently outlined in our white paper on executing a successful SAP implementation, we recently compiled client feedback on key functionality of the two leading manufacturing software packages: SAP and Oracle eBusiness Suite (EBS). These metrics, which are based on our database of client employees’ quantitative rating of the two packages as they relate to their business requirements, identify the key strengths, weaknesses, and tradeoffs of the two packages. The data was compiled exclusively from our manufacturing clients that short-listed both SAP and Oracle EBS as part of their ERP selection process.
The data reveals a number of interesting facts. First, SAP and Oracle rate very closely in a number of functional areas, with a statistically insignificant difference of .1 or less:
- Logistics
- Customer Service
- Production Operations
- Quality Control
There are some modules and functional areas, however, where SAP scores higher than Oracle:
- Product Scheduling
- Regulatory Compliance
- Human Resources (HR)
On the other hand, Oracle scored higher in a number of areas as well:
- Sales and Marketing
- Product and Manufacturing Engineering
- Product Configurator
- e-Portals
- Finance and Accounting
Obviously, these are just averages of much more detailed client evaluation metrics, but they provide a general sense of where the perceived strengths and weaknesses of each of the software packages lie. It is important to note that a client’s evaluation of a software’s functionality is likely to vary based on it’s unique business needs and requirements. However, this is one of several data points that can be considered during an evaluation of potential manufacturing software packages such as SAP and Oracle.
Manufacturing Software Functional Comparison of SAP vs. Oracle
| Functionality | SAP | Oracle |
|---|---|---|
| Sales & Marketing | 2.7 | 3.0 |
| Production Scheduling | 3.3 | 3.1 |
| Quality Control and Lab | 3.0 | 2.9 |
| Regulatory Compliance | 5.0 | 3.0 |
| Finance and Accounting | 3.4 | 3.7 |
| Logistics | 3.5 | 3.4 |
| Human Resources (HR) | 4.9 | 3.9 |
| Customer Service | 3.3 | 3.3 |
| Production Operations | 3.0 | 3.1 |
| e-Portals | 3.1 | 3.3 |
| Product and Manufacturing Engineering | 3.0 | 3.2 |
| Product Configurator | 2.5 | 3.1 |
Want to view more independent research related to SAP and Oracle? View our ERP video that highlights additional data comparing these two ERP systems. In addition, visit our resource center for the SAP white paper on the topic and watch for additional research from other leading manufacturing software providers.
The Biggest Challenge For ERP Implementations: Defining Business Processes and Workflows
One of our recent blog posts outlined The Seven Deadliest Sins of ERP Implementations. A related poll question asked which of the seven variables were the biggest challenge for ERP implementations, and the results are interesting.
To recap, there are seven critical challenges that can disrupt an ERP implementation if not addressed appropriately:
- Program management
- Business process and workflow definition and improvement
- Organizational change management and communications
- Business and technical integration
- Globalization and localization
- Independent oversight of technical resources
- ERP benefits realization
Unlike data captured in our 2010 ERP Report and other research we’ve conducted in the past, inadequate focus on benefits realization scored low in our online poll, with only 9% of respondents citing that as the biggest challenge. On the other hand, insufficiently defining business processes and workflows was the biggest challenge, according to 39% of respondents. Poor program management and not enough focus on organizational change management both followed close behind, with each gathering 26% of the votes.
The fact that business process and workflows are such a potential land mine for ERP implementations is not surprising for a number of reasons. There are six main reasons why this presents such a challenge for organizations:
- Unrealistic expectations. We find that many of our clients expect that implementing a new enterprise solution will simply transform their business overnight, without carefully defining and engineering “to-be” business processes and workflows. This unrealistic expectation helps explain why, according to our 2010 ERP Report, most ERP projects take longer than expected.
- Vendors often oversell and oversimplify. Many vendors oversell and oversimplify their software’s use of industry best-practices and streamlined business processes. While their software will inevitably improve business processes, they still need to be defined in the context of the implementing company’s operations and business policies and procedures.
