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02.24.10 Cost Of ERP Implementation Decreases  By Mike Sachoff Panorama Consulting Group, an independent ERP consulting firm, has released its 2010 ERP Report, which includes data on a wide variety of traditional and SaaS ERP software solutions. While the average cost of ERP implementation has decreased from $8.5 million in 2008 to $6.2 million in 2010, companies are realizing less business benefits from the technology. The report found that two out of five (41%) of participants failed to achieve at least half of the business benefits they expected. This 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 report notes the importance of balancing a company's high expectations of ERP systems with comprehensive organizational change manage 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 assistance to manage the user-side processes that are so critical to project success." About the Author: Mike is a staff writer for WebProNews. Visit WebProNews for the latest ebusiness news. |
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