Today is one of the biggest days of the year in the enterprise software industry, as the latest iteration of Panorama’s highly anticipated annual ERP Report is published (download the 2012 ERP Report). The independent study examines the results from a range of organizational sizes and industries ranging from smaller companies to global, multi-billion dollar organizations. The study also looks at ERP implementations from vendors ranging from SAP, Oracle and Microsoft Dynamics to Tier II solutions like Epicor, Infor and a variety of others. This year’s study of nearly 300 ERP implementations across the world demonstrates some of the same themes we’ve seen in years past: most projects not only cost more and take longer than expected but also fail to deliver anticipated business benefits.

However, there is good news in the report as well: the percentage of companies going over budget and taking longer than expected decreased compared to previous years. For example, 56-percent of organizations in this year’s study went over budget, compared to 74-percent in our 2011 ERP Report. In addition, 54-percent of organizations went over schedule, compared to 61-percent in 2011. While the numbers still highlight the challenges and risks that most organizations face, they also show that companies are starting to do some things better than they have in the past.

The bad news, on the other hand, is that of those organizations that go over budget, it is by a significant amount. This year’s study shows that that companies that blow project budgets do so by an average of 25-percent, hardly a immaterial number for most CFOs. In addition, 29-percent of the respondents indicated that they have yet to realize a payback on their ERP investments, another metric likely to make CFOs and other executives think long and hard about how they can better mitigate risk on their ERP implementations going forward. Finally, and perhaps most concerning, is that two out of three organizations indicated significant pain in changing their business processes and organizations to accommodate their new ERP systems; 63-percent said that this aspect of their implementation was either difficult or very difficult, suggesting that ERP projects are still by no means a cakewalk.

So why the change in this year’s numbers over last year’s? First, companies are less bootstrapped with their IT budgets than they were in years past. CFOs and CIOs aren’t forced as often to shave implementation budgets to the bone and cut corners as they were during tougher economic times. With more realistic estimates and expectations, organizations aren’t quite as likely to blow their budgets and project plans. However, as mentioned above, when organizations do go over budget, they do by a significant amount, suggesting more of a dichotomy between those that tightly manage scope and budget and those that don’t. In addition, even though companies are finishing on time and on budget slightly more than they have in years past, they still struggle with business process, organizational changes, and benefits realization, suggesting that they are not getting all they could out of their new ERP systems.

This year’s numbers suggest that there are still significant challenges in the marketplace, but they provide a thread of optimism that more companies are figuring out how to manage their ERP initiatives more effectively. Learn more by downloading our 2012 ERP Report and joining me at our free webinar, Review of Panorama’s 2012 ERP Report tomorrow at 10 a.m. MST.

Unfortunately, ERP implementations still aren’t any easier than they were 15 years ago when I started in the ERP world. Despite the enterprise software industry’s best intentions to mitigate risk with cloud ERP systems, implementation accelerators, and other tools, ERP failure rates are still high and most projects still take more time and money than expected. For example, our 2012 ERP Report, which will be released next week, shows that nearly half (44-percent) of all ERP implementations fail to deliver at least half of their expected business benefits.

The even more troubling trend we’re seeing at Panorama Consulting is an acceleration of ERP failures and lawsuits. We are seeing a spike in demand for our ERP consultants to provide guidance to implementations that have gotten off track or to attorneys involved in lawsuits related to implementation failures. We have a very solid and exhaustive process for helping clients assess their implementations and create a project recovery roadmap, which clients are taking full advantage of in recent months. While this is good news for us in that there is more demand for our services than ever, it is bad news for the industry and the organizations looking to implement new enterprise software solutions. Whether it’s software from SAP, Oracle, Epicor, Infor, or any other ERP vendor, the reality is that it is still difficult to implement a new system effectively without stepping into a landmine or two along the way.

The good news is that there are ways to get an ERP implementation out of the gutter. As we’re demonstrating with three clients we’re currently working with, there are a number of things you can do to get your project back on track. Here are three tips that are likely to make a difference on your troubled ERP implementation:

1. Look to organizational change management for low-hanging fruit. While it is tempting to blame your vendor or the ERP software itself, we find that most ERP failures result from organizational change management issues. In fact, if you evaluate the organizational change, communications, and training activities that you are and aren’t doing as part of your project, you are likely to find significant deficiencies and opportunities for improvement. It’s usually people that make a project fail, not the software, so more effective organizational change management will help mitigate this challenge. We often look to areas such as organizational impact, job design, process definition, customized training, and targeted employee communications as opportunities to “fix” the people side of the ERP implementation equation. Not only is this “people side” crucially important and often overlooked, but it is typically less costly than buying an entirely new ERP system or customizing to force the software to address the organizational resistance you may be facing.

2. Revisit your implementation plan. Most ERP implementation plans are flawed from the start. Unrealistic expectations, unclearly defined milestones and resource requirements, and missing key activities are some of the common problems we see when clients ask us to get their projects back on track. Organizations too often rely on a project plan provided by their ERP vendor or system integrator, which usually focus too much on the technical components of an implementation on not enough on the business, process, and organizational aspects required to make a project successful. Implementation success is never guaranteed, but failure is guaranteed without a realistic and complete plan.

3. Know when to fold ‘em. Like Kenny Rogers once said, you’ve got to know when to hold ‘em and know when to fold ‘em. It may be time to hit the reset button on your enterprise software initiative. It may also be time to ditch an attempted ERP implementation and replace it with software that is a better fit for your organization. Or it may be a matter of some of the less drastic changes outlined above. One of the benefits of working with an independent ERP implementation consulting firm such as Panorama is that we help our clients make objective assessments of whether it’s time to head a different direction with the organization’s ERP strategy.

While a troubled ERP implementation is never fun, it is not as bad as an ERP failure and there are always ways to get your project and your team back on track. With the right expertise and toolset, your project can be recovered and even rejuvenated.

Find out more about both ERP failure and ERP success by attending my interactive webinar tomorrow, Lessons Learned from Failed ERP Implementations.

Nearly a decade after the implementation of the Sarbanes-Oxley Act (SOX) at publicly traded US-based companies, the verdict is still out on whether or not the law has had a material impact on fraud, breakdown in internal controls, and other problems that the regulation is intended to address. Regardless, SOX is a reality that impacts many organizations in many ways, including how they implement their enterprise applications. Even in cases where a company is not required to be SOX compliant, there are other regulations and internal controls that ERP systems need to address.

When helping our international client base through their ERP implementations, internal controls and regulatory compliance is one of the necessary evils of ERP success. Processes need to be designed in a way that meets regulatory compliance, systems need to be configured to support those processes, and people need to be trained to execute on those compliant processes. In addition, CIOs and CFOs need to institute a framework to ensure that the implemented solution meets SOX and other regulatory requirements after go-live and on an ongoing basis.

Here are three things to consider during an ERP implementation when it comes to SOX, internal controls, and regulatory requirements:

1. Compliance begins during the business blueprint phase of an ERP implementation. While SOX and regulatory compliance may seem like a mysterious finance, CFO or Internal Audit function, compliance begins when creating the business blueprint for your ERP system. Business processes need to be defined in a way that ensures that the segregation of duties, oversight, and other compliance needs are addressed. The designed business processes need to be validated before the blueprint is finalized and before the technical team begins their software configuration. We’ve seen too many companies treat SOX and regulatory compliance like an afterthought, only to have their internal or external auditors raise red flags too late (e.g., after the system was in production or when they failed their first post-go-live audit). This challenge is further magnified by the fact that most modern ERP systems are very flexible and can perform business functions a number of different ways – some of those processes are going to be compliant with your internal our regulatory compliance needs, while others will not. We build this internal compliance, SOX and regulatory review into our ERP business blueprinting methodology for our clients.

2. Organizational change management solidifies SOX and regulatory compliance. Contrary to popular belief, ERP systems can’t always force compliance. They can make it easier to enforce segregation of duties, financial oversight, and approval workflows, but they can’t close off every possible loophole or process breakdown. Organizational change management and employee training is the key not only to ERP success in general but also to getting an ERP implementation to full compliance. These activities help employees understand the need for compliance, clarify the expected business processes, and hold them accountable for executing against those processes and workflows. All the generic software training in the world won’t help create this understanding, but effective organizational change management will. Our clients have found their business processes to be much more efficient, effective and compliant as a result of the organizational change management framework we provide as part of our ERP implementation methodology, toolset and expertise.

3. Include your internal or external auditors throughout the entire ERP implementation project. Just as your executives and employees need to have buy-in into the project, your internal and external auditors also need to support the changes resulting from your new ERP software. As mentioned above, internal audits and controls should be built in to your implementation during the business blueprint phase, but you should also include a number of touch-points in other phases of the project as well. For example, key regulatory and SOX requirements should be defined during your ERP evaluation and selection to ensure you have chosen a system that addresses your needs. In addition, key process controls should be validated during the system design, software testing, user acceptance, and integration testing phases of the ERP implementation. In addition, a formalized compliance audit should be performed as part of a post-implementation benefits realization audit as well.

While Sarbanes-Oxley and regulatory compliance are often one of the last things on the minds of CIOs and relatively low on the list of reasons why organizations typically choose new ERP systems, it becomes very important when it’s time for that first internal and external audit of your business operations and systems. For this reason, it is important to bake these processes into your entire ERP selection and implementation lifecycle to ensure that your organization gets regulatory issues right the first time. It is typically much less costly to invest the time and resources up front rather than finding out after it’s too late.

To find out more about ERP success (and ERP failure), check out our free on-demand webinar series. Subjects include “Tips for Selecting the Right ERP Software for Your Organization,” “Tips on How to Build a Business Blueprint for ERP Systems,” and “Lessons Learned from Failed ERP Implementations.”

When most people think of ERP systems, they think of a single system. The common thinking behind enterprise software is that executives are generally looking for a single solution to integrate their entire business operations, processes and technologies. They want their entire employee base on a single system, a single source of truth for customer and financial information, and a seamlessly integrated technology to bring the organization together. Most organizations don’t explore options from SAP, Oracle or Microsoft Dynamics with the intent of deploying multiple systems – they instead look to these large solutions to consolidate their systems.

The reality, however, is that a single system isn’t always the most pragmatic way to address an organization’s business, technological and organizational needs. Businesses are becoming more complex, are evolving more quickly than ever, and are working hard to carve out unique niches to differentiate themselves from competitors. These competing priorities are often not conducive to a single ERP system from a single ERP vendor. In addition, best-of-breed solutions provide systems that are built with the depth to address one specific functional area, delivering potentially stronger functionality in that area than a single ERP system that addresses the breadth of an entire organization. In these cases, a best-of-breed enterprise software solution may make more sense. There are a number of solutions that fit this category: Salesforce for CRM, Workday for HR, Plex Systems for manufacturing, and Kinaxis for Supply Chain Management are just a few common examples of best-of-breed ERP systems.

The problem here is that opening the door to a potential best-of-breed solution can be like opening a can of worms. There are already nearly 200 ERP software solutions in the marketplace, but when you throw potential point solutions into the mix – such as CRM software, HR systems, or accounting software – the number of options and combinations grows exponentially. Organizations without much experience selecting and implementing ERP solutions find it difficult enough to find and implement the right ERP software as it is, but these inherent challenges are magnified when considering a best-of-breed solution.

So how is a CFO or CIO to make sense of the plethora of variables to consider when evaluating a single ERP system versus a best of breed option? Below are five things to consider as part of an ERP selection and implementation:

1. Business requirements are especially important with best-of-breed ERP systems. While it’s true that business process and requirements definition is important for any ERP selection process, it is especially true for multi-system initiatives. Before becoming overwhelmed with all of the available options for your functional point solutions for your CRM, HR, manufacturing and accounting systems, you will want to clearly define your business processes, pain points and requirements. This is important for two reasons: first, it will help you define what criteria will be most important to selecting the right software solutions, and second, it will help better define the scope of what systems you are looking for.

2. Understand your competitive advantages versus your non-differentiators. The difference between single system and best-of-breed ERP software often comes down to competitive advantages and differentiators. When working with clients that are not well-suited for a single system solution, we often help them determine their competitive advantages so that they can better define what to house in their “core” ERP system versus their outlying best-of-breed systems. One of the key benefits of taking a best-of-breed approach is that organizations can benefit from a solution that was designed with depth in a specific functional area, providing potentially strong functionality than a single ERP system that is trying to address the breadth of an entire organization. For example, when working with aerospace and defense companies, most accounting and HR processes and functions might be considered non-differentiators, while engineering and product configuration might be viewed as competitive differentiators. In this example, HR and accounting functions might be more feasible to house in the core ERP system, while engineering and product configuration might be more effective with a best of breed solution.

3. Business process and technological integration is crucial. When exploring best-of-breed solutions, it puts more pressure on your internal IT group to manage the technical complexity of integrating multiple systems with potentially disparate data standards integration tools. In addition, functionality and system user interfaces can be materially different between the various systems, creating even more of a need to ensure smooth and integrated business processes. This requires better organizational change management and business process clarity to ensure processes and people are aligned with the systems, along with adequate time for integration, testing, and data conversion to ensure that the systems function well together before go-live.

4. Trade-off between user acceptance and technical complexity. Another variable that comes into play is the balance between user acceptance and technical complexity. A single ERP system is often less technically complex in that it doesn’t require a great deal of integration or disparate data structures. However, the fact that best-of-breed solutions often provide more powerful capabilities within their functional areas of focus can increase user acceptance and make it easier for end-users to learn. In either case, an effective organizational change management and training program is critical to your project’s success, but this need can be amplified in a single ERP system environment.

 5. Your longer-term ERP software strategy. In today’s economic climate with strained IT budgets, it is not uncommon for organizations to choose point solutions that will give them the most immediate return on investment rather than committing to a full-blow ERP implementation. However, it is important not to make this decision in a vacuum without first understanding your longer-term enterprise software strategy. For example, we recently worked with a large manufacturing company that couldn’t commit resources to a full ERP system, but they knew they could get an immediate ROI from a more robust CRM system such as Salesforce or Sage CRM. We encouraged them to define their overall enterprise-wide ERP requirements so they at least knew where they were headed in the long-term before making the shorter-term decision. This recommendation helped ensure that they didn’t back themselves into a corner later on when they chose to address their other ERP software needs.

At the end of the day, either route involves a tradeoff. If you choose a single ERP system, you are usually giving up some best-of-breed functionality or depth in exchange for a more tightly integrated system that can be easier and more cost effective to manage. If you go the best-of-breed route, you are giving up this tight integration for more depth and capabilities within specific functions. As with most decisions related to ERP systems, there is no single one-size-fits-all answer  – instead, it depends on the specific business needs, priorities, competencies and risk tolerance of your organization. Discover more tips and techniques to ensure ERP implementation success by attending tomorrow’s free webinar, Lessons Learned From Best-in-Class ERP Implementations.

As we outlined in our ERP predictions for 2012 and our look back at the ERP industry in 2011, one of the major issues that CFOs, CIOs, and other c-level executives are and will continue to focus on is how to reign in ERP costs. Unfortunately, despite their best intentions and their relatively low risk tolerance given the current economic climate, most organizations still see their ERP implementations take longer and cost more than expected. As a result, executives are watching their ERP budgets like hawks and looking for ways to control costs.

The problem these executives face is that there is a fine line between cutting costs and undermining the success and effectiveness of an implementation. Too often, cuts to ERP budgets that look good on paper can have disastrous consequences in the long-term (e.g., cutting organizational change management and training budgets), so it is important to understand where it makes sense to pragmatically minimize costs versus taking the slash and burn approach that could create a “throwing the baby out with the bathwater” situation.

Here are a few tips to help executives and project managers control and maintain costs within their ERP budgets:

1. Begin with realistic expectations. This is often the root of budgetary issues and cost overruns. More often than not, ERP vendors and their system integrators mismanage expectations on what total costs will look like, leading organizations to cut corners down the line when they realize that they never had the right budget to begin with and find that their management team isn’t willing to increase the required funds. It may be more painful to have clear, realistic expectations up front, but it is much less painful than losing your job because you can’t manage to the budget, or worse yet, losing your job because the implementation was botched due to lack of resources. Panorama’s ERP software selection and implementation planning methodologies help clients define (and budget for) these more realistic expectations from the start.

2. Detail each of the critical cost components of an ERP implementation. You can’t have realistic expectations without a realistic view of what each of the budgetary cost components will need. This includes hidden costs: hardware upgrades, internal resources, external consulting support, customization, and a host of other budgetary items that executives and project managers often overlook or underestimate. Once you have identified all of the major cost components, you can then benchmark these line items to actual costs for companies and industries similar to yours — not unrealistic “back of the envelope” low-ball guesses that your vendor or system integrator might provide during their sales cycles. Panorama’s 2011 ERP Report and other independent research can be good starting points for these more realistic benchmarks.

 3. Understand the “untouchables” of your ERP budget. There are certain, critical elements of an ERP implementation that should never even be considered for the chopping block: organizational change management and project management expertise, for example. Just like any investment portfolio that your company pursues, you will want to identify the areas of the project that you are willing to invest heavily in and those that you are willing to spend less on if push comes to shove. For example, customization is one area that many companies decide not to spend money on, and rightfully so. And here’s a hint: if you want your implementation project to be successful, then you will want your budget to reflect a heavier focus on the business and organizational aspects of the project rather than the technical aspects, which are typically not only the easiest parts of an implementation but also the areas the system integrators and vendors tend to over-emphasize.

Setting an ERP budget that is aggressive while at the same time realistic is easier said than done. You have to have extensive experience with ERP implementations, be objective and independent when defining the budget, and understand the full spectrum of costs outside of the direct vendor-related technical costs. At Panorama, we help our clients define a realistic budget, along with appropriate areas of focus, as part of our ERP implementation planning service offering and PERFECT Path methodology. Without this focus and understanding, organizations are walking into a black hole of uncertainty and risk. Find out more about ERP implementation success by attending our January 12th webinar, Lessons Learned From Best-in-Class ERP Implementations.

With another year quickly drawing to an end and our predictions for ERP in 2012 already in place, we thought it would be worth taking a look back at the past year in the ERP industry. As we reflect on the major milestones of 2011, it reminds us of the large spectrum of positive and negative industry incidents. For example, on one hand, Panorama Consulting continued its growth and success by merging with The Prescott Group while, on the other hand, several high-profile organizations failed miserably in their attempts to implement ERP systems.

Here is a look back at three of the major milestones of 2011:

Proliferation of ERP failures and lawsuits. Even with the economy still in the dumps and CFOs and CIOs more risk-averse than ever, lawsuits, fraud and project failures continued to grab headlines. For instance, Lumber Liquidators, CareSource Management Group, Tesco Bank, Whaley Foodservice Repairs, and the City of New York all reported failed or troubled ERP implementations in 2012, reminding us all how awry ERP projects can go if they are not managed well. Case in point: the CityTime payroll system implementation, which had an initial budget of $63 million and rapidly grew to $760 million in actual costs, along with allegations of kickbacks amongst the project’s system integrators and sub-contractors. While our firm will undoubtedly provide ERP expert witness testimony in several high-profile lawsuits in the coming year, we would much rather be earning our revenue by helping companies do ERP right the first time. Hopefully, these examples serve as reminders of the value of independent ERP consulting experts to help select and implement enterprise software effectively.

