ERP project overruns ‘distressingly common’: Survey

BOSTON – It is “distressingly common” to see ERP (enterprise-resource-planning) projects involving Oracle Corp., SAP AG and Microsoft Dynamics software end up taking longer than customers anticipated, according to a new survey.
The survey released this week by Panorama Consulting, a Denver-area company that provides ERP implementation and software selection services, is based on 2,000 responses from 61 countries, which were collected between February 2006 and May of this year.

About 40 per cent were in North America, company president Eric Kimberling said during a webinar on Thursday. Some 61 per cent of respondents said their projects went over schedule, while 28 per cent finished on time and 11 per cent completed the project sooner than expected, according to the report.

The actual ERP software being used is largely not to blame for problem projects, according to the survey data. Just 4 per cent of respondents cited “vendor functionality issues” as a reason for project delays, although “technical issues” drew 14 per cent.
A change in the project’s initial scope was the top reason for slowdowns, named by 29 per cent of survey respondents. “Organizational issues” came next with 20 per cent, followed by “data issues” and “resource constraints” with 17 per cent apiece.

A big focus of ERP projects is their promise of a return on a company’s investment in the software. But Panorama’s survey found that nearly a third of respondents had yet to realize any financial rewards from their projects, and another 30 per cent said it took at least three years to start seeing any “payback.”
Dynamics led the pack in terms of overall implementation times, averaging 13 months to SAP’s 17 months and Oracle’s 18 months, according to the survey.

These results should be viewed with some caution, since Dynamics tends to be implemented by smaller companies with less complex environments, Kimberling said during the webinar.
SAP and Dynamics projects ran on average two months past schedule, while Oracle implementations averaged four-month overruns, according to the survey.
Overall, there’s some cause for concern regarding the type of benefits respondents said they’ve gained from their projects, according to the report. Sixty per cent cited “availability of information” as a plus, but only 7 per cent named “decreased labor costs.”
In addition, there weren’t a meaningful number of responses citing results such as “reduced IT costs” and “improved interaction with customers,” according to the report. “The very lack of their selection points to a distressingly small percentage of potential ERP system benefits being realized.”
Panorama bills itself as a completely independent consulting firm with no financial ties to any vendor.
Sometimes, ERP projects go so poorly that customers end up suing their vendor, as well as vice versa.

Oracle, for one, is currently embroiled in a high-profile dispute with Montclair State University. Epicor was also the target of a number of recent actions.

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