Panorama Consulting Group Releases 2010 ERP Report

Panorama Consulting Group, an independent ERP consulting firm, today released the 2010 ERP Report. The Report includes data on a wide variety of traditional and SaaS ERP software solutions.

While the average cost of an ERP implementation has decreased from $8.5 million in 2008 to $6.2 million in 2010, companies are realizing significantly less business benefits from the technology, according to the 2010 ERP Report issued today by Panorama Consulting Group, an independent ERP consulting firm in Denver. The report reveals that two out of five (41%) of participants failed to achieve at least half of the business benefits they expected. This figure is nearly double the finding in the 2008 ERP Report (21%).

“While it is promising to see the costs of ERP implementations decrease, we are concerned that it is at the expense of organizational change management and other key activities required to make enterprise software initiatives successful,” said Eric Kimberling, President of Panorama Consulting Group. “Companies that cut costs in these areas suffer lower levels of satisfaction, user buy-in, and return on investment.”

The 2010 Report provides further data on the importance of balancing a company’s high expectations of ERP systems with comprehensive organizational change management initiatives. While 69% of companies expect that a new system will improve business performance and 39% expect it will make employees’ jobs easier, more than half (53%) of respondents assess their company’s ability to deal with change as fairly poor or very poor. Nearly half (47%) indicate communication between management and employees is poor. In addition, more than two out of five (41%) of respondents have experienced significant changes to their business (e.g., a new CEO, new locations, mergers and acquisitions, and layoffs) during the implementation process.

“Turbulence in business operations is magnified by the stress of an ERP implementation,” said Kimberling. “Management must allocate proper time and realistic spending to ensure that employees are aware of the benefits of the process and ready to accept and work through the challenges of a system changeover. In addition to hiring third-party consultants to help with software selection and implementation, smart companies are looking for outside assistanceto manage the user-side processes that are so critical to project success.”

To offer further analysis of the study results, Kimberling will present the free webcast “Overview of Panorama’s 2010 ERP Report,” on Wednesday, February 17, 2010. Register for the webinar at http://www.panorama-consulting.com/erp-webinars/.

About the 2010 ERP Report
The 2010 ERP Report is based on research by Panorama Consulting Group via online polling and was supplemented with qualitative data gathered from focus group interviews with a sample of survey respondents. Information was collected from December 2005 to December 2009. The 1,600 participants represent global organizations that have implemented ERP within the last four years. The 2010 ERP Report can be accessed at: http://panorama-consulting.com/resource-center/2010-erp-report/.

About Panorama Consulting Group
Founded in 2005, Panorama Consulting Group is a niche consulting firm specializing in the enterprise resource planning (ERP) software market for mid-sized companies across the globe. Independent of affiliation, Panorama helps firms evaluate and select ERP software, manages the implementation of the software, and facilitates all related organizational changes to assure that each of its clients realize the full business benefits of their ERP implementation. More information can be found on its web site, www.panorama-consulting.com.

Fixing a Failed ERP Implementation

Most of my entries in this blog have focused on proactive measures that can be taken to ensure ERP or IT success. However, what happens if you're already in the middle of a failed ERP implementation?

The good news is that troubled IT implementations can be fixed, even if they are way over budget, behind schedule, and creating great organizational strain. In these types of instances, I often advise clients to reposition their projects as business improvement projects rather than IT projects.

At this point, you have forget about ERP. During or after a failed implementation, the software is likely creating huge difficulties. Just the mere mention of the letters E, R, and P probably cause employees to cringe, so it's important to focus less on ERP per se and more on how you are going to fix your business operations. With this change in mindset, you use ERP only as necessary to make business improvements to get your organization back on track.

Here is an approach I suggest to get a failed implementation moving in the right direction again:

1) Assess each area and department of the business that ERP is affecting. What are your key performance measures (order fill rate, time to close books, order accuracy, etc.)? Where are your biggest operational pain points? This will require you to reach out to key business stakeholders to get them involved, if they aren't already.

2) Develop two-tiers of potential solutions: stop-gap / "quick fix" solutions and long-term solutions. Determine the costs and time required to implement each of the options.

3) Prioritize your problem and solution combinations to arrive at the top 5-10 areas where you will realize the most immediate business impact at the lowest cost (low hanging fruit). Many of these solutions may or may not involve ERP functionality. It may require more training of the system, configuring the system to support new solutions. My experience has shown that business
processes and organizational change management are the most common problem areas in failed ERP projects, so many of your solutions may not even involve changing the system or implementing new functionality.

4) Begin implementing these low-hanging fruit solutions. The goal should be to build organizational momentum and confidence with these "quick wins."

5) Once you get some quick wins in place with the shorter-term solutions, begin prioritizing and implementing your long-term, more permanent fixes the same way you did with your short-term problems.

6) Begin implementing long-term solutions as time and resources allow.

By following this approach, you will better position your organization to make your troubled implementation a success and optimize the business benefits of ERP.