Industry growth and consolidation. Despite the accelerating rate of ERP failures, the industry as a whole showed continued signs of life in a tough economy. Panorama expanded its reach into new industries, service areas, and geographies by merging with The Prescott Group to form Panorama Consulting Solutions, while Infor continued its march toward becoming a viable Tier I ERP vendor by acquiring Lawson. In addition to these and several other high profile merger and acquisition deals in the enterprise software space, other ERP vendors demonstrated aggressive growth by expanding their footprints of new customers, embracing software as a service (SaaS) and cloud delivery models, and focusing on emerging markets such as China. SAP, for example, continued to push its Business By Design SaaS offering and indicated that China is its number one geographical growth priority in 2012 and beyond.

The cloud is for real. 2011 appears to have been a turning point for cloud ERP software and SaaS solutions, with it becoming more clear that the movement is not a flash in the pan. SaaS ERP vendors such as Salesforce, Workday, Kinaxis, and Netsuite all exhibited strong software license growth in the last year, while traditional on-premise vendors such as SAP, Oracle, and Epicor demonstrated stronger commitments to their SaaS and cloud offerings. While the heaviest rate of adoption is still very concentrated among smaller organizations, the adoption rates in these segments of the market illustrate that the cloud is here to stay. The next step for SaaS ERP vendors is to prove that they can crack the code and concerns of the enterprise software needs for larger organizations.

While 2011 may have been a mixed bag, it left us with enough positive news and opportunity to get us ready for an exciting 2012 with optimistic prospects. On behalf of everyone at Panorama Consulting Solutions: happy new year to our current clients, future clients and industry peers. Here’s to a successful 2012 and we look forward to working with you.

While this year has been full of mixed news, with economic weakness, business volatility, and ERP failures and lawsuits taking more than their share of headlines, there is much to look forward to in the New Year. IT and finance executives in the C-suite are becoming smarter, more strategic, more flexible, and more adept with dealing with uncertainty, and we should expect no less from our ERP implementations.

With the holidays upon us and thoughts of how to spend new budgets in the New Year, we thought it might be helpful to share some of the “gifts” that every CIO and CFO should ask for before jumping in to a ERP software initiative in 2012 and beyond. For that discerning executive in your life, here are 12 gift ideas that are likely to trump any “world’s best boss” coffee mug or Christmas sweater:

1. The right ERP software for your business. It may seem like an easy process on the surface, but evaluating and selecting the right ERP software for your organization is a complex and challenging task. Many of our competitors provide “cheap” alternatives to software selection via automated checklists and over-simplified views of your business, but navigating through the many good options in the marketplace to find the right software for your organization requires a hands-on understanding of your business, true technology independence (both in theory and in fact), and recognition as the world’s leading experts in ERP software.

2. A competent project manager. While the “do it yourself” option may sound appealing at first, and you certainly will always want an internal project manager to manage the many internal activities that need to happen during an implementation, external project management support can be a perfect way to augment the internal competencies of your project management team. More importantly, external experts that manage ERP implementations every day will help you implement faster, less expensively, and more effectively than you would have otherwise.

3. A shiny new project plan. There is a reason that a majority of ERP implementations take longer than expected: the project plans were never realistic to begin with. Most project plans we see created by organizations and their ERP vendors or system integrators are woefully inadequate, missing or inadequately addressing key critical success factors, such as time for data conversion, conference room pilots, organizational change management, business process and workflow design, and user acceptance. In order for your implementation to get off on the right foot, you might consider benchmarking your plan against best-in-class and technology-agnostic implementation plans, which will highlight gaps in the business, people, and organizational aspects that are so crucial to any successful implementation.

4. More money for your ERP budget. Research presented in our 2011 ERP Report shows that a majority of ERP implementations go over budget, primarily because companies either mismanage their projects, or, even more commonly, under-estimate their budgets to begin with. Your direct ERP vendor, software license, and system integrator costs will actually be a minority of your total cost of ownership, so you should budget accordingly. A good rule of thumb to see if your budget is in the right ballpark or not is that your software license costs are likely to be just approximately 20-25% of your total implementation cost. In other words, take your license costs and multiply by four or five to arrive at your ballpark implementation figure. Anything less is too little and will require you to cut corners later on.

5. Well defined and re-engineered business processes. I can’t think of anything that saves more time and money in an ERP implementation than well-defined and documented business processes. Without this component, the software vendor or system integrator will show up with their checklists or transactional-based workflows, expect answers on how to configure the software, and spin their wheels (and billable hours) helping you make decisions on how you want to run your business. Since most ERP software is very flexible, the concept of software “best practices” is a farce, and business process re-engineering takes time, you need to have a clear vision for how you would like your operational model will look before you begin implementing your selected software.

6. More organizational change management. Whether your project succeeds or fails will be largely dependent on how you manage the organizational and “people” aspects of your enterprise software deployment. Basic generic vendor training materials won’t cut it, so you’ll need an approach that is more tailored to your business, including process-based training, organizational impact assessments, targeted employee communications, and clearly defined roles and responsibilities in the new business and systems environment. Our organizational readiness assessments help clients clearly see the areas of resistance and organizational risk that need to be addressed as part of an effective organizational change management plan.

7. More resources. Organizations are notorious for implementing (or trying to implement) with inadequate internal and external resources. No matter how talented your internal team is, chances are that they are not experienced enough to implement without outside help that can bring expertise and business methodologies to help your team implement faster and more inexpensively than they would otherwise. In addition, most executives could use more ERP staffing support to help them assemble a world-class team with the right balance of internal and external resources.

8. A Better educated team. Unrealistic expectations and lack of experience are two of the hardest things to change with a client that is about to embark on what is likely to be their biggest business transformation project in at least the last decade or two. For example, is your team armed with the knowledge that most implementation teams over-customize their software and do they know what to do to keep that from happening with their project? Do they know how to keep the project on track and identify warning signs along the way? Clients often ask us to conduct an on-site ERP Boot Camp as a way to educate and arm their teams for battle heading into their ERP initiatives. You can even start educating your team now by visiting our ERP resource center to view our on-demand ERP webinars, listen to ERP podcasts, or read our extensive ERP research and white papers, all free of charge.

9. Tangible business benefits and ROI. Your executive team is not going to be happy with your implementation unless it delivers tangible business benefits that they can see, feel, and touch on their profit and loss statements. We all know that simply implementing the software is not going to deliver business benefits, so you’ll need to go one step further by establishing a benefits realization framework that translates some of the expected business benefits into measurable metrics that can be used throughout the organization. In addition, this benefits realization plan will call for a post-implementation audit to help optimize results after go-live.

10. An ERP project that never ends. This may look like a typo or sound like a cruel White Elephant gift for that executive that has been a little too difficult to work for over the last year, but it is in fact one of the best things you can do for your organization in the long-term. A key problem with ERP projects is that they are treated like sprints to a go-live finish line, when they should instead be treated like a marathon of continuous improvements and adjustments to account for business and technology changes over time. In fact, we find that most organizations that come to us for help finding a new software solution to replace their old ones could have extended their ERP lifespans by 50% or more if they would have simply kept the software and business operations better aligned over time.

11. A resounding ERP success. Unfortunately, most executives go into ERP implementations with the low expectation of simply not failing or not bringing the organization to its knees. This is hardly the best-case result one should expect after making a risky, multi-million dollar investment in the business. The good news is that we have proven with our clients that ERP implementations can be resounding successes that do more than avoid failure – they offer relatively smooth go-lives, more efficient business processes that deliver tangible business results, and an organization that is well-aligned with the new business processes and software. The question should be not whether or not you will be successful in your ERP initiative, but how successful will you be?

12. An independent advisor to help along the way. All of the above Christmas and New Year gifts are very realistic and available to your executive team with the guidance and support from an outside consulting and services firm that does this type of thing for a living every day. We are well-known as the world’s leading independent thought leaders in the ERP industry not just because we talk a good talk and are quoted by hundreds of journalists and bloggers as such, but because we have hands-on experience making our clients successful, whether it’s helping them select the right software, implement their chosen software, or get more out of their existing ERP investments.

Panorama Consulting is happy to help you provide any one or more of these gifts to your CIO or CFO. Learn more about our ERP consulting services as you plan for your ERP project in the new year. And don’t forget to visit our ERP resource center to educate you and your team with the knowledge required to make your ERP implementation successful.

Here’s wishing you all a Happy Holidays and even Happier New Year. Best of luck in 2012!

One of the common themes we discussed in last week’s ERP Boot Camp is the ways that companies typically outgrow their ERP systems over time. Organizations change, enter new markets, respond to customer demands, and maybe even acquire other companies, leaving their more static ERP systems misaligned with business operations. In addition, companies also are often guilty of implementing software that is not aligned with business needs at the point of go-live, often because the company’s needs change during the course of the implementation or because the software was not implemented well in the first place. Simply stated, an ERP system that may have been a good fit 10-12 years ago is typically not well aligned from a business perspective later in the organization’s life.

Our independent ERP research shows that most companies fail to realize at least half of the business benefits they had expected, and employees and executives often blame software for such misalignments. However, the irony is that software is usually the least of the concerns. The issues and challenges related to these misalignments are more often than not related to business processes, organizational confusion, inadequate training, or a failure to manage the software to keep up with evolving requirements. Our ERP experience suggests that companies are notorious for defining the implementation “finish line” too early, causing them to lose out on the benefit of continuous improvements to their ERP software and processes.

So what are some signs that your ERP software and business needs are misaligned? Here are a few warning signs:

• You haven’t upgraded your ERP software in three or more years. This is often the first step toward misalignment. ERP vendors spend millions of dollars in R&D each year to enhance their products, make them more flexible, and incorporate expanded and deeper functionality. Companies that fail to upgrade are essentially leaving their ERP systems static, which typically leads to misalignments later on as business needs evolve. Upgrading to your ERP vendor’s most recent software can be an important first step to getting your software back on track with your business operations.

• Your people blame the software for the organization’s inefficiencies. As consultants, we are always somewhat skeptical when we hear employees blame the software for the company’s inefficiencies. Modern ERP systems are for the most part much more powerful and flexible than most organizations can handle, so it’s extremely rare that the software itself is the root cause of the challenges. More often, employees don’t understand how to use the software, business processes haven’t been well defined, or the software hasn’t been configured to match the organization’s business processes. An organizational and business process assessment can help you identify and prioritize some of the real root causes of these inefficiencies.

• Your business has gone through significant change. Perhaps you’ve entered foreign markets, increased revenue, opened new offices, added new product lines, and/or reorganized the company. If this is the case, chances are that your software hasn’t evolved as quickly, leaving a disconnect between business processes and the enabling software tools. Creating an ERP business blueprint, which should be a series of living documentation that keeps pace with your business, is a good way to manage the dynamic nature of your business along with your ERP software.

• You haven’t conducted a post-implementation benefits realization audit. It’s amazing how many organizations we see invest millions, and sometimes tens of millions, of dollars in their ERP systems without measuring and optimizing the results they get from the system. These post-implementation audits typically reveal underlying causes of system underperformance and operational and technical misalignment, such as broken business processes, unused software functionality, or lack of employee training. A robust benefits realization plan, including a post-implementation audit, is a prerequisite to realizing expected business benefits and ensuring business and technology alignment within your organization.

These are just a few of the major signs that you may have outgrown your ERP system. Unfortunately, many companies don’t invest the time or resources in these areas to avoid this “application erosion,” as some ERP vendors refer to it. Learn more about how Panorama can help by checking out our core ERP and IT service offerings or calling us at 720-515-1377.

The advent of mobile devices is gaining significant momentum in the consumer space, as evidenced by statistics showing that shoppers are using iPhones, tablets, and other mobile devices to conduct their holiday shopping at a rapid accelerating pace. However, the business world is also beginning to show some signs of early adoption of mobile capabilities in their evaluation, selection, and implementation of enterprise software systems.

For example, a recent study by ERP vendor IFS reveals that 13-percent of executives identify mobile functionality as the most important feature in selecting enterprise software for their organizations, while another 68-percent feel that it is just as important as other features. The study of executives from nearly 300 North American manufacturing organizations underscores the significance that mobile functionality is playing in modern ERP systems.

And it’s not just the manufacturing sector leading the charge toward adopting mobile capabilities; the retail industry is also leveraging iPads and other mobile tablets to replace cash registers. An article in the Wall Street Journal earlier this week reveals that approximately half of the retailers are considering replacing traditional cash registers with mobile devices, while another 6-percent have already adopted mobile point of sale (POS) systems. Nordstrom’s is one major retailer that is in the process of rolling out iPod Touches to serve as the chain’s POS sale system.

Since businesses in general are clearly still in the early phases of adopting mobile technologies, it begs the question of whether it is the right fit for all organizations. As with any new (or existing) wave of enterprise technology, it all depends on the needs of your organization. For example, just as security is a concern with cloud computing, it is also a concern with mobile technologies.

So how is an executive to make sense of what is or isn’t right for your organization when it comes to mobile ERP? Here are a few things to consider when weighing the options:

Potential Business Benefits and Return on Investment. What potential benefits will contribute to the return on investment you might expect from adopting mobile enterprise software? For example, Nordstrom estimates that each iPod Touch it uses costs just 20-percent of what is required to support a traditional POS system. Our manufacturing clients cite increased productivity, improved visibility to inventory and work in progress, and more transparency on the manufacturing floor as benefits of adopting mobile technology. Our utilities, energy, and telecommunications clients cited increased efficiency of routing mobile work crews and scheduling their service orders, as well as better tracking assets and maintenance in the field. So the key is to look at your specific needs, business processes, and pain points to identify the potential business benefits that your organization may realize from mobile ERP.

Security of the Data. On the flip side, many CIOs worry about the security of data, including transactions and customer and product information. Since mobile capabilities will inevitably store and transact information related to your inventory, bills of materials, and customers, it can be a bit disturbing to expose this information to the wireless world. However, as is the case with any risk, this potential downside can be mitigated with the right strategy. Encryption of data, tight security profiles, and closely-monitored asset tracking of devices are all strategies that can be used to diffuse the potential security risks.

Rapidly Changing Technology. When rolling out gadgets as highly adopted by consumers as iPads or iPhones, you are inevitably subjecting your organization to the rapidly changing world of consumer technology. Unlike ERP systems used by a relatively small number of organizations and business users, consumer technologies change and require upgrades at a much more rapid pace. In addition, the mobile software itself needs to not only provide a look and feel that consumers are used to, but it also needs to be updated regularly and integrated seamlessly with back-office operations, which can be difficult to navigate. For this reason, mobile ERP is often a better fit for organizations with more sophisticated IT support staff.

These are a just a few variables to consider when evaluating potential mobile ERP solutions. As with any enterprise software investment, you will want to ensure that the costs are justified via tangible and measurable business benefits that provide a decent return on the investment. At the same time, you want to ensure that you are aware of the risks and tradeoffs and have a plan to mitigate those risks should you decide to move forward.

Learn more about the new advances and hot trends in ERP systems at Thursday’s interactive webinar, Top Ten Predictions for ERP in 2012 (10 a.m. MT).

As the Thanksgiving holiday approaches, it’s helpful to look at all the things that we are thankful for not only in our personal and family lives, but also in the ERP industry. Here are some of the things that strike me as major advancements and improvements in the enterprise software space over the last several years:

Deployment options have become more varied. It used to be that if a Fortune 500 company wanted to implement an ERP system, executives had to make a massive investment in the initiative and burden their organizations with huge amounts of risk. Today, not only are there more options to deploy ERP systems via software as a service (SaaS) ERP, cloud, and best-of-breed solutions, but there are plenty of options for non-Fortune 500 companies and small- and mid-sized organizations. ERP vendors such as Plex Systems, Kinaxis, Salesforce, Workday, and Netsuite all provide deployment alternatives to traditional ERP systems. In addition, solutions from traditional ERP vendors such as SAP, Oracle, and Microsoft Dynamics include SaaS and cloud options.

There are business ERP experts available to help. When I started in the industry more than 15 years ago, there were plenty of software consultants available for hire, but very few (if any) independent business consultants that had a broad understanding of the ERP market – including critical success factors surrounding project management, organizational change management, and business process re-engineering. While most consultants are still more myopically focused on a single ERP system or lacking independence and objectivity, companies such as Panorama provide more holistic, comprehensive, and independent advisory services to companies wanting to mitigate the risk of their ERP selections and implementations. In response to Panorama’s leading position in the independent ERP consulting space, a host of smaller firms have emerged across the globe as well.

Failure rates are still too high. While the industry is touting low-risk deployment options and tools such as SaaS, failure rates are still alarmingly high. Demand for Panorama’s ERP expert witness services – which companies and attorneys leverage when their failures are about to lead to lawsuits – are at an all-time high, suggesting that organizations are mismanaging their implementations more than ever. What’s more interesting is that our expert witness work, whereby we leverage best practices from our proprietary and proven ERP implementation framework, shows that companies are failing in key areas despite their use of more advances technologies and tools being touted by software vendors. Unfortunately, it doesn’t matter what kind of software or tools you are deploying – implementations will fail if you don’t effectively plan and execute some of the key factors required to make a project successful. Not enough organizations, consultants, or software vendors understand this key concept.However, while there are many things to be thankful for, there are still many areas where we still need to improve:

Companies still don’t treat ERP implementations as business, rather than technology, initiatives. Contributing to the high rate of ERP failures are the fact that too many executives are delegating their ERP projects to their CIOs or IT Directors and absolving themselves of business or operational responsibility for the success of the project. At the risk of offending our more technical clients or industry peers, CIOs and IT Directors are much more likely to underestimate the need for business involvement and potential outside expertise than their more operational or finance counterparts within the organization. Worse yet, most software vendors and ERP consultants focus far too much on software rather than business processes (not system transactions), organizational change management, and strong project management.

While there is always room for improvement, we are showing signs of advancement and for this I’m thankful. Happy Thanksgiving to our US-based clients and peers!

Sometimes I think the ERP software market is a sham. After over 15 years consulting in the industry, I still see far too many overzealous system integrators and VARs hell bent on mismanaging customer expectations in order to close a sale. Worse yet, most that I run to in the industry fail to recognize perhaps the most important fact of ERP implementations: they have very little to do with the software itself. Sure, a good software solution is a prerequisite to a successful ERP transformation, but the reality is the business and organizational issues are hands down the most important things to adequately address when deploying successful ERP systems. Key among those business and organizational issues is user adoption.

Here’s another fun little fact: most VARs, system integrators and their customers know very little about user adoption. It’s not nearly as simple as industry consultants typically suggest, and it’s certainly more complex and risky than most customers expect. While most tend to focus on canned training, user adoption is depending on a variety of prerequisites, with user training being just one relatively minor part of the equation. Unfortunately for the misinformed, failing at user adoption will absolutely lead to ERP failure, no matter how well the software is “implemented” in the traditional one-dimensional sense.

