ERP is short for enterprise resource planning, a business management software solution that attempts to integrate all departments and functions across a company onto a single computer system that can serve all those different departments' particular needs. Business facets integrated include planning, manufacturing, sales, and marketing, and as ERP technology has evolved, business activities like inventory control, order tracking, customer service, finance, and human resources also came under the purview of ERP.
Fundamentally, the concept behind an Enterprise Resource Planning Solution is to take various departments and combine their unique systems so that the business may be managed as a whole. Each of those departments typically has its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other. In addition, Solutions ERP implements best practices for every operational process across an entire company.
Information collected and processed by these separate departments is integrated into one system, making seamless communications between departments, suppliers, customers, and management possible. Building a single software program that serves the needs of people in finance as well as it does the people in human resources and in the warehouse is a tall order. Still, an integrated approach can have a tremendous payback. Solutions ERP are designed to deliver tangible business benefits: cost reduction, productivity improvement, and increased bottom-line profits. The goal, of course, is for a company to derive the most benefit from the solution while minimizing risks and costs, but the only way this can happen is if the company finds the right ERP software solution.
One of the greatest benefits of incorporating solutions ERP as a key business strategy is the abolition of redundancy. Separate departments can hereby share the same important information in a standardized way. As a result, productivity is increased and costs are reduced by implementing ERP solutions. In fact, by combining all aspects of the business into one system, ERP can cut down costs, at the same time as efficiency and quality of work are improved.
There are five major benefits of Solutions ERP. First of all is the on-line or real time information throughout all the functional areas of an organization made available by ERP. Its second benefit is the data standardization and accuracy realized across the business. Third are the best-practices or optimized solutions that are included in the applications. Fourth are the streamlined efficiencies Solutions ERP creates efficiencies that a business would not otherwise have. And, fifth is the improved analysis and reporting an ERP Solution can bring to a company that can be then used for long-term planning.
Prior to the advent of Solutions ERP, companies ran a different software program for practically every department. As a result, every department used its own set of data resulting in duplicated efforts, redundancy, errors, and overall inefficiencies throughout. Companies were wasting resources and, more than that, they often appeared incompetent to customers. For example, the following situation was not uncommon: continued on Part II
Solutions ERP, Part III Micro Group #2
than on-premise ERP implementations, but deliver less business value; and, companies do not effectively manage the organizational changes of ERP; and, most ERP implementations under-deliver business value.
Panorama Consulting's data revealed that fifty-seven percent of implementations take more time than what the vendor's contract had allowed for. One reason for this discrepancy could be because the contract did not specify all the key project activities in the business' implementation planning processes. The average implementation lasted eighteen and a half months.
As far as costs are concerned, more than half (54%) of all Solutions ERP implementations go over budget. One reason for this overrun in costs could be because businesses often fail to budget for implementation costs unless they are directly attributable to the vendors. These are the costs associated with project management, organizational change management, hardware upgrades, training, etc.
The study also concludes that SaaS deployments can be accomplished much faster than on-premise implementations; the average for these Solutions is eleven months. Still, it is too early to consider SaaS a panacea. Statistics show that only twenty-three percent of clients are satisfied with the business advantages that result from SaaS implementations. This is in direct contrast to clients of traditional Solutions; forty-two percent of them are satisfied with the resulting benefits. Accompanying this situation is the fact that SaaS implementations are significantly more likely to exceed budget. Seventy percent of those go over budget versus fifty-nine percent for traditional systems.
Organizational transformation is a big reason why companies take on ERP projects, and yet Panorama Consulting found that it is very difficult for most businesses to manage the business transformation aspects of ERP. Over fifty-three percent of companies implementing ERP Solution judge their ability to deal with change as poor. One of the reasons for this is that employees using a new ERP system have a strong organizational resistance to change making the learning curve steep.
A significant number of ERP implementations did not deliver the anticipated benefits, according to this 2010 study. Over forty percent of companies surveyed reported experiencing only half of the business benefits they had at first expected. To make things worse, one-third of the businesses that participated in the survey mentioned experiencing major operational disruptions after implementation go-live, such as the inability to ship products or to close the books.
As far as satisfaction experienced by the top echelon executives of a business, the difference between SaaS and traditional Solutions is not that high. Fifty-two percent of executives that implement SaaS (hosted) ERP Solutions reported satisfaction with the system while fifty percent of executives that implemented on-premise, traditional Solutions ERP were satisfied with the project.
Overall, the findings reported here are consistent with research performed by other firms on these same topics. Panorama Consulting's findings are valid and worthwhile. Nevertheless, they would be viewed with more credibility if the company engaged an independent research organization to conduct similar studies in the future. In addition to adding credibility, a professional research firm would also guarantee consistency of the study methodology year over year. This would increase the value of the research by adding confidence to both the conclusions and the trend information over time.
