ERP software project woes continue to mount, survey says

Sixty percent of respondents said they'd received less than half of the expected benefits from their projects

ERP (enterprise resource planning) software project schedule overruns got even worse in 2012, according to newly released data from Panorama Consulting.

Some 172 respondents replied to Panorama's online survey between September and January. Last year, the average cost of an ERP project among those surveyed was US$7.1 million and would take 17.8 months, with 61 percent reporting the implementation would take longer than planned, compared to 54 percent in a survey conducted in 2011 by Panorama, which provides ERP selection and implementation services.

However, the percentage of respondents reporting cost overruns fell to 53 percent, compared to 56 percent in 2011 and 74 percent in 2010.

But 60 percent of survey-takers said they had received 50 percent or less of the expected benefits of their project in 2012, up from 48 percent who said so in 2011.

"While costs, durations and benefits received fluctuate year to year due to economic conditions, implementation trends and data set make-up, the facts remain: an organization is more likely to surpass its cost and timeline expectations and receive less than half of the benefits it expects than it is not," Panorama wrote in the report.

Some 40 percent of respondents in the most recent survey had finished their ERP project, while another 36 percent were still implementing it and 17 percent remained in the planning phase, according to the report.

Nearly half of Panorama's respondents stated their project had between one and 100 named users. Some 16 percent had more than 1,000 named users.

Fifty-three percent reported annual revenue of $50 million or less, but 21 percent had at least $1 billion in annual revenue.

The survey turned up some positive albeit somewhat befuddling results as well. While more than 80 percent of respondents said they were satisfied with their software, only 60 percent termed their project a success, Panorama said. "Perhaps even more interesting is that nearly one-third of respondents (30-percent) are 'neutral' or 'don't know' if their project was a success, which points to a lack of a business case, lack of post-implementation auditing and/or a lack of communication about project results from leadership," the report adds.

One in 10 respondents, however, classified their project as a failure.

That last data point is reflected in the many ERP project-related lawsuits that have cropped up in recent years, with both software vendors and systems integrators finding themselves on the legal firing line.

Public-sector IT project failures have particularly drawn headlines, in part because of their propensity to be massive in size.

In the past few weeks alone, California announced the cancellation of two major IT projects, one related to state employee payroll and another tied to modernization at the Department of Motor Vehicles.

U.S. lawmakers, angered by a rising tide of wasteful government IT spending, have called for reforms in recent months, although it's not clear how much momentum such efforts will gain.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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