So how can one ensure that their SAP, Oracle, Microsoft Dynamics, or Tier II ERP implementation be successful from a user adoption perspective? Here are three keys to ensuring successful user adoption:

1. Ensure clearly defined business processes. I still get mildly nauseous when I hear system integrators and VARs suggest that their software or technical consulting teams can define business processes for their customers. This statement is complete garbage and is a big reason why so many companies fail miserably in their ERP implementations (over 70-percent, according to our independent research). Here is the simple fact: ERP software defines transactions, and transactions mean nothing without bigger-picture end-to-end business processes. When most software vendors talk about a business blueprint or system design, they are typically referring to designing transactions in the system. Imagine a giant puzzle; the software vendor provides you with the 1,000s of pieces of the puzzle (the transactional blueprint), but they do not put it together for you (the true business blueprint). Without this critical activity and deliverable in a project, your people will not truly understand the new business processes, what is expected of them, or how to tie together all those pieces of the puzzle in a way that makes your business more efficient and effective. A proper business blueprint is something that will take months to complete, especially if you want to consider re-engineering your business processes before implementing the software, which we always recommend to our clients.

2. Define clear roles and responsibilities. Once the business processes and supporting workflow transactions are defined, you still need to define employee roles and responsibilities in the new processes and systems. Just because they have been trained to create a work order or demand forecast doesn’t necessarily mean that employees understand their roles and place in the overall process. Most ERP transformations involve significant changes to people’s job roles, so it is important that you facilitate a process and structure for defining, documenting, approving, and rolling out those job roles and changes. Your HR department, management team, unions, and other key stakeholders will need to be involved in this potentially time consuming process. Again, these are things that your ERP vendor or system integrator is not in a position or qualified to provide.

3. User adoption doesn’t stop at go live. Most ERP project teams are relieved when they cross the finish line of a go-live. Many months or years have been spent getting the project off the ground, so the last thing anyone wants to do is talk about how to extend the project or make it take longer than it needs to. But the reality is that most user adoption issues are identified after go-live, and most of the benefits realization framework doesn’t kick in until well after go-live, so defining go-live as the project finish line is a common misguided assumption.  An effective user adoption and organizational change management framework will ensure that your people are not only prepared to adopt the system at the time of go-live, but also ensure that they continue to improve their individual and team performance in the weeks and months after go-live. This incremental investment in time and money after go-live has returns that exceed the investment multiple times over, but most organizations fail to recognize this need.

The good news is that these three factors are included in any effective organizational change management plan, including the methodology and tools we use at Panorama Consulting. We have a very well-defined and structured way of maximizing user adoption throughout the ERP implementation and after go-live, and the corresponding results are often the difference between implementation success and failure.

For example, we just started working with a manufacturing client that is having user adoption problems with their Epicor Vantage rollout, so we are helping them assess how to optimize acceptance and use of the system. Some of the client’s departments had completely abandoned the software and reverted back to their legacy processes and the implementation was at risk of completely failing. Without our help, this particular client was staring down the possibility of having spent significant amounts of time and money in software licenses and technical implementation services that resulted in expensive shelf-ware that is failing to deliver any business value whatsoever.

Learn more about our organizational change management services to understand how Panorama can help you ensure that your employees accept and embrace your new ERP system in a way that not only mitigates the risk of failure, but ensures that your implementation delivers real business value to your organization. Whether you are implementing SAP, Oracle eBusiness Suite, Microsoft Dynamics, or a Tier II ERP system, our methods, tools, and framework will help make your project more successful.

This last year was another eventful time for the ERP software industry. Vendors continued to consolidate, the rate of ERP failures and lawsuits accelerated, and enterprise software technologies continued to evolve. Our company, Panorama Consulting Solutions maintained its aggressive growth and merged with TPG Solutions, reflecting the dynamic and evolving nature of the ERP market and its customers.

• Infor acquired Lawson
• Lawsuits, fraud and project failures continued to grab headlines (e.g., Lumber Liquidators, CareSource Management Group, Tesco Bank, Whaley Foodservice Repairs, City of New York, etc.)
• Cloud ERP gained steam
• Social ERP gained credibility
• And, worthy of a second mention, Panorama Consulting merged withTPG Solutions to become Panorama Consulting Solutions

As we look forward to 2012, there are a number of trends we expect to continue, while we expect a few new developments as well. Here are our highly anticipated top ten predictions for 2012:

1. Continued consolidation in the industry. Infor’s acquisition of Lawson was just the start. Barriers to entry in the ERP space are low and there are way too many players in the industry (in fact, we track nearly 200 ERP vendors in our proprietary ERP database). At the same time, global economic uncertainly isn’t necessarily creating an environment for robust industry growth that might support the crowded field, so we expect the merger and acquisition activity to continue among ERP vendors.

2. Shake-up in the Tier I space. This coming year may be when we finally see a shakeup among the big Tier I ERP vendors. While SAP, Oracle, and Microsoft Dynamics certainly aren’t likely to lose their foothold as the Big 3 of the ERP software market, we do expect that some of the larger Tier IIs are going to pose legitimate challenges to their market share and reach. For example, after their acquisition of Lawson, Infor is just a couple steps behind the traditional Tier II players, while companies such as IFS, Epicor, Kinaxis, and QAD are continuing their aggressive growth, especially in the SMB space.

3. Acceleration of ERP failures. Unfortunately, we’re still seeing the collateral damage from poor decisions of years past, and this isn’t likely to change in the next year. Tight IT budgets and a “do it yourself” mentality to ERP projects of the last few years have finally started catching up in terms of the large number of publicized ERP failures in the latter part of 2011. Companies have simply under-invested time, money, expertise, and resources in their ERP projects in recent years, so we will see those bad decisions catch up to us in the coming year.

4. Increase in the number of ERP lawsuits. If we look at demand for our ERP expert witness services as a leading indicator, 2012 is going to entail a huge number of ERP lawsuits. We are typically engaged by courts and legal counsel to consult on lawsuits before they are formally filed, and we have seen a marked uptick in demand for these services in late 2011. Combine this with the #3 prediction above, and it is clear that 2012 will be a year of epic ERP lawsuits.

5. Less “do it yourself” ERP projects. Because of #3 and #4 above, we expect fewer companies to attempt the DIY approach to ERP selection and implementation. Installing a light fixture from Home Depot may work for do-it-yourself home improvement projects, but CIOs and CFOs are becoming smart and risk adverse enough to know better than to try this approach when it comes to transforming their entire business with a new ERP system. These companies will lean on outside consultants and experts more than they have in recent years, with the understanding that an expert consulting firm that has fine-tuned selection, implementation, and organizational change management methods over 100s of organizations will be able to deliver better, faster, and cheaper results than they can internally.

6. SaaS ERP providers will continue picking off smaller pieces of ERP. Software as a Service (SaaS) vendors such as Salesforce, Plex Systems, Netsuite, Kinaxis, and Workday have successfully poached smaller customers from the traditional ERP vendors over the last few years, but next year they will start making broader in-roads among mid-size companies. In addition to riding the SaaS wave of hype, the above vendors offer a sort of best-of-breed system approach that allow companies to rollout enterprise technology focused on one or a handful of specific functions within organizations, such as CRM, supply chain, or HR. Also feeding into this trend is the risk-adverse propensity for organizations to not bite off more than they can chew with their software initiatives.

7. Convergence of CRM and social media. Industry analysts have been talking about it and software developers have been working on it for years, but next year is when we will finally start to see some meaningful integration between the “enterprise” side of CRM and the “social” side of Twitter, Facebook, and LinkedIn.  Enterprise and social technologies will finally converge in a meaningful way that will allow organizations to better manage internal customer relationship functions in tandem with the external and less structured social media functions.

8. Misalignment of ERP systems. A lot has changed in the last few years – the economy tanked and recovered moderately while companies evolved, customers demanded more, and mergers continued, but many companies did not proactively invest in their ERP software, leaving organizations with systems that are misaligned with their current business needs. This points to a large subset of organizations wanting to realign their enterprise software with their operational realities, whether it be through investing in new systems or attempting to get more out of their existing software.

9. Conducting a business blueprint as part of the ERP selection process. Fortunately, companies are starting to learn from others’ mistakes (see #3 and #4 above) and are realizing that they shouldn’t rush the ERP evaluation and selection process. Too many failures and lawsuits are caused by choosing the wrong software that is misaligned with business needs, so companies are being more diligent about blueprinting their business processes prior to selection rather than after. We at Panorama are seeing an uptick in the number of companies wishing to engage us to facilitate more robust blueprinting as part of the selection process, which is a reflection of CIOs and CFOs wanting to mitigate their risk.

10. Technology-centric system integrators will continue to struggle to be effective. As I’ve seen in the industry over the years, the traditional technology-focused implementation approach of most system integrators, partners, and value-added resellers (VARs) is clearly not getting the job done. Too much focus on the software, its functionality, and capabilities typically means under-investing in the things that really matter, such as business process design, organizational change management, and effective project management. System integrators will need to either learn to do these things, which they typically don’t have the competency to provide, or partner with firms that do.

Last year was a good year for the ERP industry and we expect even more exciting and positive things in 2012. What do you think? Feel free to leave your comments below or discuss these predictions in more detail in our upcoming webinar, Top Ten Predictions for ERP in 2012, on December 1.

Today we published our highly anticipated Clash of the Titans report. Last year’s report, which provided a comparison of SAP vs. Oracle based on our independent experience and research, was our most popular and most referenced research article of the year. This year, we created a new version to not just include updated research data but also add Microsoft Dynamics to the mix.

This year’s findings are interesting. The report outlines actual results from more than 1,800 implementations across the globe over the last six years. Some of the results validate research of previous years, such as:

• SAP still leads in terms of ERP market share with 24% of the market, followed by Oracle and Microsoft Dynamics, respectively
• Consistent with its leading market share, SAP is short-listed more than Oracle and Microsoft Dynamics (38% of all organizations evaluating new ERP software)
• However, once on the short list, Oracle is selected at a rate higher than the other two vendors (22% of the time, followed by SAP and Microsoft Dynamics, respectively)
• Implementations still take longer and cost more than expected across the board
• Actual vs. expected benefits are still terribly misaligned, with 60%+ of SAP, Oracle and Microsoft Dynamics implementations combined realizing less than 60-percent of the expected business benefits

In addition to findings consistent with last year’s research, this year’s report highlights some compelling new facts. For example:

• Oracle has the highest satisfaction rate, at 80%
• However, satisfaction rates for the others are lower, with SAP at 39% and Microsoft Dynamics at 33%
• On average, Microsoft Dynamics takes the longest to implement at 14 months, followed by SAP (13 months) and Oracle (11 months). Microsoft Dynamics also has the highest discrepancy between planned and actual implementation duration, suggesting that its customers’ expectations are misaligned with reality.
• Microsoft Dynamics offers the quickest payback and return on the investment, with 84% of organizations realizing a payback period of less than 3 years
• In addition, Microsoft Dynamics has the lowest average total cost of ownership (approximately $500k), followed by Oracle and SAP, which is the most expensive
• SAP has the lowest average cost overrun (8% over budget), followed by Microsoft (14%) and Oracle (15%). This suggests that although SAP customers spend more than those of other ERP vendors, SAP customers have a better sense of what it will take to implement and are able to budget accordingly.

Perhaps the most interesting finding is the potential correlation between implementation duration and satisfaction. The more time that customers of the three “titans” of Tier I enterprise resource planning (ERP) software take to implement their systems, the lower their self-reported satisfaction rates. The online survey found that while Microsoft Dynamics had the longest average implementation duration (14 months), it also had the lowest satisfaction rate (33-percent). Conversely Oracle, which has the shortest average implementation duration (11 months), had the highest satisfaction rates (80-percent).

Another interesting finding is what we didn’t find: the ERP software with the quickest payback period (Microsoft Dynamics) does not have the highest satisfaction level. In fact, and as mentioned above, Microsoft has the lowest satisfaction rate, suggesting that business benefits may not be the key determinant of an organization’s satisfaction with a particular ERP system. Instead, it may be that implementation duration is the bigger driver of customer satisfaction.

These are just a few of the findings. Download the full 2011 Clash of the Titans report and join us this Thursday for a free webinar to review and discuss the findings in more detail.

We regularly work with clients to help them estimate their ERP implementation budgets as part of the ERP selection and planning process. Given the hidden and unanticipated costs associated with a successful ERP implementation, this can be one of the trickiest parts of an enterprise solution initiative. In fact, and as we’ve seen in our analyses of ERP failures in our expert witness work, a company’s unrealistic expectations regarding the total cost of ownership of ERP software is often the first domino to fall in an ERP implementation failure. Without a realistic budget, companies end up cutting corners on activities that are critical success factors and paving the way towards a disastrous conclusion.

Panorama research indicates that the average company invests 4.1-percent of its annual revenue into its ERP implementation. However, most companies fail to budget anywhere near this amount. Part of this disconnect is driven by software vendors that outline a one-dimensional estimate of the implementation costs for their ERP solutions. These estimates often fail to include hidden expenses associated with ERP implementations, such as internal resources, external consultants, hardware upgrades, and a host of other items necessary for a successful project.

Further, a software vendor will usually estimate implementation costs to be a 1:1 ratio between software licenses and technical implementation costs — meaning $1 of technical implementation costs for every $1 spent on software — these estimates are woefully low for most companies. Based on our research and experience, a 1:4 ratio (e.g., every $1 a company spends on ERP software translates to $4 of total implementation costs) is much more reasonable.

Below are some of the cost components commonly overlooked by organizations in both the ERP implementation planning and implementation stages:

• Hardware and infrastructure upgrades. It is rare that an organization can implement a modern ERP system without a modern IT infrastructure to support it. Servers, databases, bandwidth, PCs and other components of an organization’s IT infrastructure often need to be upgraded to support the new system. In addition, IT staff often need to be augmented with additional resources, training, or outside consulting to support the new environment.

• Longer than planned implementation durations. Contrary to popular belief in the industry, implementation duration and implementation costs are not independent. Our research suggests that 67-percent of implementations take longer than expected, which leads to higher costs. Given the amount of resources, time, and money dedicated to an implementation project, even the slightest delays will affect the budget. The first step to having a realistic budget is to have a realistic implementation plan and timeframe, as the latter will always drive the former.

• Organizational change management and training. Proper organizational change management (OCM) and training is too often overlooked, with many companies and vendors over-simplifying OCM to equate to team training. Vendors and systems integrators will typically train the internal core team on how to use the “vanilla” software, but often fail to facilitate end-user training to reflect the software as specifically designed and built for the company. In order to be effective, proper time and money needs to be allocated to develop tailored training materials that employees can relate to in the context of their individual business processes. In addition, a host of other OCM activities – such as organizational gap analyses, employee communications and job design – needs to be incorporated into the overall implementation plan, which results in higher than expected costs for the less astute ERP customer.

These are just a few of the pitfalls to watch for when developing an ERP implementation budget, and a big reason why the average implementation runs over budget. If you’re budgeting for anything less than 4-percent of your annual revenue or four times your software license costs on your total cost of ownership estimate, than you may want to revisit your assumptions and expectations. By addressing all of the “hidden” costs in your implementation budget, you’ll be headed in the right direction on your ERP project. For more early-stage implementation advice, please join me at tomorrow’s free webinar, Tips for Building A Business Blueprint for ERP Systems (10 a.m. MT).

Given the uptick in recent ERP failures, executives are looking for ways to mitigate risk and hold their ERP vendors accountable for the success of their implementations. Organizations are well aware of the challenges and pitfalls of implementation cost overruns, lack of vendor accountability, and troubled implementations, so they are looking for ways to leverage the potential business benefits of their ERP systems without the risk. One mechanism commonly employed is the concept of fixed-cost or fixed-bid contracts as part of the purchase of ERP software.

On paper, it’s a brilliant idea: 100-percent cost predictability and shifting the risk from your own organization to your chosen ERP vendor or system integrator. Hold the vendor’s feet to the fire, guarantee a successful on-time and on-budget implementation, put the responsibility for the success of the project on the people that know the software best and can best influence the outcome, right?  It may sound good in theory, but they are more often than not a bad idea in theory.

Here’s a dirty little secret in the ERP industry: fixed-bid contracts have some potentially disastrous consequences that are even more destructive than the problems they were intended to address. In our extensive experience with ERP implementations and serving as expert witnesses for some of the world’s highest profile ERP lawsuits, we found that fixed-bid contracts are often the root cause of enterprise software implementation challenges and failures. It’s not to suggest that they are never a good idea, but it’s never a good idea to enter into a fixed-cost contract without fully understanding the costs and risks.

Here are three consequences of engaging in a fixed-bid contract with your ERP vendor or system integrator:

1. Incentives are misaligned between the ERP vendor and the implementing company. In fixed-bid arrangements, you know exactly what you’re going to pay your system integrator or implementation partner. However, you’re not always getting from the vendor what you need to make the project successful. In fixed-bid engagements, the vendor is financially incentivized to provide a bare-bones implementation scope and provide cheaper and less experienced resources, which may optimize the vendor’s profitability, but is clearly not in the best interest of an inexperienced company about to engage in a risky initiative. Such a relationship with such out-of-sync incentives is not conducive to a successful long-term partnership , as we’ve seen in many of the ERP implementations and ERP failures that we have been asked to consult on.

 2. Abdication of responsibility for the success of the ERP implementation. Executives typically don’t understand the complexity and magnitude of a successful ERP implementation, which is why they lean on their selected ERP vendors to help guide them. However, it’s not the implementation partner or even the software itself that is going to make or break the project – it’s the implementing organization itself. Only internal executives and management team members are going to provide the direction, resources, operational decisions, and oversight required to make any ERP implementation successful. However, fixed-bid contracts are more often than not used as a way to abdicate responsibility and expect that the vendor and their software will unilaterally make the project successful. It’s ultimately the way that the non-technical aspects are managed that will determine the success or failure of the project, such as business process design, organizational design, training, employee communications, and project management and oversight. No vendor is going to magically make these issues go away without strong leadership and ownership from the client’s executive team.

3. The fixed-bid buffer can be more costly than managing time and materials. When we advise clients in their ERP selection initiatives and contract negotiations, it is rare to see vendors fix-bid a proposal without including a buffer, often ranging from 30- to 40-percent. In other words, they will take their estimated time and hourly rates and add a buffer to insulate them from the risk of overruns. In addition, as noted in #1 above, they will at the same time reduce their implementation scope, leaving more time- and cost-consuming activities for the client to manage. At the end of the day, this doesn’t reduce cost, it simply shifts costs from the vendor to the implementing client. To add insult to injury, most companies don’t fully understand the magnitude of the costs being shifted from one party to the other, so they end up having extremely unrealistic expectations in addition to increased costs.

This is all not to say, however, that fixed-bid contracts are never a good idea. Rather, it is simply to say that they more often than not result in more unintended consequences than they do benefits. ERP vendors will often use the appeal of fixed-bid proposals to land a deal, and executives typically won’t scoff at the idea, but they rarely deliver the expected benefits and value.

