ERP Investment Strong Despite Poor Success

October, 2016

Companies are continuing to invest in ERP systems at a strong rate, despite persistent disappointment with cost overruns and low return on investment associated with ERP implementations.

Figure 1 from our study, ERP Adoption Trends and Customer Experience, shows that ERP adoption is high. In fact, the adoption rate is the highest of any technology in the survey, while the investment rate is moderate. The high adoption rate is not surprising as ERP is a mature technology. The solid investment rate, however, shows that these systems are continuing to expand their footprint in the enterprise. Enterprise Resource Planning vendors continue to expand their offerings, and cloud ERP is allowing for some companies that could otherwise have difficulty investing in ERP to take advantage of a full-scale enterprise ERP.

ERP fig 1 - ERP Investment Strong Despite Poor Success

The ERP profile ratings are based on comparisons with 11 other technologies in our Technology Trends 2016 study. The comparisons are on a relative scale, and each technology is categorized as having low, moderate, or high rates relative to other technologies in the study.

The ERP customer experience is decidedly less positive than the adoption rate. We classify ERP as offering very low ROI and TCO success rates. The percentage of organizations at least breaking even on their investments within a two-year period is within the bottom one-third of the range when compared with other technologies in the study. The low TCO success rating means a relatively high percentage of organizations are underestimating the total cost of implementing and maintaining these complex systems.

Enterprise resource planning systems have become the platform for integration of data, information, and applications in the well-managed enterprise today. While not yet ubiquitous, more than two-thirds of all organizations have ERP systems. Moreover, ERP is the single most important area of investment across most sectors, as it is the transactional backbone for many organizations’ systems of record. While risks remain high, rewards are rising as ERP becomes a necessary foundation for enabling innovations such as bringing analytics and mobility to enterprise data. It is an area of ongoing investment and focus for every organization that intends to remain competitive.

The full study helps IT executives understand how aggressively their peers are investing in ERP and the risks and rewards presented by those investments. We report adoption and investment rates by sector and organization size. We also measure customer experience in terms of the success rates for return on investment (ROI) and total cost of ownership (TCO). Finally, we assess what functions organizations are using ERP systems for today. We wrap up with our recommendations for improving the ROI of ERP.

This Research Byte is a brief overview of our management advisory on this subject, ERP Adoption Trends and Customer Experience. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).