Ten ERP failure statistics that highlight the importance of getting it right first time round
When it comes to ERP, resources-based systems tend to behave like ‘peculiar animals’ unlike any other business technology. On the one hand, they offer all kinds of advantages, particularly given today’s global, mobility-adept marketplace. But on the other hand, these highly-expensive, complex and error prone technologies tend to exhibit failure with unfortunate regularity.
Why is that? And what statistics represent the mountain just under the tip of the iceberg. Well, here are ten metrics that help tell the tale.*
80% of customers are unhappy with their current ERP.
The leading causal elements relating to this disaffection include; weak business cases, malformed requirements, poor overall strategic/tactical planning, erroneous budgets, weak training programs, and general difficulties regarding ERP platforms.
60% of ERP projects fail.
This statistic includes elements associated with many of the aforementioned metric; in addition to generally poor management discipline, whenever faced with one or more extended implementation evolutions.
90% fail to deliver any measurable ROI.
This metric primarily accrues to the direct failure of effective expectation management.
95% of failure companies dedicate less than 10% of total budget to education/training/change mgt.
In concert with metric #1, weak budgeting from the outset creates a general lack of confidence in training programs. Short-cutting a training regime ensures problems at minimum and overall disaster at worst.
57% of ERP systems take longer than expected.
‘Time is money’ as the old saying goes, and if a project schedule extends beyond a expected milestone, untoward enterprise ERP budgets tend to skew toward loss rather than profit. Over time, if the situation is not corrected quickly, managers tend to cut their losses, leaving a system half-launched.
54% of ERP systems exceed projected budget targets.
Note that metric #5 usually represents ‘the cause’ of and ERP failure, while metric #6 results the ultimate effect.
32% of ERP executives are unsatisfied.
Executives live and die on the basis of ‘expectation management.’ Consequently, as soon as a costly project slips, and the enterprise begins to spend operational monies that ‘should’ have gone elsewhere, the result becomes plain.
39% of ERP workers are unsatisfied.
More times than not, this metrical result comes from poor training plans, weak trainers, and ineffective management, thereby creating a general lack in overall confidence. This impact cascades forward to involve nearly all go-forward operations.
40% of ERP systems experience at-large operational disruption.
New and improved is fine as long as the enterprise’s bread and butter is secure. However, ERP platforms typically involve nearly process and policy in an enterprise. Consequently, if the company’s operating underpinnings are threatened, expanded disruption occurs throughout.
41% of enterprises fail to achieve more than half of the expected benefits.
This metric illustrates the sum of all previous metrics. In simple terms, if a highly-pervasive technology, disrupts your revenue stream, and if that system is validated on certain ‘benefits’ (usually revenue-based), it is likely that no one is going to be happy about anything.
*Aggregated statistics provided by Ziff Davis, as excerpted from 2007 report compiled by Yan-Goh Ng, Ph.D.
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