So how can you leverage the potential benefits of fixed-cost contracts without running into the challenges outlined above? First, ensure you have a solid contract review and negotiation process, which Panorama provides to its clients. The fine print and details around scope and responsibilities of each party in the contract can in fact be the silent killers of an ERP implementation, so make sure you have an experienced team helping you through the process.  Investing in this process early on can also ensure that you have realistic expectations of what it will take to get your ERP implementation done right, rather than cheaply, quickly, and poorly.

Second, there is no substitute for independent program management and oversight, another service that Panorama provides. This will ensure that you are tightly managing scope, project milestones, budget, and vendor activities in a way that will ensure an on-time and on-budget implementation project.

Finally, don’t forget about the non-technical aspects of your project. This is true of any ERP implementation, but it is especially true for fixed-bid engagements. Make sure you’ve designated enough time and resources for business process definition, organizational change management, conference room pilots, user acceptance, and benefits realization. Odds are your vendor will not include that in their implementation contract scope, but these and other non-technical activities are critical to the success of your project.

Learn more about how Panorama can help your ERP selection, negotiation, implementation and organizational change efforts by visiting our the ERP and IT services section of our website. And remember: our negotiation skills save our clients an average of three to five times the cost of our fees. Don’t sign a contract without us.

As recently outlined in the press, two high-profile organizations have fallen victim to yet two more ERP implementation failures. SuperDry and Tesco Bank, both based in the UK, blamed their recent financial woes on disastrous ERP failures. SuperDry, a fashion retailer, was allegedly unable to stock the appropriate risk of product through its distribution chain as a result of their implementation. Similarly, Tesco Bank, a consumer bank, experienced problems with its ERP system as well, resulting in customers being locked out of their accounts for three days and profits dropping by nearly 2/3 in the first half of this year.

There is good news and bad news here. First, the bad news: unfortunately, these are just two examples of a plethora of high-profile failures in recent months and years. Lumber Liquidators, Shane Company, and Waste Management are just a few of the many organizations that suffered high-profile and well-publicized failures in recent years. The good news: most ERP implementations succeed or fail based on how organizations handle their implementations – factors completely within their control – rather than uncontrollable issues related to their chosen ERP software, ERP vendors, or system integrators.

Panorama Consulting is frequently called in to provide independent expert witness testimony for some of the highest profile ERP lawsuits, many of which you have probably read about in the press. For confidentiality and court-ordered reasons, we can’t share specific information about any of the cases we’re involved with. However, in our recent ERP Boot Camp, we presented a session outlining some of the lessons learned from our extensive experience with ERP software implementations and service as an expert witness for ERP lawsuits. Below are three common trends we see in most ERP failures in lawsuits that we are asked to consult on:

Lack of clarity surrounding business processes and business requirements. Most ERP lawsuits involve situations where the client and their system integrator did not clearly define business requirements. While most ERP vendors and implementation consultants will go through a checklist of items that need to be defined in order to configure the software, this is not nearly enough to provide a comprehensive and complete view of how an organization’s business processes and workflows will look. However, clearly defined business processes are critical to keep the project on track and to ensure employees clearly understand the big-picture of how the organization’s operation will run in the future. This lack of business process clarity will typically result in over-customization, lack of understanding from employees, and configuration that is misaligned with business requirements – all of which often lead to implementation chaos and failure.

Mismanaged expectations. The first domino to fall in an ERP implementation is often mismanaged expectations. In the heat of trying to land a new client and in the midst of not clearly understanding the scope or magnitude of an implementation, ERP vendors and system integrators often underestimate the amount of time, money, and resources required to complete and implementation. To add insult to injury, organizations often rely on vendor estimates that only consider technical implementation activities and overlook other key implementation activities such as organizational change management, business blueprinting, thorough conference room pilots, business integration testing, and other critical items. Mismanaged expectations lead to underfunded and understaffed projects, which results in cutting corners and scope, snowballing and leading to failure.

Poor organizational change management. Most ERP vendors and system integrators define organizational change management as “training.” However, there are two problems here. First, vendors provide generic training that is focused on transactions rather than the big picture and are not tailored to fit the implementing company’s business processes, so this sort of canned training is typically mediocre at best. Second, training is one of several key components of an effective organizational change management program. Employee communications, change discussion guides, organizational design of roles and responsibilities, project branding, and benefits realization are just a few of the additional elements of organizational change management that will make or break your ERP implementation.

Through our years of experience in ERP implementations and consulting on ERP lawsuits, we have actually defined ten key things that go wrong in implementation failures vs. those initiatives that are successful. These are just three things to keep in mind as a starting point to not only avoid failure, but to make your ERP implementation successful. If you’d like to learn additional strategies and tactics to ensure your organization realizes all of the business benefits possible from its ERP system, check out our free ERP webinar series.

Enterprise 2.0, social ERP, and other buzzwords related to enterprise software combined with social media are quickly gaining momentum in the ERP software industry. Industry analysts and research firms regularly cover the potential convergence of social applications like Twitter, Facebook, and Yammer with traditional ERP systems like SAP, Oracle, and Microsoft Dynamics. For example, last year IFS North America and Affinity Research Solutions conducted a study of manufacturing executives to determine their interest and understanding of social ERP.

The study from IFS outlined several potential benefits of social ERP, including the ability to better capture the tacit knowledge of employees and ability to better streamline communications between employees and customers. In addition, executives also pointed to increased organizational flexibility and an ability to cater to a younger generation of employees more accustomed to Facebook and Twitter than they are to structured manufacturing ERP systems. Based on this and other research conducted in recent years, it is clear that this potentially inevitable convergence of enterprise- and consumer-based technologies is on the radar of most executives and industry analysts.

However, following these trends has led me to question how two very different types of technologies will really align themselves. One the one hand, you have informal and unstructured consumer-oriented social media tools like Facebook and Twitter where anyone can say about anything they want without any real controls or structure. On the other hand, you have large structured enterprise systems with controls surrounding master data, security profiles, and standard workflows. One is simple, flexible, and supportive of a flat organization, while the other is more conducive to a larger and more controlled organization.

To illustrate the contrast, look at the situations of many of our clients: they have outgrown their simplistic and uncontrolled systems and are looking for something more standardized and structured to help them scale for growth. Many have multi-national or multi-site operations that are misaligned with their current systems. As such, our client executives are often looking to ERP systems to help them standardize, control, and scale – not exactly terms one thinks of when describing social media tools. So the real question is: can both structured enterprise software like SAP or Oracle co-exist with unstructured social media tools like Twitter and Yammer?

I think the short answer is not yet, but companies will need to find a way to leverage the best of both worlds. Below are four considerations when examining the potential integration of social enterprise systems within your organization:

1. Make ERP systems more flexible and social interactions more structured. One of the frustrations most organizations and their employees have about their current ERP systems is the relative lack of flexibility. As companies grow, their enterprise software needs to remain aligned with evolving business processes and requirements, but this is often unachieved. Social media capabilities similar to Twitter and Yammer provide potential flexibility in how employees interact with customers, vendors, and internal colleagues. Social media tools and their flexibility can be powerful, but employees also need clarity and definition on how to use the tools. You obviously don’t want employees sharing too much information about customers, products, and financial information, so there needs to be a balance between flexibility and standardization.

2. Focus on the strengths of each technology. Enterprise software is good at providing back-office controls and standardization in areas such as finance and accounting, while social tools can be more beneficial when it comes to customer interactions and capturing undocumented knowledge in people’s heads. It is important to identify where the strengths of each fit within your organization and business processes and leverage each competency accordingly. Just as you want to avoid misalignments between traditional ERP and your business processes, you also want to make sure that social ERP systems are aligned with your operational needs.

3. Define your business blueprint. Just as with any ERP implementation, successful organizations should clearly define their business blueprint for social ERP. Clarity around business processes, organizational roles and responsibilities, and performance measures will ensure that the system is designed to support business processes and tested accordingly. Documented business processes and use cases should clearly define where standardization is required and where there is some latitude to deviate from standard business transactions. These components are critical to a successful social ERP implementation and should be addressed prior to rolling out the new technologies. In addition, this clarity and definition will help ensure that you select the right ERP system that addresses the various social and enterprise software needs of your organization.

4. Don’t forget organizational change management. It’s easy to forget about organizational change management and assume that social ERP is going to be much easier to adapt than traditional enterprise systems, but the reality is that it will entail significant operational and cultural changes for most organizations. Tenured employees will need to adapt to a less structured and different way of doing things, while newer or younger employees will need to adapt to balancing social tools that they’re more accustomed to with more structured ERP processes and systems that they may not be comfortable with. In both cases, organizational change management activities should be incorporated into the overall implementation plan to assure processes are understood, employees are trained, and that roles and responsibilities are clearly defined.

At the end of the day, social ERP and CRM applications will be a reality for most organizations sooner rather than later. By incorporating the above four tips into your enterprise 2.0 initiatives, you will ensure you get the best of what the convergence of these two technologies has to offer.

What is your take on social media applications in the workplace? Do you think it’s advisable (or even viable) for organizations to pursue? Let us know your thoughts and experiences in the comment section.

Last week, we hosted our fourth ERP Boot Camp in Denver, CO. The three-day training session, which was attended by 20 CIOs, executives, project managers, and ERP project team members across the globe, covered a number of topics designed to help organizations better manage their ERP initiatives. The discussions and presentations focused on helping ERP practitioners understand the variables required to make ERP implementations successful, such as overall IT strategy, ERP selection, vendor negotiations, business cases, and organizational change management.

Prior to jumping into the content, we facilitated a session asking the attendees to introduce themselves, their organization, and their top two concerns or fears regarding their ERP initiatives. As you might imagine, this interaction is invaluable to understanding the mindsets of people attending our training and especially so when your participants come from organizations and government agencies as diverse as Boeing, Cook County, City of Charlotte and Crown Equipment, among others. In addition, it is always interesting to see and hear the common themes that participants share, regardless of industry, company size or geography.

For example, this session’s most commonly stated concern related to organizational change management and business blueprinting. On the organizational change management front, participants shared concerns with how to determine organizational readiness, manage resistance to change, and include staff members in the ERP implementation process to increase buy-in and support. In terms of business blueprinting, concerns centered on how to standardize business processes across multiple countries or departments, determine the pros and cons of adopting the functionality of the software vs. forcing the software to adopt to the business, and clearly define business processes in a way that would ensure a more business-centered implementation rather than one with a more one-dimensional software focus.

Here are some of the additional concerns that this focused and bright group of executives and team members shared during the sessions:

• Adapting ERP software capabilities without customization
• Vendor management, including software vendors, system integrators, and consultants
• Risk management and mitigation
• Implementing without disruption
• Transitioning internal IT to support commercial off-the-shelf (COTS) software
• Implementation strategy
• Program management, including costs and scheduling
• Ensuring engagement at all levels in the company
• Integrating with other systems
• Considering the “soft” aspects of evaluating ERP vendors
• Finding a system that can grow with the organization, including global growth
• Distinguishing between core competencies that may need to be customized in the software and things that the organization should change to better fit the software
• Overall implementation and approach for the entire ERP lifecycle

These were just a few of the topics that we proceeded to cover over the course of the three days. By the end of the training, attendees had a better sense of blindspots to watch for, an understanding of technology-agnostic ERP best practices, and a tool kit to apply to their ERP implementations back home. It was a very good session with very positive feedback from attendees. The lesson to be learned here is that a lot of knowledge, planning, and work goes into making ERP software initiatives successful, so it is important to proactively address the potential risks and failure points of ERP initiatives to ensure their success.

Our next ERP Boot Camp will be December 7, 8 and 9 in Denver so start planning now to ensure you can attend (and maybe sneak in a few days of skiing). If you can’t get away, please also note that we can bring Boot Camp to you and your teams with customized on-site ERP training.

Earlier this month, Salesforce hosted Dreamforce, its annual conference for cloud ERP vendors. The event drew over 45,000 participants this year, underscoring the significance of the company in the ERP space, and more importantly, the significance of cloud and Software as a Service (SaaS) based ERP solutions.

Dreamforce also featured the launch of Kenandy, a Silicon Valley startup focused on SaaS ERP solutions for the manufacturing industry vertical. While ERP vendors such as Salesforce, Plex, and Epicor already provide SaaS manufacturing ERP systems, this particular industry has been sorely lacking the software options required to give most manufacturing executives the choice and comfort required to fully embrace the SaaS model. Kenandy’s launch, which is backed by over $10 million in venture capital funding, helps mitigate these concerns.

Don’t get me wrong: the SaaS and cloud trends are very real and are quickly changing the game for ERP vendors and their customers. Despite the relatively low market adoption rate, SaaS acceptance is still growing incredibly fast, up from 6% to 16% adoption between 2009 and 2010. In addition, ERP vendors such as Salesforce and Workday are providing best of breed point solutions in the CRM and HR arenas, which are more likely to be embraced by manufacturing executives. However, when it comes to fully integrated solutions that tie together a manufacturer’s data and business processes – ranging from financials to inventory to manufacturing workflows – into a single system, SaaS ERP systems have been lacking, with only a handful of solutions providing the truly integrated processes desired by most manufacturing and distribution companies. With each new company like Kenandy and Plex, executives in this industry vertical will become more comfortable and more likely to adapt the SaaS model.So does this mean that traditional manufacturing ERP systems are obsolete, only to be replaced by SaaS options like Kenandy? Not quite yet. Although many industry analysts strongly disagree with my lukewarm opinion of SaaS solutions, I still feel as if we are still three to five years from seeing widespread adoption of SaaS enterprise solutions in the manufacturing industry. Indeed, our most recent research – as outlined in our 2011 ERP Report – indicates that only 16-percent of organizations that implemented ERP systems in 2010 had adopted SaaS-based solutions. Despite the hype and long-term potential, the fact of the matter is that SaaS and the cloud have not yet quite killed traditional enterprise software.

A few weeks ago, ComputerWorld published an article about a recent Epicor implementation failure and lawsuit. The suit alleges that Whaley Foodservice Repairs tried and failed to implement Epicor Vantage after an extended period. One of the key difficulties with the project was that Epicor’s professional services group had estimated that the implementation would cost $190,000, while the actual implementation cost ended up exceeding $1 million by the end of the project. In addition, the company alleges that its wasn’t able to use the system as expected after two years in production, requiring additional work and costs.

The alleged failure and lawsuit underscores two widespread industry problems: misaligned expectations and inaccurate estimation methods. This problem is by no means a problem with Epicor – it is a common problem across all ERP vendors. Throughout my 15+ years consulting organizations on their ERP initiatives, I have time and time again seen companies initiate ERP software purchases and implementations without a clear or realistic understanding of what it will really take to make the project successful, while at the same time finishing on time and on budget.

When you look at the root cause of these problems, it is usually the fault of both ERP vendors and their customers. The vendors are eager to make a sale and gain a new customer, so it is in their best interest to underestimate the time, money, and resources required to effectively implement their software. In addition, vendors and system integrators typically don’t know enough about a prospect to make realistic assumptions about implementation duration and cost. On the other side of the relationship, customers often latch on to what they want to hear: that implementing their chosen vendor’s software can be done quickly, cheaply, and easily with very little to no risk. In addition, most customers don’t have the expertise to know what it takes to make an ERP implementation succeed, and most certainly don’t know what they don’t know.

Unfortunately, ERP failures and lawsuits are not uncommon. Because of our extensive experience helping clients across the globe successfully implement various ERP solutions, we are commonly engaged by attorneys to provide independent expert witness testimony for failed implementations, and we have done so on a number of the highest profile lawsuits in recent years. Based on our implementation and expert witness experience, here are three lessons from the Epicor and other ERP implementation failures:

 1. ERP vendors and system integrators typically underestimate implementation duration and cost. The first key to developing a realistic implementation project plan and budget is to understand that most vendors underestimate implementation estimates. This shortcoming isn’t necessarily intentional, but it has more to do with their understanding of client needs and incomplete project plans. There is a lot that vendors and consultants don’t know prior to an implementation, so they are in some ways shooting in the dark. In addition and more importantly, software vendors and system integrators are focused on implementing the technical components of their software, not necessarily addressing the business process and organizational aspects of the implementation. Business processes need to be defined and standardized, operational decisions need to be made, organizational change needs to be managed, and business benefits need to be realized, none of which are in the scope or estimates of most ERP vendors and implementation partners. It is up to the client to develop a master implementation plan and budget that takes both the vendor’s and internal activities into account, which typically looks much differently than a software vendor’s more one-dimensional plan and estimate.

 2. Business process definition and re-engineering is not driven by the software, vendor, or system integrator. Most software vendors and sales reps use the terms “best practices,” “industry pre-configurations,” “out of the box functionality,” and other buzzwords to sell the value of their software in helping drive business process improvements. While these concepts are true to some extent, most true business improvements and standardization decisions are going to be driven by the implementing organization. New ERP software will certainly drive improvements at the transactional and vanilla, back-office process levels, but organizations implementing the software need to clearly define and document their business blueprints so the technical consultants have a clear vision on the higher-level business processes and requirements that their software needs to support. Imagine a complex jigsaw puzzle: the new software provides the pieces of the puzzle, but the implementing organization needs to provide the picture that provides guidance on how the pieces will all fit together.

 3. Nothing matters without effective organizational change management. Business process improvements driven by the ERP software are a moot point without the organizational changes and management required to realize them. Even the most perfectly designed business processes and software won’t matter if employees within your organization can’t embrace and execute the new operational model and systems. Just as the software provides the pieces of the business process jigsaw puzzle, organizational change management provides employees with the big picture understanding of how the new software supports and enables the new business processes. In addition, organizational change brings employees from Point A to Point B, which is a critical outcome of an effective ERP implementation. Effective organizational change management plans accomplish these things via organizational impact assessments, organizational readiness reviews, customized training to fit your specific business processes, job and role design, and a host of other activities that should be executed throughout the entire ERP project lifecycle.

One of the key reasons clients hire Panorama to plan and manage their implementations is because we provide a realistic and technology-agnostic perspective on what organizations need to do to make their enterprise software initiatives more successful.  We have the experience, benchmark research, and objectivity to help clients clearly understand what is required to make their projects succeed with realistic expectations. The above three lessons are just a few that we bring to companies looking to initiate their implementations. But no matter what stage of ERP implementation your organization is in, we can help. Contact us today.

I’m a big fan of American football and I get excited with the start of each new season. One of the things I like most about the sport is that each moment of the game is carefully scripted and executed, with a tremendous amount of detail going into each play. Each team has eleven people on the field at any given time and with each snap of the ball, each player has clearly defined roles and responsibilities. Whether a team member is on offense or defense, he has to know what is expected of him, where exactly he needs to be on the field, and what he needs to do to help his team make the most of each play.

