How long should ERP implementations take? How much do they cost? How long does it take to recoup these costs? How long does it take to realize the benefits of the new system? These are the magic questions asked by thousands of companies around the globe.
With so much money at stake — after all, some ERP implementations can cost millions of dollars — the timing of such a technology project is critical.
The answer, as you might expect, is that it depends on many different factors.
The length of ERP implementations depends on the project scope, what resources are available, which ERP solution is selected, and the types of modules that need to be implemented.
The main factor is the type of software selected. SAP, Oracle and Microsoft Dynamics — the three largest providers of ERP software — offer a wide variety of features and functions for a number of verticals.
Fortunately, there’s a way to compare these “big three,” and in more ways than just the timing of implementation.
Panorama Consulting Solutions creates an annual report called “Clash of the Titans.” It answers questions not only about how long these types of implementations take, but also how much they cost, how long it takes to recoup those costs and how long it takes to realize the benefits of this effort.
Here are some key success rate statistics from the report.
- How long does it take? According to the report, 62 percent of those surveyed said that their implementations took longer than originally planned. A little over a third of those surveyed finished their implementation on time. Only 3 percent completed their implementation ahead of schedule.
The average length of implementation varied by provider: Microsoft Dynamics’ average was 12.5 months, SAP’s average implementation was 18.5 months and Oracle’s was 22.5 months.
The biggest reason for delayed timelines, based on the report, is expanding the initial scope of the project. About a third of companies that were delayed cited this as the reason.
“Regardless of which software package is chosen, a company that does not devote the time and effort to ensuring its staff is aligned and trained … is apt to see an ERP project stretch past the projected timeframe,” the report says.
- How much does it cost?According to the report, the most expensive implementations are SAP, with an average cost of $2.55 million. Oracle follows at $2.25 million and Microsoft Dynamics is least expensive at $1.8 million. The main source of additional costs is the expansion of the project scope, with the addition of new modules or customizations.
- How long does it take to recoup the initial investment?The report found that it takes businesses an average of 1.7 years to recoup their costs in 2013. This is down from 2.4 years in 2012. This is counterbalanced with the growing number of businesses that show no recouped costs, up 7 percent to 38 percent in 2013.
- When will all the benefits be realized?The report found a variety of results when it looked at whether companies realized their expected benefits from the ERP implementation. While improved interaction with customers grew from 0 percent to 8 percent from 2012 to 2013, all other metrics declined.
According to the report, availability of information went from 60 percent in 2012 to 42 percent in 2013. Increased interaction across business stayed stable at 13 percent; while decreased labor costs went from 7 percent in 2012 to 0 percent in 2013. Improved lead time fell to 4 percent in 2013 from 7 percent in 2012.
An on-premises ERP implementation will be one of the most expensive, important and time-consuming technology projects that your company will probably undertake. Take time to find the right vendor to meet your needs will increase your chances of having a successful, on-time and on-budget implementation.
By Whitney Vickrey, from: http://www.gcecloud.com/blog/cloud-saas-accounting-trends-blog/erp-implementation-success-factors-takeaways-from-clash-of-the-titans?utm_source=GCE+Master+List&utm_campaign=641f43ca79-2013-12-17_Email_Newsletter&utm_medium=email&utm_term=0_305493c0cf-641f43ca79-87841281