- There are often complex processes outside of the ERP system. Business processes may entail activities to be completed in the ERP system, but chances are, there are also processes that touch other systems or manual processes. These non-ERP processes need to be incorporated into the overall workflows in order for employees to better understand them.
- Most ERP systems are very flexible. Most modern ERP solutions are extremely robust and flexible, so even a simple business process such as creating a sales order is likely to have multiple variations. It cases like this and hundreds of other business processes, it is not enough to say that you are going to simply adopt the software’s processes; even those workflows need to be defined, which takes time and resources.
- Business processes are a source of competitive advantage. While some business processes, such as general ledger or financial reporting, are not sources of competitive advantage, other core functional areas are likely to differentiate your organization from competitors. For this reason, it is not always advisable to simply adopt vanilla functionality that can be easily replicated by others in your industry.
- Employees need well-defined processes. Processes and workflows need to be clearly defined so employees can be adequately trained. Software developers and implementers have very different process definition needs than employees, who will ultimately be responsible for performing the tasks. Organizational change management, communications, and training activities are effective only with well-defined business processes.
ERP software is not implemented by simply plugging it in and assuming business processes and workflows will fall into place. Instead, organizations need to carefully define and re-engineer their processes. By keeping the above points in mind, your organization will be less likely to overlook a key, but often overlooked, component of an effective ERP implementation.
What do you think? Take the poll or review the full results from other readers.
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An Appetite for Destruction: The ERP Implementation Lawsuits Continue…
As we outlined in a blog post earlier this year, ERP implementations fail for five key reasons. Unfortunately, some of these failures lead to heads rolling, millions of dollars of budget overruns, and in some extreme cases, lawsuits against software vendors. In fact, the number of inquiries we have received to act as expert witnesses in ERP lawsuits has increased dramatically in the last twelve months.
When working with clients, we often hear the perception that most ERP failures or lawsuits must pertain to SAP implementations . After all, Hershey’s, Waste Management, and a host of other high-visibility failures involved SAP’s ERP software. However, our research shows that there is no pattern to ERP failures and lawsuits, other that they happen more often than they should and no one ERP vendor appears more or less likely to experience failure than the others.
For example, two new lawsuits were announced in the last 30 days: one against Oracle and another against JDA’s i2 unit.
In fact, we looked at the most recent lawsuits to see if there was a pattern among vendors and software solutions. As you will see in the table below, there is no apparent pattern to the vendors named in recent legal matters. If anything, when expressed as a percentage of total client base, SAP and Oracle probably have a lower lawsuit rate than other vendors on the list. However, because large and high-visibility companies are more likely to embark on Oracle or SAP implementations, those organizations are more likely to receive attention when something goes awry.
Lawsuits Againt ERP Vendors
| ERP Vendor | Year | ERP Customer | Reason for ERP Lawsuit | Article Link |
|---|---|---|---|---|
| Epicor Software Corporation | 2009 | Ferazzoli Imports of New England | Epicor's system never worked as intended or promised. Initially paid: US$184,443.61. To date: US$224,656.42 (included the additional software and services meant to make the system operate properly). | Read the article. |
| Infor Global Solutions | 2009 | Vaughan & Bushnell | ERP software giant Infor is taking legal action against customers as it seeks to recoup license fees it claims it is owed. An attorney for the tool company, which sued Infor in this case, confirmed that his client paid Infor something. | Read the article. |
| Lawson Software | 2009 | Public Health Foundation Enterprises | Failed ERP implementation | Read the Article. |
| Lawson Software | 2009 | Sisters of Charity of Leavenworth Health System | Hospital chain sues Lawson Software over retiring ERP apps, a breach-of-contract. Its agreement with the ERP vendor requires Lawson to provide -- for just a small fee -- replacements for two software modules that will be decommissioned next year. | Read the Article. |