One intriguing aspect of football is how every little detail seems to matter. From how a receiver runs his route, to how the offensive linemen protect their quarterback or help the running back run the ball, to how a defender covers his receiver, each play hinges on the little things, each of which can ultimately affect the outcome of the game. It’s also a game of inches – a ball thrown just inches from a receiver’s fingertips can be the difference between a touchdown and an interception to the other team, just as a defensive lineman lined up just inches off of his position can be the difference between sacking the quarterback and not moving off his position.

Whether or not you follow or enjoy football, the sport provides some important lessons for ERP implementations. Similar to football, ERP initiatives require a great attention to detail, carefully scripted project team roles and responsibilities, and clear orchestration among the various project activities. Perhaps most importantly, it is the little things that can make or break an ERP implementation.

Here are a few details that may seem like subtle nuances of an ERP implementation, but they are actually very significant and important differences between managing a successful ERP project versus an ERP failure. These minor adjustments in your ERP system playbook can be the difference between winning and losing during your ERP implementation:

1. Business blueprint vs. technical blueprint. Most ERP vendors and system integrators provide software design or blueprint activities, as it is a critical step in helping them design and configure the software for your business. However, there is a subtle but big difference between creating a technical blueprint and creating a true business blueprint. The technical focus tends to define transactional details, such as how the screens will look, user options will be defined, and master data will be set up. However, traditional and common technical blueprints do not address the more important fundamental issues, such as how the overall business process will flow, employees’ specific roles and responsibilities in the system, and performance measures that will be used to drive performance in the new environment. So while most vendors and consultants use the term “blueprint” loosely, it is important to ensure your organization develops a business blueprint rather than a more limited technical blueprint. Without a business blueprint, you will have a configured ERP system that may work technically, but won’t necessarily work for your business.

2. Organizational change management vs. software training. Training employees on the new software is probably one of the more obvious needs of a successful ERP implementation. However, a common misconception is that employee training is the sole requirement from an effective organizational change management perspective.  The reality is that training is just one of many components of organizational change and is, in my opinion, the least important. Just as a business blueprint is more important than a technical blueprint, business process training is more important than transactional-based software training. Employees need to understand end-to-end business flows in the context of your organization’s unique operations and how it relates to the current environment that they’re used to, much more so than they need to understand how to punch buttons or choose menus in the software. For this reason, generic transactional-based vendor training materials need to be tailored to fit your specific workflows. In addition, employee communications, clearly defined job roles and responsibilities, and change discussions are all things that are arguably more important than training to use the software.

3. Program management vs. project management. Managing a software project is much different than managing an overall business transformation program. Sure, software vendors and consultants provide “project management” services to ensure the software is delivered, configured, and tested to your satisfaction, but this does not cover the broader and more important aspects of a successful project. For example, there are a number of activities that require more time, resources, and oversight than delivering the software, such as process design and blueprinting, organizational change management, benefits realization, making operational decisions that affect the software, and business process testing and acceptance. These activities are typically outside the scope and capability of software vendors and consultants, but this ability to program manage the ERP initiative is critical to its overall success.

4. Benefits realization vs. go-live. Perhaps the most important but subtle aspect of successful versus failed ERP implementations is the definition of a successful go-live. Most system integrators, vendors, consultants, and their clients define a successful go-live as when the software works from a technical perspective and things are a complete operational mess. This definition sets the bar for success way too low and causes many companies to leave millions of dollars of lost business benefits on the table, and in some cases, results in project failure. If you don’t measure it, you won’t achieve it, so it is important to not just get the system up and running, but to also optimize the business benefits you expect to see. As with any multimillion dollar investment, you should expect the best ROI possible for the risk that your organization is taking. A comprehensive benefits realization plan and methodology is the best way to ensure that this happens.

On the surface, the above variables may seem subtle or immaterial, but they are in fact critical success factors for any effective ERP implementation. These minor adjustments will have a huge impact on the likelihood of your project’s success and the overall risk profile of your initiative. We recommend making these adjustments to your ERP playbook before getting too far along in your ERP system implementation. Contact us today to learn more about how our team of independent ERP experts can help your organization bring home a win.

As summer draws to an end, people across the country are sending their kids back to school and getting ready for autumn. In addition, CIOs and other executives are finalizing their Q4 budgets and preparing for other end of year activities. For many customers of SAP and Oracle, these winds of change can also signal consideration of switching from one of the two Tier I ERP systems to another.

We work with many companies that are using one of SAP’s ECC, All in One, or Business By Design products and looking to switch to Oracle’s eBusiness Suite, JD Edwards, or Peoplesoft products. We also work with just as many companies that are looking to do the opposite and migrate from Oracle to SAP. In either case, we encourage clients to carefully understand what they’re trying to accomplish, fully understand the risks of switching out ERP systems, and consider their options.

Here are four key questions we ask clients that are about to consider a switch from Oracle to SAP or vice versa:

1. Is the ERP software a band-aid for other operational problems? We often see companies misplace their frustration with operational issues and blame the ERP system. Broken business processes, organizational design issues, lack of employee training, and poorly implemented software isn’t going to be remediated by a new ERP system. It’s easy to blame the SAP or Oracle software for operational or organizational challenges, but it’s important to differentiate between the two. Addressing non-software issues can be much less time consuming, expensive, and risky than completely changing out the software, so it is a good idea to be absolutely certain that the software is the problem before moving forward.

2. Is there another product from the same ERP vendor that can address your needs? If you find that the answer to the first question is that your problems do indeed lie with the ERP software, then you may want to consider whether your vendor has other viable solutions available to your organization. Both SAP and Oracle have a relatively wide variety of products to choose from, so it can be beneficial to consider alternative options from your existing vendor. For example, we often run into companies that are using JD Edwards but feel as if they have outgrown in and want a more robust or more comprehensive solution such as SAP. However, these companies may be well advised to consider eBusiness Suite since it would not require a complete migration away from their current vendor. Your current vendor may be able to provide migration credit and other financial incentives to stay in their family of products, and the implementation of a sister product from the same vendor can be less risky and costly as well.

3. Can your company handle the risk of a rip and replace ERP approach? SAP and Oracle implementations are generally more costly and involve more risk than Tier II systems or point solutions. However, if either SAP or Oracle is indeed the right product for your organization going forward, then it is wise to understand the risks of another Tier I rollout. Because the systems are complex and robust with differing data structures, you’ll want to make sure your organization has the resources and expertise to effectively implement. Effective SAP to Oracle and Oracle to SAP implementations require tedious project management, clearly defined business processes via a business blueprint, and effective organizational change management to address the significant difference between the two software solutions and their related business processes.

4. Are you looking for a single system or best of breed ERP strategy? As simple as it may sound, many companies choose to migrate to or from SAP and Oracle without fully understanding the type of solution that is best for their organizations.  SAP generally provides single system solutions that fully integrate data into a single package, while Oracle generally provides a more best of breed solution given their acquisitions of some of the leading business providers, such as Siebel, JD Edwards, and Hyperion. On the other hand, SAP’s single system approach can result in business workflows that aren’t ideal in each functional area, while Oracle’s best of breed approach can create data and software silos between the different systems they provide within their solution set. Either option has strengths and tradeoffs, so it is important to understand the type of software that is best for your organization before making the decision on which route to go.

The switch from SAP to Oracle or vice versa may provide business process and system improvements that enhance your operations. However, as is the case with any ERP implementation, migrating from one Tier I ERP system to another can be risky and resource intensive. The above questions should help ensure you are on the right track as part of your ERP evaluation and selection process.

For more analysis, download Clash of the Titans: An Independent Comparison of SAP vs. Oracle and be sure to look for our forthcoming report comparing SAP, Oracle and Microsoft.

Last week, I had the pleasure of being the keynote speaker on the final day of the Manufacturing ERP Experience conference in Chicago. The conference, which was hosted by MetalForming Magazine, was attended by just under 100 executives in the manufacturing industry. It was a good size group — a relatively large turnout for a first time conference, but small enough for attendees to have a chance to interact one-on-one with the speakers and ERP vendors involved with the event.

In my presentation, I gave a summary of the concepts and themes covered in our three-day ERP Boot Camp, the next of which will be in Denver September 21-23. It is difficult to condense three days of content into 45 minutes, but it appeared to be enough to stimulate some thought and discussion on how the executives in attendance can make their ERP selection and implementation initiatives more successful. The presentation covered ten key things executives should know before embarking on an ERP initiative, including topics such as the appropriate balance of business vs. technology, the use of organizational change management, and the role of business process re-engineering in effective ERP projects.

In addition to providing a keynote presentation, I was also able to take part in a panel discussion, which is one of the better ones that I have participated in. Approximately 80- to 90-percent of the attendees are about to embark on their journeys of selecting and implementing a new ERP system, so they had excellent and thoughtful questions that stimulated a great deal of discussion with myself and the other panelists.  It is clear from the questions asked that this group was well-informed and serious about making their ERP initiatives successful, which is always nice to see.

Below are a few of the interesting and sometimes controversial discussion points that came up during the panel discussion:

• The overall health of the ERP market. One participant asked about the overall health of ERP vendors and the ERP software industry in general. Although software vendors have been as affected as everyone else by a poor economy, the market is still healthy. There is a great deal of pent-up demand for IT software and services, which is validated by recent metrics on IT spending released by various sources over the last few quarters and is contributing to industry growth.  In addition, innovative solutions such as SaaS and cloud deployment options are fueling renewed industry in ERP software, and high-growth small- to mid-size companies are investing heavily in ERP systems to provide a foundation for their continued growth.

• SaaS vs. on-premise ERP. Software as a service (SaaS) ERP systems and cloud computing are talking points in most situations where I meet with CIOs, COOs, or CFOs. There is a great deal of interest and uncertainty related to this trend, which was reflected in many of the questions we received. During our panel discussion, we discussed how ERP vendors and cloud providers will typically provide better security than any internal IT department is able to, as well as the fact that the biggest security risks typically lie within the company.  One other topic we discussed was contract clauses – how to protect oneself if your SaaS vendor goes out of business, as well as understanding some of the escalation clauses in most SaaS software contracts.

• Measuring business benefits and ROI. One of the more lively and controversial portions of the discussion centered on the role and value of measuring business benefits as part of an ERP initiative. One panelist, who is from a company that recently implemented ERP software, suggested that measuring benefits is not important since new enterprise software will inevitably bring improvements to a business, so it’s a waste of time to measure them. I, along with a few other panelists, strongly disagreed, suggesting that if you don’t measure the business benefits, you won’t achieve them. In addition, even if you know you’re going to realize business benefits regardless of whether or not you measure them, you’re not going to truly maximize those benefits unless you closely track, monitor and follow-up with required corrective action.

Overall, it was a good conference with good ideas and best practices to make manufacturing ERP software initiatives more successful. The questions and answers covered in the session reiterated some of the advice we commonly provide our clients. If you’d like to hear more, register for our ERP Boot Camp. Both time and space are running out so be sure to reserve your spot today.

ERP systems come in all types of varieties, shapes, and sizes, ranging from the massive Tier I packages like SAP and Oracle, to the smaller, more focused nice point solutions like Salesforce and Workday. In addition, there are a host of industry-focused solutions cropping up every day, along with software as a service (SaaS), open source, and best of breed systems. There are so many options, in fact, that Panorama tracks literally hundreds of ERP software solutions in the industry research and consulting services we provide to our clients.

While there may not necessarily be anything to be afraid of when it comes to navigating through the dizzying array of options, it is easy to bastardize your ERP system to the point where it doesn’t fit with your business strategy, operations, and requirements.  Every day we see companies across the world make ill-advised decisions regarding when selecting and implementing their ERP systems. Here are some of the common mistakes we come across:

• Using Microsoft Excel and Access as your ERP system. One of the big mistakes organizations make is using disparate spreadsheets, databases, and inefficient manual processes to manage their businesses. Most companies don’t intentionally develop this strategy, but rather they reactively use this as a way to address business growing pains and deficiencies in their existing enterprise software. However, this strategy is a band-aid solution that inevitably leads to the need for a more intentional and well-developed ERP systems strategy. And companies that are already using ERP systems have to watch that employees don’t use this strategy as a way to work around the perceived deficiencies of the system or to address their lack of understanding how the system works. In both cases – for companies that don’t have good systems in place or those that don’t fully understand the capabilities of their business software – spreadsheets and databases can be expensive, error-prone, and inefficient ways to deal with those operational and technical deficiencies.

• Quilting together a best of breed patchwork of systems. Without a well-defined, long-term IT and enterprise software strategy, organizations are prone to deploying systems in a piecemeal fashion to address deficiencies as the arise. Companies that head down this slippery slope often struggle with inconsistent systems and processes, data redundancy, integration issues, and business processes that operate in silos. While not every organization is able to find a single, enterprise-wide ERP system to address their varied and complex business needs, some don’t look hard enough and end up taking an inconsistent and fragmented business systems approach that can make operations less efficient and more costly in the long-run.

• Relying too heavily on industry best practices, pre-configured solutions and business processes. This is probably the most dangerous and subtle of the three, because so many companies fall into the trap. Countless ERP vendors position their solutions as the end-all-be-all cure to broken business processes by providing industry best practices that can be deployed out of the box simply by installing their software and flipping the switch. Unfortunately, this concept is for the most part marketing and sales hoopla and causes some organizations to use software as a substitute for doing the hard work of defining business processes and their overall operational models. Unfortunately, no software can fix these types of problems, but the false hope of magical fixes from ERP software often leaves organizations with under-performing and under-utilized enterprise solutions and processes.

While these three types of black market ERP systems are common, they can be easily diffused and navigated via a clear enterprise software strategy and realistic expectations about what ERP software can and can’t realistically do for your business. Learn more about the specific ways Panorama can help your organization avoid these pitfalls at our ERP and IT service offerings page.

As kids across the country begin heading their way back to school for the new academic year, CIOs and their respective organizations appear to still be getting schooled on the harsh realities of ERP implementations. In the last week, two fairly high-profile lawsuits made their way into the technology media: one involving a case against ERP software vendor Epicor and the other against Infor.

In the first case, Whaley Foodservice Repairs sued Epicor for an implementation that was delayed repeatedly, cost five times more than originally estimated, and failed to work “as advertised” after two years of use. In addition, the suit claims that Epicor’s implementation team suffered from high turnover, Whaley was forced to hire a third-party software developer to fix some of the defects, and the software was unable to provide visibility into inventory movements or handle transaction volumes.

In the second case, also publicized last week, Paragon Medical is suing Infor for a failed implementation of the company’s product lifecycle management software. Paragon was an existing user of Infor’s Visual ERP software and selected PLM8, also from Infor, to handle the document management aspects of its business. However, the suit claims that the software was not able to support the company’s business processes or requirements.

Although companies still seem to be learning the hard way, their mistakes provide some important lessons learned for the rest of us. Here are a few factors that we have often seen in our years of experience being called upon as expert witnesses during ERP lawsuits:

• Fully understand the strengths and weaknesses of your enterprise software options. There is a dizzying array of options to choose from in the ERP software market. However, there is no perfect solution for most organizations. It is important to fully understand your business requirements in detail, as well as the strengths and weaknesses of various software options to meet those requirements. This can be accomplished through scripted demonstrations and other due diligence, but the first step is to clearly understand and articulate your requirements, as well as understand the important areas to focus on during and ERP software evaluation.

• Have realistic expectations. It’s not realistic to expect that a software vendor is going to know as much about your business as you do, or even enough to provide an accurate estimate of the implementation duration and cost. Therefore, it is important to develop a realistic and detailed implementation project plan, resource allocations, and budget based on factors unique to your business. In the case of Whaley, the organization expected standard configuration of the software, but ended up customizing the software during implementation. We often fully blueprint a company’s future-state business processes prior to selecting a client’s software, for the simple reason that it helps uncover potential unknowns in the implementation process. This type of guidance is usually not going to be provided by a software sales rep, so you may need outside assistance from independent ERP experts such as Panorama.

• Know what you don’t know. The above points are easier said than done, especially if you don’t have extensive ERP implementation expertise within your organization. In both lawsuits mentioned above, Whaley and Paragon appeared to have had blind spots and deficiencies in their knowledge of ERP systems. An outside opinion from independent and focused ERP consultants such as Panorama can provide the objectivity, knowledge transfer, and guidance to help identify and address your organization’s blind spots during the ERP evaluation, selection, and implementation process.

These are a few steps to help you avoid making the same mistakes that other organizations have made in their ERP failures. Learn more about ERP project success by attending our ERP Boot Camp in September. We’re holding a special Preview of our 2011 Boot Camp webinar tomorrow at 10 a.m. MT to give a taste of what to expect at the event. Attendees receive $500 off Boot Camp pricing.

Many of our clients hire us when they know they need help selecting and implementation a new ERP system. Often times, these clients know the general direction they want to go with their enterprise initiatives and simply need help navigating the options and implementing their chosen solution. This tends to be the sweet spot of our client base.

However, we are seeing more clients come to us that aren’t even sure they want or need a new ERP system. Many of them are earlier in their planning process and are opting to take a holistic approach to evaluating their entire IT infrastructure and defining a longer-term plan to upgrade to allow them to scale for future growth and acquisitions. Because we’re an independent consulting firm, we are able to provide objective guidance on how to evaluate and determine the best path to take with the organization’s enterprise software, IT infrastructure, and IT organization, whether or not that strategy entails a new ERP system.

We address these and other issues when helping a client define their three- to five-year IT strategy. Once we understand the strategic direction of the entire company and how the executive team views IT (e.g. as a core competency vs. an undifferentiated commodity), then you will be ready to develop a strategic IT plan. Here are some of the areas to consider when defining an IT strategy for your organization:

Current enterprise applications. Enterprise and ERP software is often the biggest pain point experienced by organizations. It’s the front-facing everyday tool that is the most visible thing to employees, so they often feel the pain of any inefficiencies or misalignments. For this reason, an effective IT strategic assessment should evaluate the functional fit of the organization’s enterprise software applications, including legacy ERP, CRM, HR, and any other systems that the organization may have in place. In addition, this assessment should consider the integration (or lack thereof) between these systems.

IT organization and infrastructure. In addition to systems, an effective IT strategy should evaluate the internal IT organization and infrastructure. This portion of the assessment will typically consider things like internal IT competencies and deficiencies, the potential of consolidating IT functions and/or leveraging a shared services IT delivery model, and the physical IT infrastructure. Often times, companies identify deficiencies in these areas and identify opportunities to upgrade their physical or “soft” infrastructure.

Low-hanging fruit. During a holistic assessment of an organization’s entire IT infrastructure and systems, there are bound to be low-cost yet high-value types of improvements that can be made in the short-term to provide immediate impact. For example, opportunities to retrain employees on key processes or systems to help make them more efficient, integrate disparate systems, or tweak business systems or processes are all examples of areas of potential immediate value that we often see. These changes can often be implemented in parallel or before making larger changes, such as a new ERP system.

Business case and ROI. In order to fully flush out your three- to five-year IT strategy, you’ll want a clear understanding of the costs and benefits associated with the various strategic options available. This will also help prioritize improvement opportunities and plan the timing of each strategic initiative that your organization may undertake. This also forces a focus on accountability and benefits realization so that your organization may actually realize the expected business benefits.

