ERP & enterprise solutions put on hold
From the National Computing Centre, Manchester UK.
3rd November 2009
The current state of the economy is having a major impact on investment levels in Enterprise Resource Planning and enterprise systems, according to a new survey from the National Computing Centre. The research has been undertaken by NCC's Evaluation Centre, an interactive online service guiding IT buyers in the selection and use of business software, services and technology.
In nearly a quarter of organisations (24%) all future ERP and enterprise software projects are on hold and 41% are seeing projects being postponed. This compares to 29% of companies who are not experiencing any cutbacks and 6% who are increasing their investment in enterprise applications.
The implementation costs of ERP solutions are also problematic – they have greatly exceeded expectations in 18% of cases and have exceeded them in a further 53%.
But the real problem area is in the length of time required to complete the implementation, with 24% of companies saying this has greatly exceeded expectations and 53% that it has exceeded the anticipated timescales. Only 12% of respondents feel the implementation has been on time, with 6% saying that it has been shorter than expected.
The implementation times have had a knock-on effect on the time to cost-benefit of the solution, with 24% saying this has greatly exceeded expectations and 24% that it has exceeded the timescales. On the other hand, 24% have generally met cost-benefit time frames.
Steve Fox, Evaluation Centre Managing Director, commented: 'In these challenging times it is more imperative than ever that ERP vendors demonstrate an effective return on investment for their software and this includes making their systems easier to implement and manage.'
To achieve full value from their ERP or enterprise solutions, many companies have to customise their implementations. In 12% of cases this has required 'very significant' modifications and in a further 46% 'significant' alterations. In contrast 24% of organisations have made only minor changes and 6% none at all.
Where companies have made changes to the source code of their enterprise or ERP systems, then this has caused problems when upgrading to newer versions of the software. Major problems have been experienced in 14% of cases and significant difficulties in 57%.
As an alternative to on-premises solutions, over half the respondents (58%) may consider a 'Software as a Service' (SaaS) model in the future for ERP or enterprise solutions. Currently, 6% have adopted SaaS and a further 6% are evaluating this option.
Despite the need for a convincing business case to invest in enterprise solutions, only 29% of organisations formally measure the return on investment (ROI) from their ERP applications.
In addition, only 12% of companies always put in place a range of metrics to measure the ongoing business performance of their enterprise solutions. A further 47% sometimes do, while 35% do not bother with performance measurement at all. The key performance criteria used are customer service (90%), financial metrics (80%) and productivity improvements (50%).
Overall, less than half (47%) of companies feel that their ERP or enterprise solutions are meeting the majority of their requirements. A further 41% say they are only partially meeting their needs and 12% that they are only meeting a few requirements.
Over 100 companies were interviewed for this year's survey on ERP and enterprise solutions. A substantial proportion of respondents (30%) are from the manufacturing sector, which was the original base for ERP solutions. But many other sectors use enterprise solutions including the public sector (24%), retail (12%), distribution & logistics (8%), IT & telecoms (8%) and financial services (6%).
The respondents represent a spread of different-sized companies with 12% having in excess of £5 billion turnover, 6% in the £1 billion to £5 billion bracket and 24% in the £500 million to £1 billion range. In the mid-range 28% have a turnover between £100 million and £500 million and 18% £50 million to £100 million. At the smaller end 8% have a turnover between £10 million and £50 million and 4% £5 million to £10 million.
The survey is available from www.evaluationcentre.com/erp_software/home.go
NOTE TO EDITORS
About The National Computing Centre (NCC)
The National Computing Centre (NCC) helps IT decision makers deliver effective solutions to business problems by bringing together users, experts and vendors to share experiences and develop best practices. We are a non-profit distributing organisation.
About the Evaluation Centre
The Evaluation Centre (www.evaluationcentre.com) is an interactive service for end users and consultants to assist them in the procurement process for software, services and technology.
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