Fundamentally, the concept behind an Enterprise Resource Planning Solution is to take various departments and combine their unique systems so that the business may be managed as a whole. Each of those departments typically has its own computer system optimized for the particular ways that the department does its work. But ERP combines them all together into a single, integrated software program that runs off a single database so that the various departments can more easily share information and communicate with each other. In addition, Solutions ERP implements best practices for every operational process across an entire company.
Information collected and processed by these separate departments is integrated into one system, making seamless communications between departments, suppliers, customers, and management possible. Building a single software program that serves the needs of people in finance as well as it does the people in human resources and in the warehouse is a tall order. Still, an integrated approach can have a tremendous payback. Solutions ERP are designed to deliver tangible business benefits: cost reduction, productivity improvement, and increased bottom-line profits. The goal, of course, is for a company to derive the most benefit from the solution while minimizing risks and costs, but the only way this can happen is if the company finds the right ERP software solution.
One of the greatest benefits of incorporating solutions ERP as a key business strategy is the abolition of redundancy. Separate departments can hereby share the same important information in a standardized way. As a result, productivity is increased and costs are reduced by implementing ERP solutions. In fact, by combining all aspects of the business into one system, ERP can cut down costs, at the same time as efficiency and quality of work are improved.
There are five major benefits of Solutions ERP. First of all is the on-line or real time information throughout all the functional areas of an organization made available by ERP. Its second benefit is the data standardization and accuracy realized across the business. Third are the best-practices or optimized solutions that are included in the applications. Fourth are the streamlined efficiencies Solutions ERP creates efficiencies that a business would not otherwise have. And, fifth is the improved analysis and reporting an ERP Solution can bring to a company that can be then used for long-term planning.
Prior to the advent of Solutions ERP, companies ran a different software program for practically every department. As a result, every department used its own set of data resulting in duplicated efforts, redundancy, errors, and overall inefficiencies throughout. Companies were wasting resources and, more than that, they often appeared incompetent to customers. For example, the following situation was not uncommon: continued on Part II
Solutions ERP, Part III Micro Group #2
than on-premise ERP implementations, but deliver less business value; and, companies do not effectively manage the organizational changes of ERP; and, most ERP implementations under-deliver business value.
Panorama Consulting's data revealed that fifty-seven percent of implementations take more time than what the vendor's contract had allowed for. One reason for this discrepancy could be because the contract did not specify all the key project activities in the business' implementation planning processes. The average implementation lasted eighteen and a half months.
As far as costs are concerned, more than half (54%) of all Solutions ERP implementations go over budget. One reason for this overrun in costs could be because businesses often fail to budget for implementation costs unless they are directly attributable to the vendors. These are the costs associated with project management, organizational change management, hardware upgrades, training, etc.
The study also concludes that SaaS deployments can be accomplished much faster than on-premise implementations; the average for these Solutions is eleven months. Still, it is too early to consider SaaS a panacea. Statistics show that only twenty-three percent of clients are satisfied with the business advantages that result from SaaS implementations. This is in direct contrast to clients of traditional Solutions; forty-two percent of them are satisfied with the resulting benefits. Accompanying this situation is the fact that SaaS implementations are significantly more likely to exceed budget. Seventy percent of those go over budget versus fifty-nine percent for traditional systems.
Organizational transformation is a big reason why companies take on ERP projects, and yet Panorama Consulting found that it is very difficult for most businesses to manage the business transformation aspects of ERP. Over fifty-three percent of companies implementing ERP Solution judge their ability to deal with change as poor. One of the reasons for this is that employees using a new ERP system have a strong organizational resistance to change making the learning curve steep.
A significant number of ERP implementations did not deliver the anticipated benefits, according to this 2010 study. Over forty percent of companies surveyed reported experiencing only half of the business benefits they had at first expected. To make things worse, one-third of the businesses that participated in the survey mentioned experiencing major operational disruptions after implementation go-live, such as the inability to ship products or to close the books.
As far as satisfaction experienced by the top echelon executives of a business, the difference between SaaS and traditional Solutions is not that high. Fifty-two percent of executives that implement SaaS (hosted) ERP Solutions reported satisfaction with the system while fifty percent of executives that implemented on-premise, traditional Solutions ERP were satisfied with the project.
Overall, the findings reported here are consistent with research performed by other firms on these same topics. Panorama Consulting's findings are valid and worthwhile. Nevertheless, they would be viewed with more credibility if the company engaged an independent research organization to conduct similar studies in the future. In addition to adding credibility, a professional research firm would also guarantee consistency of the study methodology year over year. This would increase the value of the research by adding confidence to both the conclusions and the trend information over time.