Organizational change management. Once the strategic initiatives have been identified, prioritized, and rolled into the actual deployment plan, the next step is to identify how to manage the organizational changes inherent in the transitions. Employees will need to be trained on new systems, communicated and trained on new processes, and the organization will in many cases need to be redesigned to reflect required competencies and reporting relationships to support the new strategy. Regardless of the exact types of changes involved, the transition is likely to entail significant change for employees, which requires an effective organizational change management plan.

These are just a few areas of consideration to help you get started on defining your IT strategy. Once these and other critical areas are addressed, you and your team should be in a better position to define exactly where you are headed as an IT organization via a strategic roadmap.

Learn more about our IT strategy service offering online or call us at 720-515-1377 to discuss options with our ERP consultants.

Cloud ERP is clearly the talk of the ERP software industry. The marketing engine supporting cloud options such as software as a service (SaaS) and hosted ERP systems is very strong, even reaching into the consumer-facing side of things with Microsoft’s push into the cloud with Windows-based products.

In fact, our 2011 ERP Report - published earlier this year – shows just how prominent the cloud is becoming in the enterprise software space: 17-percent of organizations are reportedly using SaaS-based solutions, up from 6-percent the previous year. In addition, another 24-percent are using the cloud to host their traditional, single-tenant ERP systems, while just over half of organizations are opting for traditional systems that are hosted on site.

So cloud ERP must surely be the wave of the future, right?

Not necessarily. Just as the cloud can be very practical for a consumer that doesn’t want to deal with hosting their music or pictures on their laptop, smaller businesses often find that the cloud is an ideal solution because it minimizes the need for costly IT support. Some mid-size companies find that point solutions – such as CRM or HR systems – are feasible to host in the cloud. In addition, cloud solutions can be faster and less costly to deploy, at least in the short-term. But larger organizations are simply not embracing the cloud like their smaller-company counterparts. How can this be, you might ask? First of all, a big limitation of the cloud is lack of flexibility. On-premise ERP systems have been and still remain easier to configure and customize to fit your specific business needs, while SaaS and other cloud-based solutions offer less flexibility in these areas. While that could actually be a positive thing for vanilla companies with fairly generic business operations, it can be very detrimental to more complex companies with distinct competitive advantages from their peers.  This problem is starting to dissipate with the advent of platform as a service (PaaS) and other development and integration tools, but those options are not yet mature or robust enough for most larger organizations we work with.

The other big issue larger organizations tend to have is with control and security. Although most SaaS and cloud ERP vendors are able to provide more stability and security than most internal IT departments, most CIOs are at least a little skeptical about not having complete control over security and other issues. These concerns can be mitigated via well-defined service level agreements, but they are still very real and valid concerns.

So what’s one to do when trying to determine whether or not the cloud is for their organizations? First, it is important to define what your specific needs are and recognize that there is no one-size-fits-all answer to ERP. Second, understand the tradeoffs between cloud versus on-premise solutions. The industry marketing sales hype may suggest that there are no tradeoffs, but they are indeed there and the tradeoffs are very distinct. Keeping these two points in mind will take you a long way toward making your way through the foggy and sometimes confusing landscape of cloud and SaaS ERP.

If you’d like to discuss your organization’s specific business processes and how they relate to ERP software selection, including cloud and/or SaaS solutions, contact our independent ERP experts today.

We see it every day with our current and prospective clients: company installs ERP system, it costs more time and money — and causes more pain — than it should have, and after years of usage, the business and software become misaligned. When this happens, the CIO or COO will inevitably call us insisting that the software is broken and that it’s time for a new solution, leading to an evaluation and selection of new ERP software.

It may sound crazy, but one of the first questions we usually ask is, “Do you really need a new system?” After all, it can take some time and effort to select new software, and implementations are costly and risky. Many cases do involve a legacy system that’s just not a good fit for the business and never will be, but if it makes sense, a rejuvenation of the existing solution can be less risky, less costly, and less disruptive to an organization. After some digging and analysis, we often find that companies are leaving a great deal of low-hanging fruit on the table that can easily be addressed by simply conducting refresher training, tweaking businesses processes, making updates to the software configuration, or in some cases, upgrading to a new version of the software.

Before heading off the deep end and assuming you need a new ERP system, it is helpful to ask a few key questions to start:

• Is your ERP system really the problem? Although we have plenty of clients that are in dire straights with their current legacy enterprise software, I would estimate that the software itself more often than not the real problem when a company first contacts us for a software evaluation. Even if it was implemented well, which most of the time it isn’t, ERP software tends to get misaligned with evolving business needs over the years. Instead, look at how well your business processes are functioning, how competent your employees are with the business processes and systems, and the cost-benefit of doing some reconfiguration or upgrades to the software.

• Are you running the latest version of the software? The evolution of ERP at most organizations is pretty common: the slow misalignments mentioned above build up until the company finally stops upgrading the software, which further exasperates the problem. We see clients that haven’t upgraded in several years, only to wonder why the software is dated and unable to meet their key business requirements. Although upgrades are never really simple, they can be a lot simpler than a full rip and replace of the system.

• What is the best way to align your business with your ERP software, and vice versa? The final question is to ask what else could be done to align business and software. What are the different available options and what is the estimated return on investment for each scenario? We often help clients look at the costs vs. benefits of several scenarios, such as process improvements or implementations of advanced modules of the current system, before making a final recommendation. Even if you are leaving some potential benefits on the table by sticking to your current system, the potential lower costs and risks combined with the overall return on investment may justify that approach.

So perhaps it’s not your system that’s the problem — maybe it’s simply time to rejuvenate your ERP software. Learn more about your options by attending our free webinar on August 4, Tips for Selecting the Right ERP Software for Your Organization.

Software as a Service, or SaaS ERP as it’s known in industry circles, has been receiving its share of media and business attention in recent years. The allure of SaaS – including potentially lower up-front costs, no software to implement, and relatively easy upgrades – can be enough to convince some CIOs that it’s the right choice for their organizations.

But is it right for everyone? That’s one of the more controversial questions we answer when working with current and prospective clients. If you ask industry analysts, academics, and media types, most will tell you that the future is all SaaS and nothing else. Some have been arguing for years that traditional “big” ERP is dead. In fact, Dun and Bradstreet recently reported Gartner’s estimation that 25-percent of ERP software purchased in 2011 will be SaaS solutions. In addition, SaaS vendors such as Netsuite, Plex, and Salesforce have been aggressively growing while other ERP vendors have struggled.

A couple of counterpoints are always in order when there is this much buzz surrounding an industry trend. First, while 25-percent may seem like a large portion, that still leaves 75-percent of ERP purchases that are of the traditional on-premise flavor. As for the steep growth of SaaS ERP vendors, they have a much smaller revenue base to start with relative to other more established software providers. And it also helps to understand the primary customers of SaaS ERP solutions: our experience and research shows that SaaS customers are disproportionately skewed toward smaller to mid-size companies. Larger and more complex organizations simply haven’t had a compelling reason to switch to these types of solutions.

Since SaaS may be perfect for some companies and misaligned with others, how is an executive team to decide the best fit for their organizations? Here are a few starting points to ask to determine whether or not SaaS is the right option for you:

1. How unique or complex is your business relative to others? The fact of the matter is that SaaS ERP systems are still not as flexible as on-premise solutions. While this may change with the continuing evolution of platform as a service (PaaS) and other development and integration tools, it is generally more difficult to change SaaS offerings to fit your business. If you have a fairly vanilla or less complex business operation, then SaaS may be a good option for you. If, on the other hand, you have unique competitive advantages or otherwise need the flexibility to materially change the software to fit your business, then the ability to heavily configure on premise solutions may make them more appropriate for your organization.

2. Are you more willing to increase capital versus expense budgets to support a new ERP system? Many high-growth companies are cash and/or budget strapped, which can affect the type of software you invest in. Companies with less cash reserves or capital budgets or more likely to invest in SaaS, while those that are more comfortable carrying depreciable assets on their balance sheets are more likely to invest in on-premise ERP. In addition, SaaS customers need to be more comfortable with the possibility that it will cost more in the long-term, despite the lower up-front costs. A realistic and objective business case will help determine a total cost of ownership estimate for either type of solution.

3. How much control and security do you need over your ERP systems? While this question isn’t 100% based on reality, it is based on the common perception among CIOs that SaaS affords less security and control. While SaaS can indeed offer less control (see #1 above), security should not be as much of a concern for most organizations. After all, SaaS vendors are able to provide more world-class security and reliability than most IT departments. However, our government, aerospace, pharmaceutical and other types of clients with sensitive business information are more inclined to retain control via on premise solutions.

While SaaS is a very real emerging trend in the market, like everything, it’s not for everyone. Your specific needs will determine the most appropriate needs more than industry or marketing hype. Learn more about how to evaluate SaaS vs. on-premise solutions by attending our upcoming ERP Boot Camp.

As we’ve covered in great detail in this blog over the last several years, ERP implementations can be a grind. It’s tough to finish on time and on budget while at the same time delivering expected business benefits. Whether you are working for a commercial company or are in the public sector, it’s no secret the the odds are stacked against you when it comes to ERP systems.

However, our experience with non-profits, federal, state and local entities have shown us that certain challenges are especially pronounced in the public sector. Public ERP systems face unique obstacles related to people, business processes, and complexities. It’s not that public ERP implementations are necessarily more difficult than those in the private sector, but there are things that make them unique.

Here are a few distinct challenges to consider before embarking on an ERP implementation for your public-sector organization:

• Organizational change management. Change is hard for employees at most organizations, but it can be even more difficult to manage in the public sector. Employees in the public sector haven’t traditionally been motivated by a fear of having to outperform peers to keep their jobs (although this is changing in recent years), so performance-based incentives may not be as effective. In addition, because government organizations often do not feel the same external market pressures to change quickly, employees may not be used to the large changes entailed by an ERP implementation. For these reasons, organizational change management plans need to pay particular attention to “selling” the changes and positively impacting the culture of the organization.

• Communications. In addition to the cultural change enabled by an organizational change management plan, general communications can be especially challenging with public sector entities. Not only is it important for the project team and executive sponsors to communicate major process and organizational changes to employees, but there are typically a complex series of stakeholders that need to be communicated to as well. Constituents such as internal customers, external taxpayers, and external “customers” all have a vested interest in ensuring the project is successful.  It is for this reason that public ERP systems often take so long and cost so much to implement.

• Complexity. Another challenge for government organizations is that they are generally larger, more complex, and impact people more than in the commercial space. It’s rare to find a small, nimble, and simple government organization – no matter how relatively small it may seem compared to other government entities – so the complexities can be material.  Business processes, systems, people, and organizational structures can all be more complex than what you might see in the commercial space. For this reason, you want to make sure you have a software solution and ERP implementation partner that is accustomed to these complexities.

Public sector ERP implementations are difficult, but as is the case in the public sector, they’re not impossible if managed effectively and with the right implementation partner. However, getting there is easier said than done.  The above three variables are three key complexities to consider as you begin your organization’s ERP initiative.

Learn more about how Panorama can help by attending our upcoming ERP Boot Camp or by reading about our ERP and IT consulting services for both private and public-sector organizations.

The fourth of July holiday in the US is all about fireworks, a long weekend, and summer barbecues. Even more importantly, however, the holiday is about independence. For over 200 years, our nation has prospered and taken pride in its independence.

Just as our country struggled for its independence from the British in the early days, the ERP software market also struggles with independence, or lack thereof. The market is full of consultants, industry analysts, and software resellers that are aligned with one or more ERP vendors. Even most companies that provide online resources and databases for software selection are paid big bucks by the vendors. So whether you’re subscribing to a vendor evaluation database, viewing a market briefing from a vendor analyst, or hiring a software selection consultant, chances are they are in bed with one or more vendors.

So what’s the fuss? After all, this is how the industry has worked for years, right?

That’s exactly true, it is how it has always been, and therein lies the rub. As our independent 2010 ERP Report shows, 72-percent of ERP implementations fail, and that’s no coincidence. For too long, companies have been sold products that aren’t good fits for their organizations or have had implementations managed by consultants that don’t have their best interests in mind. In software selection, you need an unbiased partner to help you find the right solution for your business. During implementation, you need someone that isn’t trying to sell you additional software or charge additional fees to customize the system to death. Up until recently, you had two choices: 1) hire a biased consultant or advisor to help you select and implement the right software, or 2) try doing it yourself, with very little to no expertise.

Having been a part of this unfortunate landscape for 15 years and seeing the impact it had on clients is exactly why we started Panorama Consulting in 2005. Our vision is simple: to be the world’s leading independent ERP consulting firm. The keys to that vision are independence and focus on being better at ERP than anyone else in the market. Fortunately, our clients and the ERP market see the value in what we do, which helps explain our extremely rapid growth in a down economy.

So what are the questions to ask a consultant, analyst, or online resource to determine how independent they really are? Here are three starting points:

1. Do you sell ERP software? This is probably the easiest one. If they do, it is impossible for them to be objective and to make your business requirements their priority. Even if they represent two, three, even five different software vendors, that’s only a tiny fraction of the overall ERP market.

2.  Do you receive any financial kickbacks or have any financial ties to one or more software vendors? This is one is not so easy. Ever since we started Panorama five years ago, we’ve been offered large sums of money as “referral fees” in exchange for bringing clients to them. This would have been an easy way to make some cash on the side, but completely goes against our business model. About two years ago a client asked us to guarantee our independence in writing, so we included a clause in our contract that if they found evidence that we were financially or any way aligned with one or more software vendors, we would refund 100-percent of our consulting fees to them. I have yet to find another firm that is willing to put money where their mouths are. Most consultants, industry analysts, and online vendor database subscription services charge vendors fees of some sort.

3.  Do you have a staff of consultants that focuses on one or more software packages? Having worked for one of the Big 5 firms earlier in my career, this is where a lot of the bigger consulting and audit firms get you. They may technically be independent, but they are going to be more than a bit biased if they have a staff of SAP or Oracle specialists that they’re dying to staff on the next project. I did several ERP software selection projects with my former Big 5 consulting firm, and it was no coincidence that we recommended SAP in each and every one of our software selection engagements. Even in cases where SAP was a good fit, our blinders were such that we couldn’t objectively advise the clients on where the risks and weaknesses were with the solution, which every ERP solution has.

In case you’re not familiar with Panorama, we can answer these three questions with a resounding “no,” which is how we’re able to provide independent advice and bring knowledge of more than 150 different ERP software solutions to the table. In addition, our independence allows us to provide an unfiltered, unsponsored view of the strengths and weaknesses of each solution, as well as how to most effectively implement them.

Want to learn more? Attend one of our upcoming webinars to better understand how an independent firm like Panorama can help make your ERP initiatives more successful. And we hope you all had a happy and safe Independence Day.

Like their counterparts in the private sector, most CIOs and project managers in the government space are concerned with implementing their ERP, CRM, payroll, financial, and other enterprise systems on time and on budget. Some even want to see actual improvements to their public-sector organizations. However, very few expect that they will be defrauded for hundreds of millions of dollars by their system integrators.

Unfortunately, that’s exactly the problem faced by the City of New York. Just last week, officials announced that most of the $600 million that the city paid to its main contractor (TechnoDyne) for its payroll system implementation involved fraud. In what seems to be a complex and long-term web of greed, the main contractor, sub-contractors, and city employees were taking kickbacks in exchange for awarding business.

This problem brings up two questions: 1) Why in the world would any organization pay $600 million for a payroll system, even if it did involve 160,000 end-users, and 2) How did it go undetected for so long? Both questions are worthy of additional discussion beyond this single blog, but there are some lessons to be learned here. Although Panorama was not involved and never has been involved with the City of New York or this project in particular, there are some conclusions we can make:

1. Independent validation and verification can ensure a project finishes on time and on budget. I’m not familiar with the details of NYC’s payroll project, but according to our research and benchmarks in the public sector, I can tell you that $600 million seems like an extremely high and unnecessary budget. With a budget this high, it would have behooved the City to spend a small sliver of their resources on independent validation and verification (IV&V), quality assurance, and oversight. An independent third party with expertise in complex systems implementations is able to identify signs of fraud, misuse of resources, and lack of implementation best practices. When contractors like TechnoDyne get fat, long-term contracts with a government entity – even when fraud is not involved – it can be awfully tempting to get lazy without a third-party to keep the project on track.

2. Outside ERP system experience is crucial to the success of any enterprise software initiative. Deeper and more relevant experience with complex enterprise system implementation could have probably materially reduced the amount of money the City invested in their project. Whether it be a payroll, financial, CRM, HR, ERP, or health insurance exchange system, government ERP projects can be very complex and risky. Only companies with a great deal of expertise in these types of implementations in a number of industry verticals should be trusted with such responsibility. In addition, these types of experts can help identify best practices, highlight opportunities to negotiate more favorable contract terms, and help provide other expert guidance that your average consulting firm would be unable to do.

3.  Proven best practices, tools, and consulting methodologies will drive down your implementation costs. While we don’t know much about the City’s project, our assumption is that the organization and its consulting contractors failed to leverage implementation best practices, tools, and methodologies. If it had, it most likely would not have required a $600 million investment on an incomplete initiative. Consulting firms that specialize in ERP implementations — such as Panorama Consulting — bring implementation tools that will accelerate your implementation timeframe and reduce the overall cost of your initiative, while at the same time addressing points one and two.

Most ERP initiatives are not destined to lead to fraud, kickbacks, and/or failure. However, the above tips will smoke out any signs of those tendencies.  More commonly, these same tips will also help prevent more moderate challenges and problems, such as budget over-runs, delayed implementations, and poorly implemented systems.

Learn more about how Panorama can help with your ERP systems initiatives by viewing our ERP and IT services.

Organizations typically implement ERP systems to help improve business operations, whether it be to increase efficiencies, streamline business processes, or increase revenues. However, our research shows that a full 54-percent of companies have a high level of business risk at the time of going live with their new ERP software. By “high level of business risk,” we mean a material operational disruption, such as not being able to ship product or close the books at the end of the month. Granted, some disruptions are more significant than others, but bringing a company to its knees isn’t exactly a reason most organizations implement enterprise software.

While just over half of companies experience this type of problem, an even greater number have more moderate difficulties. Employee resistance to new processes, unclear business processes, working outside the system, and corrupt data are other issues that may not necessarily bring a company to its knees, but certainly don’t make life any easier for anyone involved. It can be amazing to see how companies go from high expectations during the software selection process to merely hoping that the go-live doesn’t fail as the implementation proceeds.

So what’s the problem — why do ERP implementations so frequently bring organizations to their knees? More often than not, it boils down to three key problems:

1. Poorly defined business processes. ERP systems are very flexible and typically involve significant operational change, so it’s critical to clearly define how business processes are going to look in the new “to-be” environment. Even the most flawlessly designed software can result in failure if processes aren’t clearly defined and communicated to employees. And by business processes, we mean end-to-end business processes, not transactions in the system, which ERP vendors are more opt to focus on.