| Infor Global Solutions | 2008 | Carver Pump Company | The company sued Infor over a disputed $451,000 invoice Infor sent Carver in August 2008 for allegedly using the Maxim ERP package without a license since 2000. Carver says it received a perpetual license from CA (which acquired Maxim's original developer, NCA) in 1998 as part of a Y2K upgrade, and claims it stopped using Maxim anyway in 2006. The companies settled out of court in November. | Read the Article. |
| Infor Global Solutions | 2006 | Scientific Components | Scientific Components sued Infor in U.S. District Court in New York over a dispute concerning temporary license fees needed to access MAPICS running on a secondary iSeries server connected via iTera's high availability software. The companies settled in December 2006. | Read the Article. |
| Infor Global Solutions | 2006 | Western Textile Company | The Company sued Infor over allegations by Infor that the company owed it more than $100,000 for exceeding the number of sessions in its license agreement; Western Textile claims its original license with CA was measured by concurrent users, not sessions. They settled in March 2007. | Read the Article. |
| PeopleSoft and Kaludis Consulting Group | 2004 | Cleveland State University | A faulty installation of the company's ERP applications. The lawsuit charges PeopleSoft with breach of contract and negligent misrepresentation, among other counts, and claims PeopleSoft's solutions for managing student applications amounted to little more than "vaporware." | Read the Article. |
| Baan USA Inc. | 2003 | Dexter Axle Company | Dexter asserted twelve claims: breach of the Software Agreement and the Consulting Aggrement, two claims of breach of express warranties, breach of implied warranties, fraudulent inducement of the Software Agreement and the Consulting Agreement, fraud, negligence, constructive fraud, statutory deception, and unjust enrichment. | Read the Article. |
| EDS | 2003 | British Sky Broadcasting | Sky has alleged that EDS dishonestly exaggerated its abilities and resources when bidding for the contract, resulting in late delivery of the project and lost benefits that make up the the £709m in damages it is claiming | Read the Article. |
| Oracle Corporation and KPMG Consulting | 2001 | The University of Cambridge in the United Kingdom | Considered possible legal action against Oracle and KPMG Consulting for a faulty computer system that the university estimates it spent $13 million installing, with the aid of the two companies. | Read the Article. |
| SAP (R/3) and Andersen Consulting (now Accenture) | 2001 | FoxMeyer Corp. | The company claimed that a botched SAP R/3 implementation in the mid-1990s ruined the company, driven the company to bankruptcy. Six years later the bankruptcy trustee and Accenture settled out of court and the lawsuit was dismissed on August 8, 2002. | Read the Article. |
| SAP | 2001 | Arkansas State | The National Federation of the Blind of Arkansas had sued the state in 2001 claiming the AASIS system was not fully accessible to blind persons. The state, in turn, filed a third-party claim against SAP, blaming the vendor for the accessibility problems. SAP agrees to fix Arkansas ERP system. | Read the Article. |
| PeopleSoft and Deloitte & Touche | 2000 | Gore & Associates | Alleges PeopleSoft sent in unqualified consultants to do the job, forcing Gore to rely on PeopleSoft's customer service hotline to set up the program after major problems occurred when the system went live. | Read the Article. |
| Oracle Corporation | 2000 | Tri Valley Growers | Alleging fraud, negligent misrepresentation, malpractice, and breach of contract. TVG claimed that the database giant failed to fulfill its contract to modernize the company's production and management systems using its ERP applications. | Read the Article. |
| J.D. Edwards and IBM | 2000 | Evans Industries Inc. | The suit alleged that OneWorld was "defective and failed to operate and function as promised by the defendants." Failed and refused to fulfill its obligations under its agreements" and with IBM failed to install the OneWorld software "such that it is operational. | Read the Article. |
So what are some of the best ways to avoid becoming wrapped up in an ERP lawsuit? There are five key factors that can help you stay out of trouble during your ERP selection and implementation process, regardless of which software you are considering:
- Ensure functional and technical fit of the software you select
- Have realistic expectations about how long the implementation process will take and how much it will cost
- Ensure adequate executive buy-in and support
- Where possible, avoid customizing software rather than leveraging standard functionality
- Ensure sufficient internal and external ERP software implementation expertise on your project team
Read more about these five implementation factors by reading the full blog, Welcome to the Jungle: Lessons Learned from ERP Implementation Failures. In addition, share your opinion about which of the five failure points is the most crucial by taking our poll below.
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