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ERP report shows implementations stretch time and budgets thin

Users say their ERP projects are straying far from schedules and budgets, according to a new ERP report.

ERP implementation projects are chronically running over schedule and costing more to complete, resulting in less-than-stellar customer satisfaction, according to Panorama Consulting Solutions' 2014 ERP Report. If the numbers are any indication, ERP vendors have a lot of work to do in supporting product deployments.

The report surveyed close to 200 ERP users, 27% of which were in the manufacturing sector.

According to Panorama, 54% of ERP projects went over budget, while 72% took longer than planned. In addition to those bleak statistics, 66% of the users surveyed said they received less than half the benefits they expected to reap from their ERP implementations.

These numbers reflect what Panorama considers a long-term trend with ERP projects. "Over the years, we've found the same story: most projects still take longer than expected, cost more than expected, and fail to deliver the expected business benefits," said Eric Kimberling, founder and managing partner of Panorama. "That [has] been consistent."

Oddly enough, while only 63% of respondents consider their ERP projects to be successful, 76% said they would choose the same ERP software again, according to the report. This may signal that users are willing to put up with schedule and cost overages if the end result is an ERP system that suits their needs.

Organizational change management becomes big-ticket issue

One finding that stood out to Kimberling was a change in what today's CIOs and IT managers identified as the most difficult part of their ERP implementations. For the first time since Panorama started the survey in 2006, organizational change management and training took the top spot on the list of reported implementation challenges.

The majority of respondents that reported projects that went over time and budget also named "organizational issues" as the main culprit for the setbacks. This may be because more than half of those respondents are spending only 0% to 25% of their budgets on organizational change management, the report said.

Cloud ERP slows while mobile grows

Another notable survey result was that Software as a Service (SaaS) and cloud ERP adoption rates have leveled off. In previous years' surveys, those technologies had shown a steady rate of customer growth, but it seems to have come to a halt. While 86% of respondents have implemented an on-premises ERP system, only 15% are using cloud or SaaS.

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The top reason given for not implementing cloud ERP -- according to 45% of respondents -- was a "lack of knowledge about cloud offerings." However, 30% were interested in cloud, but feared security breaches.

"We dug into this and looked at the concerns that IT managers and CIOs have around SaaS and [the] cloud, and there's a problem with perception," Kimberling explained. "There's a lot of concern about security issues and the control that they don't have [with cloud]. For SaaS vendors to find higher adoption rates, they're going to have to overcome those perceptions." He noted that in reality, most SaaS and cloud providers will offer more security than in-house, employee-built systems.

Oddly enough, Panorama hasn't seen the same level of restraint in adoption of mobile devices and applications by businesses. Management (18%) and field employees (15%) have the most access to mobility in the workplace, the report found.

"When it comes to security, [mobile] is more where you should be concerned," Kimberling said. "It's ironic that the concerns are flip-flopped here." The prevalence of mobile devices for personal use may be the reasoning behind this lack of fretting about mobile security, he added, as the average person is comfortable with transmitting data over smartphones and tablets.

Follow SearchManufacturingERP on Twitter @ManufacturingTT.

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