2. Ineffective organizational change management. Speaking of business processes changes, employees need to fully understand these changes in order for the business to function going forward. Software vendors are typically well-versed in training on how to perform transactions in their system, but they are not versed in facilitating a robust organizational change management program that helps employees understand what the specific differences are between the as-is and to-be business models, how it affects their specific jobs, and how the end-to-end business processes will look in the new environment. All of these areas should be addressed via an effective organizational change plan, and they should happen in addition to and well before end-user training.

3. Unrealistic expectations. One of the more overlooked ERP failure points is unrealistic expectations. You may have experienced the consequences of unrealistic expectations in the past – your ERP vendor tells you their software can be implemented in 90 days or less, then you budget and resource accordingly only to quickly find that you have severely underestimated the time and money required, thus requiring you to cut corners where no one in their right mind would. This is an all-too-common root cause of implementation failure and can quickly bring a company to its knees because it is forced to implement poorly, which is worse than not implementing at all.

By avoiding these three pitfalls, you and your project team will go a long way toward not only ensuring your implementation doesn’t fail, but more importantly, that it delivers measurable business value to your organization.

Learn more about how you can make your ERP implementation more successful by attending our ERP Boot Camp on September 21, 22 and 23 in Denver.

This is the time of year when our clients are either in the midst of ramping up their ERP implementations or are on the verge of selecting an ERP system to implement later in the year. While the ERP selection process is critical to the success of an enterprise software initiative, even the most perfectly aligned software won’t make a bit of difference if it’s not implemented effectively. Since most organizations don’t have the in-house capabilities to handle the associated complexities and risks, they often choose to leverage the expertise of an outside ERP implementation consultant.

There are a number of options to choose from when shopping for third-party assistance. ERP vendors, solo consultants, and large accounting firms all offer implementation services. However, given the high percentage of ERP failures (see our 2011 ERP Report for statistics), it seems that even companies who leverage implemetation consultants are incapable of making their initiatives as successful as planned. Truth be told: Despite all the options in the marketplace, there are only a handful of viable options when you’re looking for genuine expertise.

Here are three things to consider when evaluating potential ERP implementation consultants:

1. Business and ERP expertise. I’ve always thought that deep knowledge of a particular ERP system is the most overrated criteria for choosing an implementation consultant. In fact, I don’t recall the last time I saw an implementation fail because of a lack of software or technical expertise. Since failures are more commonly due to poorly defined business processes, organizations need a consulting firm that not only understands their industry but also business process improvement, and how to drive measurable business improvements from enterprise software. It’s relatively easy to find consultants that can figure out the software; the business skills are harder to find.

2. Robust organizational change management tools. Put simply, an ERP implementation will fail without a proper focus on organizational change management. Even the best business process or software design won’t matter if the staff doesn’t fully understand the new ways of doing business. And software training is just a small component of a robust organizational change methodology. Effective deployments also address stakeholder communications, organizational impact, benefits realization, organizational design, and a multitude of other organizational tools required to make any implementation successful.

3. Independence from your software vendor. Most companies understand the value of an independent consulting firm to facilitate an unbiased ERP evaluation, but independence is just as important during the actual implementation. It may sound counter-intuitive, but how effective can a consultant really be during implementation (or any other stage) if their world centers on one particular software? And what kind of expertise will you get if the consulting firm makes their “real” money on the software license side of the equation? Independent consultants like Panorama, on the other hand, always bring technology-agnostic industry best practices and tools to the table. In addition, we identify ways that other third-party systems might augment your core ERP system regardless of who sells it. This independence not only enables clients to better achieve points the first two points explained above but provides a good insurance policy to executives concerned with mitigating risk and optimizing business benefits.

So whether you’re implementing a Tier I ERP system like SAP or Oracle or a Tier II package like Infor or Microsoft Dynamics, the above items are critical considerations when choosing an ERP implementation partner. Careful analysis of a consultant’s capabilities in these areas will ensure that you manage one of the few ERP implementations that fully succeed and optimize business benefits. Learn more about Panorama’s ERP implementation services here or call us at (720)-515-1ERP to discuss your specific needs.

Most of the clients we work with grow at least to some degree via mergers and acquisitions of other companies. Either they want to branch into new markets, acquire new customers, and/or leverage operational competencies of other companies. Regardless of the drivers of these M&A activities, there are a number of operational and strategic risks and pain points that unfortunately often aren’t adequately addressed by organizations.

For example, the following are several challenges when a company merges with or acquires another company:

• Different business processes and workflows
• Different products
• Different customers, with different ways of servicing those customers
• Different ERP systems
• Silo mentality among employees

While companies are often aware of these challenges before they engage in their M&A due diligence, they typically fall short on execution in addressing them. We typically are hired several years after a merger or acquisition, and often times after several M&A transactions, when the pain becomes too obvious and disruptive to the business.

Although these challenges will always exist in a merger or acquisition to some extent, they don’t necessarily need to be as painful as most organizations let them become. After several years of operational misalignment, the differences between these merged companies become glaring as executives begin to see the costs associated with multiple ERP systems, different ways of doing the same processes, and lack of a shared services vision to help minimize redundancies and increase scale in the organization. After all, most of these expected benefits were likely identified as financial justification for the transaction, so it is appropriate that executives will eventually focus on addressing these items.

One potential solution to proactively address these misalignments before they become too disruptive is to define an ERP business blueprint for the overall organization. If a parent company has clearly defined processes, job roles, key performance indicators, system configurations, and other operational and enterprise software clarity, rolling M&A companies into the parent organization will be significantly smoother. In addition, the parent company’s blueprint will help define the direction the new organizations should go in regard to potential new ERP systems or upgrades, rather than necessarily keeping their legacy systems intact.

Below are just a handful of operational, organizational, and technical issues that should be defined in an ERP business blueprint:

• Standard business processes and workflows
• Organizational roles and responsibilities within the new ERP business processes
• Key performance indicators for each process
• Systems and tools to be used to complete each step in the process

Once these items have been defined for the overall company, M&A integration becomes much more efficient and results in higher business benefits. In the shorter term, it helps companies with multiple business units gain efficiencies through standardization.

Learn more about our ERP consulting services (including ERP business blueprint development) and find out how we can help your organization through this your implementation process.

When organizations implement new ERP systems, they often think that the biggest change is in the software that employees will be using. Sure, they usually understand that the change will be fairly significant, but they also usually think that some end-user training prior to go-live will resolve most of those concerns. However, it is important to point out that training addresses a relatively minor portion of the vast changes that employees see (and experience) following most ERP implementations.

The degree of organizational change is broad: business processes, job roles and responsibilities, workflows, reporting and transactional processes are just a few of the major changes employees need to adapt to, which underscores the need for an effective organizational change management program. However, the largest change is perhaps a more philosophical and less tangible one: employees must evolve from being hunter-gatherers to true decision makers.

In other words, many employees probably spend a great deal of their time searching for information. Mountains of paper reports, Excel spreadsheets, and even Access databases (for the truly sophisticated) are a normal part of the routine for many 21st century employees. And since these tools are likely all fragmented into silos and aren’t talking to one another, there is likely a great deal of redundant effort trying to manage and find any needed information. No wonder staff members spend a lot less time making sense of and analyzing the data than they could and should be — they’re too busy trying to track it down.

But after organizations implement new ERP software, employees typically have access to a single repository for operational information not only in their own worlds, but also for departments and functions that they perhaps had very little visibility to them before. This transparency is generally a good thing in the long run, but it can be overwhelming to employees if they don’t understand what to do with all of this newfound organizational knowledge. So end-user training that is focused simply on software transactional training isn’t enough. Even if they understand how to use the software the way the ERP software vendors described it, it is arguably more important they understand how to deal with the mountains of data and information that they are about to have access to.

So if end-user training isn’t enough, then how do we ensure that this mindshift occurs? That’s where an effective organizational change management program comes into play. Software training may be the most obvious component of managing organizational change, but it is quite frankly not as critical as constant employee communications, process gap analysis, organizational impact assessments, and a host of other organizational change management initiatives. Only by dedicating time, money, and resources to these activities will your organization be able to realize the full potential business benefits of your new ERP software.

Click through to learn more about our organizational change management services and how they might benefit your company.

Several weeks ago, I published one of my more controversial and thought-provoking blogs in quite some time. In it, I make the argument that when it comes to ERP systems, software and technology are a distant second to business in terms of critical success factors (click to read the original blog, Forget About Technology: ERP Systems are All About Business).

In fact, the article was controversial enough to provoke a welcome point/counterpoint with Lyle Ekdahl, the Group Vice President and General Manager of Oracle’s JD Edwards unit. In Lyle’s response, he asserts that I may have underestimated the importance of technology in successful ERP implementations. Although he raises some good points and brings some valid arguments to the discussion, I still maintain that technology is never as important as business in effective ERP software initiatives.

But first, let’s look at where Lyle and I agree. One key point he makes is that the ERP system you choose does indeed matter. While I may have suggested (somewhat facetiously) that ERP software doesn’t matter, it is true that not all systems are created equal. Different ERP vendors have different strengths, functionality, breadth, and automation, so it is important to find the right fit for your organization as part of your ERP selection process.

Where Lyle and I disagree here is in the reality that customers too often focus on technology at the expense of business needs. Ideally, we like to see customers that look at both business and technical fit when choosing a new ERP system. In fact, both aspects are key elements of Panorama’s ERP selection methodology and tool-set. The reality, however, is that most companies are forced to prioritize what is important to them and make tradeoffs accordingly. When faced with such a tradeoff, if there is indeed one, we will almost always recommend that business needs will trump the technology.

Let’s look at two extreme examples for illustrative purposes: a company has the option either to choose a new ERP system with cutting-edge technology but no business blueprint to start from, or it can pick a sub-par package along with clearly defined processes. If I were a betting man, I’ll put money on the organization with clear business processes and needs over the one with the better technology every time. The even safer bet is on organizations that have both, but again, this is often not realistic in an age of limited resources and constrained IT budgets.

Lyle also uses an analogy that I find very useful: comparing ERP software to cars. Like cars, enterprise software can get you where you want to go, but they can also be dangerous if you don’t know how to drive them or choose to do so with your eyes closed. While Lyle is correct in his statement that driving a 1978 Ford Pinto is not the same as driving a 2011 BMW 5 series, I would argue that having the BMW won’t do you much good if you’re blindfolded after drinking a few bottles of wine. In this case, I’ll put my money on the sober Pinto driver any day. Similarly, I’ll take the informed and business-focused client over other organizations, as I know they are more likely to succeed regardless of the software they choose.

Again, business and technology are both important, but ERP sales reps too often oversell the value of their technology and downplay the importance of business processes and organizational change management. While their intentions are most often good, ERP vendors too often sell technology, best practices, training documentation, and other tools as surrogates for the hard work of defining business processes and effectively managing organizational change. Learn more about how we help clients take a business-focused approach to driving ERP implementations by reading about our ERP consulting services (including business blueprinting and organizational change management).

Earlier this month, Panorama finalized an agreement to merge with TPG Solutions, a Denver-based business and IT services company. This is an exciting opportunity for us and allows us to continue on our aggressive growth trajectory that has enabled us to become the world’s leading independent ERP consulting provider. By merging with TPG, Panorama will add the following capabilities to its service offerings:

• ERP and IT staffing
• Application development
• IT strategy and infrastructure
• IT support and maintenance
• Expanded global footprint
• Government certifications and designations, including Minority Owned Business (MBE), Self-Certified Small Disadvantaged Business (SDB), Women Owned Business Enterprise (WBE), Disadvantaged Business Enterprise (DBE), DOT-Certified Disadvantaged Business Enterprise and Small Business Enterprise (SBE).

We will continue to operate under the Panorama brand name and the combined entity will be called Panorama Consulting Solutions. Our existing consulting and administrative team will remain intact, and we do not anticipate any changes to the team we have provided to you as a result of this merger. In addition, I will continue to serve as President and Chairman of the new company, while Calvin Hamler will continue to act as our CEO and CFO.

We are very excited about this next step in our growth and look forward to continuing our long-term relationship with you and to leverage the transaction to improve the breadth and depth of our services. As always, thank you for your business and please feel free to contact me with any questions.

Best regards,

Eric Kimberling, President and Chairman

Earlier this month, I spoke at CDC Software’s Ross Enterprise user conference in San Antonio. The team at CDC asked if I would cover the topic of how to realize a larger return on investment and business benefits from their customers’ investments in Ross Enterprise. This is a topic that I particularly enjoy speaking about, so it was a pleasure to be able to discuss it with their customers and users.

Here are three key points we discussed in the presentation:

1. Understand and leverage the functionality you already have. Like many ERP vendors, CDC and Ross Enterprise offer a wide array of core functionality, advanced modules, and third-party applications to address the needs of their customer base. So much so, in fact, that many customers don’t fully understand the full breadth of what is right in front of them.  Once key lesson from our clients is that many broken business processes or perceived weaknesses in the system are often easily addressed by better leveraging functionality that already exists but isn’t necessarily being used by the organization. This can be a more cost effective solution that ripping out and replacing your incumbent ERP software package.

2. It’s never too early or too late to develop your business blueprint. It’s amazing how convoluted a robust, complex, and flexible ERP system can become where there are not clearly defined business processes to base the design. For that reason, it is important to develop your business blueprint to give your software vendor direction on how to configure and design the software. Although this is ideally done before you implement the software, we’ve seen quite a few companies benefit from doing this important activity during post-implementation to help identify areas of improvement, enhancements to the system, and to provide clearer direction to employees on how their jobs should be performed. Better late than never.

3.  Keep up with ERP system upgrades. Companies will inevitably experience misalignments with their ERP software over time as their business changes. This misalignment is usually magnified when an organization fails to keep up with upgrades. For example, CDC introduced Ross Enterprise version 7 at their user conference, which takes their software to a whole new level. Companies that don’t elect to leverage the millions of dollars of R&D that companies like CDC software spend will miss out on significant business benefits.

Realizing and maximizing the business benefits potential of ERP systems is never an easy task. However, although most companies fail to reach the full potential of their implementations, the smart ones realize that they can continuously optimize business benefits of their ERP investments by proactively employing tactics like the ones mentioned above.

Learn more about how we help clients develop their business blueprint or independently assess how they can get more out of their current systems by reviewing our ERP and IT consulting services.

When most organizations are ready to replace their ERP software or legacy systems, they typically expect that the new system will fix most or all of their business process and organizational issues. Broken processes, redundant data entry, and Excel spreadsheets are just some of the pain points that many organizations expect a new ERP system to solve. However, as many of our clients have found, business software in and of itself won’t fix these and other business challenges.

The real key to taking your ERP implementation to the next level? Business discipline. During my 15 years as an ERP consultant, enterprise software solutions have become deeper, more robust, and more flexible, which are generally considered good things. However, this flexibility and rich functionality comes at a price; implementation project team members and employees can tailor the software to handle even the simplest task in a number of different ways, which can lead to the very inconsistencies and broken processes that ERP systems are intended to fix.

So what’s one to do? First, recognize that ERP software is no substitute for well-defined and disciplined business processes. Chances are the software you select and implement will be able to handle your business needs, but the question remains: how will it address your needs in a way that makes sense to both your business and your employees? This conundrum is exactly why Panorama’s ERP business blueprint services have been in such high demand lately.

Second, effective business discipline also requires effective organizational change management. Without a clear understanding of how exactly new business processes should work, how they themselves should work with the new business processes, and how individual workflows affect people upstream and downstream in the organization, employees will not be able to deliver the business benefits you (or they) may be expecting from the ERP implementation. End-user training is a start, but there are a number of activity that should happen well before training, such as change impact analyses, targeted organizational change discussions, and a benefits realization plan. Remember: software doesn’t deliver business benefits, people do.

It’s obvious that an ERP software package should fit your organization’s functional requirements and be implemented in a way that is aligned with your business. However, fulfilling these requirements alone will not get the job done; you also need to instill the business discipline required to realize the business benefits. Learn more by attending one of our upcoming webinars on ERP selection and implementation best practices.

We are very pleased and proud to announce our new firm: Panorama Consulting Solutions. Formed as a result of a merger between TPG Solutions and Panorama Consulting Group, Panorama Consulting Solutions, a division of The Prescott Group, LLC, will continue to offer the ERP implementation, software selection and organizational change management services we are proven to excel at as well as IT staffing, support and application development.

Panorama Consulting Solutions will continue to operate as a wholly independent and objective partner to our global client base. We aim to further ease and accelerate the adoption of ERP system projects by adding capabilities to customize legacy systems, build new systems, provide solutions to short- and long-term staffing needs, and offer direct technical support for clients at any stage of their projects.

Both Panorama Consulting Solutions and TPG Solutions will operate under the umbrella of The Prescott Group, LLC. Overseeing the new venture will be Eric Kimberling, president and chairman, Calvin Hamler, newly named CEO and CFO, and Portia Prescott, managing member of The Prescott Group, LLC.  Learn more about our leadership team on our website, and be sure to check back as we incorporate more information about our broadened capabilities. Though mergers are always hard to understand at the beginning, rest assured that nothing about Panorama’s ethos or our commitment to providing honest, ethical and independent consulting services and research will change. We look forward to sharing this journey with you.

I’m just young enough to be addicted to text messaging, but not young enough to fully engage in text talk. Rather than texting someone a message saying LOL (laugh out loud), I’d prefer to actually laugh. Although I understand and use newer technologies like text messaging, Facebook, and Twitter, I also have one foot in the world of “older” technologies like ERP systems. Most CIOs and executives we work with are in a similar position.

But what about those that are under 30 or just coming out of college? How will they adjust to more complex business processes and technologies? While this demographic may be used to unstructured and informal tools like Facebook and Twitter, where one can say whatever one wants whenever they want, ERP software requires quite a bit more discipline and structure. In addition, the interwoven business processes in most organizations and their enterprise software mean that there is a ripple effect anytime a new process or transaction is triggered, something that newer technologies may not prepare you for.

The irony is that this disconnect may actually underscore the need for organizational change management in the future. Traditionally, organizational change was more dramatic for heavily tenured and older workers that were making dramatic changes from outdated legacy systems to more modern ERP systems. Now, the pendulum has shifted and it’s the younger workers that will likely create resistance when it comes to forcing structure and timeliness on employees that may not be used to it.

Here are some tips that may may help ease the organizational implications of migrating these types of employees to the world of ERP:

• Provide systems that have a look and feel similar to the newer consumer technologies in the marketplace. Many ERP vendors like Infor are launching user interfaces with consumer grade interfaces to address this concern.

• Help these newer employees understand why well-defined processes are so important. They need to understand that while they can update their Facebook status or watch the Evolution of Dance whenever it strikes their fancy without any consequences, there are very compelling reasons why you have to go to the other extreme and enter customer orders in a timely basis.

• Provide a variety of organizational change management and training tools. Younger employees are very familiar with a variety of non-traditional learning tools, such as on-demand videos (think: YouTube) and interactive, hands-on “try it yourself” training. Traditional classroom-based training alone won’t cut it with this group.

ERP vendors are doing a fairly good job of beginning to address this shift in the first point above. However, it is up to your ERP implementation and organizational change management teams to address the latter two points; even the easiest-to-use software won’t enforce the discipline and structure required to run an effective and efficient business operation.

To learn more, read about our organizational change management services or register for an upcoming ERP webinar.

We often work with clients who are determined to replace their legacy ERP systems. More often than not, by the time a company engages Panorama to evaluate and select a new system, key players in the organization are determined to find something better than what they have now. The software doesn’t work, employees are frustrated, and executives don’t have visibility into business operations.

Sounds like a no brainer, so why would an organization want to consider keeping their current system? There is one key reason: application erosion. Even after 15 years in the ERP consulting industry, I am still amazed by how many companies have trouble with their business processes or suffer from organizational change management issues, but blame the software instead. It is not at all uncommon for us to find that their core issues can be addressed simply by upgrading the software to a more recent version, better aligning business processes with software functionality, or addressing common organizational change management issues.

Here are a few things to consider when determining whether or not you are suffering from ERP systems erosion:

• Are your operating on an old version of the software or have you migrated off of maintenance? If so, there is a fairly high probability that a less risky and less costly upgrade to a newer version of the software will deliver a more positive return on investment than a full rip and replace of the system. In addition, your incumbent ERP vendor will often more aggressively price their software in an attempt to protect their maintenance revenue stream and keep you from opening up the field to competition.

• How much is the software really to blame? I can confidently say that ERP systems get more than their unfair share of blame for business and operational issues. More often than not, business processes or broken, people aren’t properly trained, or the software was poorly implemented, yet the ERP software gets a bad name internally nevertheless.

• Has your software kept up with your business? Most organizations evolve fairly rapidly, so there are going to be inevitable disconnects between evolving business processes and the software the way it was implemented. In addition, most modern ERP software is very flexible, yet end-users often assume that the software will only work the way it was originally configured and implemented. For these reasons, it is important to explore ways that your existing software can be reconfigured to meet the changing needs of your business.

At the end of the day, it is a safe bet to assume that a more incremental upgrade or adjustment to your current system is going to involve less cost and risk than a full replacement. Obviously, you don’t want to pursue this path if the software really is a bad fit, but it’s important to make certain you have explored all of your viable options as part of an effective ERP evaluation and selection process.

Learn more about ERP best practices by attending one of our upcoming ERP webinars.

“The Tipping Point” by Malcolm Gladwell is one of my favorite books of recent. In case you haven’t read it, the premise of the book is to provide sociological and sometimes non-conventional ways of explaining why change happens. For example, he cites a theory that the decrease in crime in the US during the 1990s had more to do with Roe vs. Wade than it had to do with increased law enforcement efforts. In short, the author examines why and how changes happen in general.

When I first read the book, I began to wonder if the same concepts applied to ERP systems. After all, Panorama regularly works with clients that have generated strong biases for or against particular ERP vendors based on a number of factors during their software selection processes. In cases where an ERP software has already been selected, companies and their employees typically reach a tipping point to either accept the ERP system or resist it.

Let’s start with the first case. A client has an existing ERP system and is evaluating potential options to replace that software. In many cases, end users have already developed an overwhelming impression that the old system doesn’t work. Perhaps it was poorly implemented, employees were not adequately trained, or the company’s underlying business processes were broken. Regardless of the precise cause, it more of than not has little to do with the software itself. However, those underlying problems can be enough to cause employees to reach a tipping point that leads them to conclude that the existing system won’t work under any circumstances and that they need a new one. The system may in fact work just fine with some minor, inexpensive, and low-cost enhancements, but a tipping point based on other perceptions is reached nevertheless.

Similarly, when we guide clients through the software selection process, employees involved in the evaluation of potential systems often reach a tipping point in their impressions of the contenders. Perhaps a demo went extremely well or maybe the employees connected with the personalities of the sales team.  In any case, the tipping point may have been caused by subjective or irrational reasons. This is one of the reasons our ERP selection process is designed to neutralize these potential factors and facilitate a tipping point on more rational and business-centric reasons.

In the second case, when a company is implementing a new ERP system, employees often do not accept or reject a new system right away. How well or how poorly a company facilitates organizational change management, communications, and training activities as part of the implementation will determine how soon and how strongly employees will accept or resist the new system. Obviously, the goal of an effective organizational change management plan is to ensure that employees reach a tipping point of embracing new business processes and business benefits sooner rather than later.

So what are the lessons here? First, organizational change management is instrumental to ensuring that a tipping point is reached, either during the evaluation of potential ERP vendors and/or during the implementation of the selected software. Second, it is important to separate fact from fiction and business rationale from more emotional criteria during a software selection process. This can be accomplished via an independent review and validation of either your existing software or potential options that you may be considering. Once a tipping point is reached, it can be very, very difficult to turn the tide in a different direction, so it is helpful to facilitate the tipping point in a way that makes sense to your organization.

In our recently released 2011 Guide to ERP Systems and Vendors, I wrote a list of the top 20 tips I have collected over years of both participating in and observing ERP system implementations and other large IT projects. While I won’t go into the whole list here, I wanted to drill down into a few of the key points:

• ERP software best practices and pre-configured solutions do not solve all of the challenges of ERP. I’ve said it before and I’ll say it again, best practices don’t mean squat when it comes to implementing a specific ERP system for a specific company. More and more, organizations are realizing that to achieve any sort of return on their technology investment, they need to make sure it fits the needs of their company – not whatever company implemented it “best” or served as the bellwether for its pre-configured settings.
  

• The “A-Team” is critical to ERP success. If there is one thing your organization does right during its ERP implementation, make it choosing the best team possible. Give members the authority, the autonomy and the time to ensure that the project is done quickly and done well.
  

• If your operations and your ERP system are misaligned, it’s probably not the software’s fault. It is absolutely crucial to define and document your operations prior to starting an ERP implementation. Business system blueprinting will help your company better know how to select its best-fit ERP software and whether – or how – to customize the solution once its purchased.

• You don’t have to implement ERP all at once. Today we are seeing more and more organizations opt for a phased (or hybrid) approach to ERP system implementations over the “big bang” style favored in years past. This is often a much safer and more advisable way to approach the switchover and offers many benefits (e.g., allowing employees access to parts of the old system, determining flaws and glitches before going company-wide, etc.) that the big bang approach simply lacks.

• ERP success and benefits realization are largely determined before the implementation starts. Many of the most important decisions about your ERP implementation are made before the software is even purchased. The previous bullet points offer ways to position your implementation for optimal success before starting the actual implementation (or maybe before even short-listing vendors): pick the right team, blueprint your processes, determine your needs, decide on areas of customization, choose a phased approach to implementation, etc. Don’t focus solely on the software selection or the implementation; focus instead on your business and how it’s best going to prepare for and take advantage of this momentous change.

To read the rest of the tips, please visit our resource center and download the free 2011 Guide to ERP Systems and Vendors (the tips are on page 15). Many of these topics also have been addressed in previous blog posts, so feel free to browse through or use the search bar to find topics that best match your specific queries.

Since we began the company in 2005, Panorama has gone through quite a bit of change. Industry recognition, rapid growth, reorganizations, and improved consulting methods are some of the things our clients and prospects have seen from us over the years. All of these changes have been designed to improve the value and quality of the services we provide our clients.

So far, 2011 is turning out to be no different; we continue to make continuous improvements to our business in our never-ending quest to provide client service that exceeds what any of our competitors are able to achieve. Below are just a few improvements that you may have already recognized or are about to see from Panorama Consulting:

1. New additions to our client base. Over the last several months, we have added a handful of new clients, including high-growth mid-size companies, larger organizations with annual revenues nearing or in excess of $1B, and even some smaller organizations. Recent new additions to our client base include Louisiana Pacific, AeroJet, and many others, all of which have helped contribute to and sustain our 80%+ average annual growth rate over the last three years.

2. Improvements to our consulting team. As a growing company, we are always hiring the best available talent in our industry. With that growth brings faces that may seem new to our clients, but that are veterans with considerable experience. For example, while I continue to serve as President and Chairman of the Board, we recently brought on a new CEO and CFO (watch for the official press release to follow in the next several days). Along the way, we have also implemented various strategic initiatives to better align our consultants with our overall corporate goals and the best interests of our clients. These goal re-alignment initiatives have resulted in some consultants moving on, and in other consultants who are an excellent fit with our strategic vision coming aboard and/or rising in rank within our organization. As a result, our team now is much stronger and more cohesive than it was even just three or six months ago.

3. Refined organizational structure. We have a very talented and ambitious group of ERP consulting experts, many of whom want to lead and provide direction to our growing company. For that reason, and to support our growth and new clients, we recently promoted two project managers to Director in our Client Services division: Michael Kalkman and Ipsita Mitra. In addition, Larry Bell was promoted to Manager of Vendor Relations. These three organizational changes were designed to recognize outstanding contributions from our team members, but more importantly, to help us scale for our continued growth.

4. Enhanced processes and methodologies. Late last year, we upgraded and refined our consulting processes, tools, and methodologies. We released significant enhancements to our software selection approach, more clearly defined our business blueprint processes, and optimized our ERP implementation toolset. In addition, we more tightly integrated our three key service offerings – ERP software selection, ERP implementation and organizational change management – into a seamless set of offerings, which our consulting team is cross-trained to provide clients. We are using these tightened processes and methodologies as a way to train our expanding consulting team to provide more consistent and elevated quality services to our clients.

5. Expanded ERP consulting services. We also have continued to respond to market demand by expanding our ERP consulting services. For example, we now provide more flexible contract arrangements with our clients to provide them with more control over how they leverage our expertise and competencies. In addition, we have also expanded the services we provide, specifically in areas such as organizational change management, providing our ERP Boot Camp™ on-site and tailored to meet client needs, and standalone ERP vendor negotiation services.

In some cases, these changes are happening behind the scenes in a way that is transparent to our clients. In all of the above examples, however, one thing remains constant: we are still committed to our vision of being the world’s leading and most recognized independent thought leader in the enterprise business and technology services area. Our vision also focuses on delivering measurable business results, reducing business risk and improving business operations for our clients.

The rest of this year will most certainly bring additional improvements: more new clients, more success stories, new additions to our team and, most importantly, more value and success to our clients. So while our organization will continue to grow, new faces will appear, and our organizational chart will continue to evolve, the pursuit of our vision and unwavering commitment to our strategic direction is the one thing that will not change.

We would like to recognize our employees, clients, and investors for helping us continue our growth now and in the future. If you’re not already a client, click here to learn more about our ERP consulting services and to see how Panorama can help you decrease your ERP costs and risks while optimizing business benefits.

On Thursday, Panorama will issue its latest independent report, the 2011 Guide to ERP Vendors and Systems. With research culled from more than 1,600 responses over five years, the survey compares information about ERP implementation durations, costs, payback periods and benefits across all tiers of vendors and presents metrics regarding vendor market share and sales by industry.

Key findings include:

• Rankings within Tier I implementations did not change substantially compared to the 2010 ERP Vendor Analysis Report, but each of the top three vendors showed a drop in market share.

• Tier III vendors have the lowest average project cost ($1.1. million) and the shortest overall payback time, with 76-percent of their paybacks clocking in at less than three years. And while Tier III vendors have the shortest average implementation duration (12 months),  they also have the largest average percentage of duration overruns (62.2.-percent).

• Tier III vendors captured the lion’s share of the market in the under $25 million category and the $25 to $50 million category and beat out Oracle, Microsoft an Tier II vendors (combined) to rank as the second choice (behind SAP) in the $50 to $100 million market.

• Respondents who had implemented Tier III solutions rated themselves as “satisfied” or “very satisfied” only  31.3-percent of the time. In contrast, 42.3-percent of Tier I clients and a full 50-percent of Tier II clients reached similar levels of satisfaction.

The above is just a taste of the data included in the study. Check the Industry Reports section of our website on Thursday morning to download the full 2011 Guide to ERP Systems and Vendors and don’t miss Thursday’s free webinar, Understanding the Differences Between Leading ERP Software Vendors, which will discuss its findings in greater detail.

When people think of ERP systems, most think of SAP, Oracle, and Microsoft Dynamics as the leading solutions. Among these top three, SAP is generally viewed as the leading ERP vendor in terms of real and perceived market share. Each of our recent annual ERP Reports has supported this concept, where we’ve seen SAP lead the pack in terms of the rates at which ERP systems are short-listed and selected.

In the 2011 Report, the second part of which is to be published later this month, we see a changing trend. While SAP still has the largest share of the ERP software market, this is the first year that we’ve seen Oracle nudge ahead of SAP in terms of the rate at which companies are selecting the software. The below table highlights the selection rate of the top 10 vendors in this year’s study:

Since selection rates can be seen as a leading indicator of market share, as they will ultimately lead to increased license, maintenance, and professional services revenue, could this mean that Oracle is taking a bite of SAP’s market share? Only time will tell and these are only preliminary estimates from our research to be published in the coming month, but it could provide further fuel to the heated competition among SAP and Oracle among the top ERP systems.

In the meantime, feel free to download the first part of our 2011 ERP Report to read about the other interesting trends we’re seeing in the market.

When helping clients evaluate and select the right ERP systems for their organizations, choosing the software is just one piece of the puzzle. The next steps are to develop a comprehensive and realistic implementation plan and to identify the best ERP implementation partner to help make the selected software work for your business.

Unfortunately, most companies focus on the wrong things when choosing an implementation partner. For example, the number one priority that many companies focus on is the implementation partner’s technical and functional experience with the ERP software. Evaluation factors such as software certifications, technical competencies, and number of implementations with the chosen software often rate high on the lists of executives. However, this is one of the least relevant aspects of choosing an implementation partner.

How can that be, you might ask? First, good technical resources are not hard to find (my apologies to the technical consultants reading this post). Technical and functional resources are plentiful, especially If you’re implementing a leading ERP system like SAP, Oracle eBusiness Suite, or Microsoft Dynamics. Go to any staffing firm or consulting shop and you can find plenty of consultants with the technical and functional credentials to implement a leading ERP solution. So in many ways, choosing an implementation partner based on this criteria is the equivalent of saying you want to choose a car with four wheels and an engine; it doesn’t really narrow the field in a meaningful way.

Second, and more importantly, successful ERP implementations are about business, not technology. Throughout my career, the most successful ERP implementation teams were the ones that best understood business, not the ones that had the strongest technical competencies related to the new software. The technical stuff is straightforward and relatively easy to learn, but business takes quite a bit longer to learn and understand. So finding an implementation partner that knows business process re-engineering, lean manufacturing, industry best practices, project management, and organizational change management is much more important than their knowledge of your chosen ERP system.

So what exactly should you look for when evaluating ERP implementation partners?  Here are five things to consider.

Five Things to Consider When Evaluating ERP Implementation Partners

1. Business and industry acumen. Assuming your implementation partner has core technical and functional knowledge of the software, which is typically a non-differentiating factor when looking at various options, then you want to focus on their business and industry acumen. For example, do they have a good track record of implementing in industries similar to yours?  Do they understand your business? And, most importantly, do they treat ERP systems more like business initiatives than technology initiatives?

2.  Focus on business blueprinting. Business blueprinting is very different from and more important than system design, but most implementation partners focus on the latter. A successful blueprint does not entail a checklist of items to configure and switches to turn on in your system. Instead, it should be a business process-driven view of every nook and cranny of your business, which serves as a foundation for the system design and eventual implementation. Implementing without a proper business blueprint is like building a house simply with specs from your electrician rather than a blueprint for the whole house from your general contractor.

3. Competencies in organizational change management. Most implementation partners are well-versed in basic system training. However, most do not have competencies in other aspects of organizational change management, which will result in failure if not adequately addressed on your project. This is often the toughest criteria for most implementation partners since they are much more focused on software and technology than they are with people and organizational change – two completely different skill sets. (Learn more about the six workstreams of organizational change management to better understand what competencies you should look for in this area).

4. ERP implementation project management expertise. Project management and functional knowledge of any given software are two important but very different skill sets. When given a choice, I always opt for the strong project manager who doesn’t know the software over a software expert who doesn’t know how to manage a project. As intense as implementation projects can be, strong project and program management is a must have, even if it comes at the expense of strong knowledge of the software. Strong project management doesn’t necessarily require PMP certification, but it does require a strong understanding of how to manage project plans, mitigate risks, deal with business challenges, balance conflicting stakeholder needs, and handle the dozens of other variables that make a project manager’s job so challenging.

5. Independence and technology neutrality. Most implementation partners specialize in one specific software. For example, most Infor implementation partners are not going to know Epicor well and vice versa. However, it is not uncommon to find that multiple solutions from multiple vendors are required to address your business needs, which you may not otherwise find out if you’re not working with an independent implementation partner that understands all of the options in the marketplace. Since ERP solutions typically entail third party systems and integration, it is important to leverage an independent partner like Panorama Consulting that will find the right solutions for you rather than direct you to the ones that they represent or receive financial compensation for.

These are just few things to consider when evaluating potential ERP implementation partners. And these evaluation criteria hold true whether you’re about to implement a large ERP system like SAP or Lawson or a Tier Two solution like Infor or Microsoft Dynamics. At the end of the day, you want an implementation partner who not only knows ERP software, but more importantly, knows business.

Learn more about how Panorama’s ERP services can help provide the right implementation partnership for your ERP initiative.

The 2011 ERP Report shows some interesting trends that began last year and continue into this year. For example, the accelerating adoption of SaaS and the increased focus on business case and benefits realization are both trends that aren’t too surprising in this economic environment.

However, two trends in particular stand out in our recently published report. First, implementation durations and costs both decreased fairly dramatically in the last year. This year’s report, which was based on data collected in 2010, shows that implementation durations fell from 18 to 14 months over the last year, while the average total cost of ownership fell from 6.9% to 4.1% of implementing companies’ annual revenue.

These numbers may seem surprising on the surface, but the detail behind them helps provide some clarification. While it is partially good news that companies are not spending as much on ERP implementations as they have in years past, the bad news is that many companies are cutting corners in their attempts to do more with less. This is partially reflected in the fact that the percentage of companies that took more time and money than expected compared to years past. For example, the percentage that took longer to implement than expected jumped from 35% to 61%, while the percentage of budget overruns escalated from 51% to 74%. These numbers suggest that even though implementation costs and durations decreased, more companies beginning their projects with unrealistic expectations at and are blowing their budgeted time and resources at an alarming rate.

A second surprising metric from this year’s report is that Oracle was selected at a higher rate than all other ERP vendors since we begin tracking this data in 2006. Although SAP is still short-listed at the highest rate (38% vs. 32% for Oracle), Oracle is selected 22% of the time (including eBusiness Suite, Peoplesoft, and JD Edwards), followed by SAP (19%), and Microsoft Dynamics (14%). While SAP is still considered the leading ERP vendor in terms of market share, might this data be a leading indicator for Oracle beginning to take market share from SAP?

Downlad the full 2011 ERP Report in our ERP Resource Center.