ERP systems must be more agile

New survey shows ERP applications need to become more responsive to meet changing business requirements.

The majority of companies feel that their ERP or enterprise solutions need to become more agile and responsive, according to the latest survey of this market from PMP Research commissioned by the Evaluation Centre.

Of those polled, 82%, require greater flexibility from their software to respond quickly and effectively to changes in business requirements.

Many companies admit they have failed to make full use of their current ERP applications. Nearly two-thirds concede that either some of the software (34%) or a large element of it (30%) is not used at all. Of the remaining companies, only 3% say their solution is used to its full extent while 33% reckon they make extensive use of their ERP functionality.

The implementation costs of ERP solutions are problematic - they exceeded expectations in 30% of cases and greatly exceeded them in a further 6%.

The real problem area is in the length of time to complete the implementation, with 36% of companies saying this has exceeded expectations and 12% that it has greatly exceeded the anticipated timescales. Only 25% of respondents feel the implementation has been on time, with 12% saying that it has been shorter than expected.

The implementation times have had a knock-on effect on the time to cost-benefit of the solution, with 24% saying this has exceeded expectations and 6% that it has greatly exceeded the timescales. On the other hand, 36% have generally met cost-benefit timescales and 8% say they have been shorter than expected.

Despite this, most of the organisations surveyed indicate they intend to go on making investments in ERP applications - 25% are looking to buy new ERP packages over the next 12 months while 46% are planning enhancements or upgrades to existing ERP implementations.

There is still a great deal of historical baggage associated with ERP implementations, and there is a long way to go before they are fully aligned and responsive to an organisation's business processes.

This is highlighted by the fact that few companies find modifying their systems a straightforward process. Only 3% describe this as 'very easy' and 12% as 'easy', compared to 10% who describe it as 'very difficult', 24% as 'difficult' and the largest proportion, 43%, who find it 'moderately difficult'.

When implementing enterprise applications, 54% of companies will adapt the software to match their core business processes against 43% who will adapt the process to match the software functionality. For non-core business processes, only 33% of organisations modify the software to match the process against 62% who will alter the process.

Despite the difficulty many face in prising money out of corporate coffers without a convincing business case, organisations are split over the question of formally measuring the return on investment (ROI) from ERP applications. While 44% do so, the larger proportion (55%) do not.

In addition, only 14% of companies always put in place a range of metrics to measure the ongoing business performance of their enterprise solutions. A further 45% sometimes do, while 36% do not bother with any performance measurement at all.

The key performance criteria used are financial metrics (43%), internal productivity improvements (34%) and customer service (28%).

Survey statistics:

Over 100 companies were interviewed for this year's survey on ERP and enterprise solutions. A substantial proportion (25%) were from the manufacturing sector, which was the original base for ERP solutions along with the engineering industry (11%), automotive (6%) and chemical & pharmaceutical (6%). But many other sectors now use integrated solutions, including public sector (15%), distribution & logistics (6%), energy & utilities (5%) and IT & telecoms (4%).

The respondents represent a spread of different sized companies with 12% having in excess of 5 billion turnover, 8% in the 1 billion to 5 billion bracket and 21% in the 500 million to 1 billion range. In the mid-range 20% are between 100 million and 500 million and 13% in the 50 million to 100 million range. At the smaller end 13% have a turnover between 10 million and 50 million and 13% 5 million to 10million.

About PMP Research

PMP Research,  founded in 1990, provides bespoke research, analysis and consultancy typically within the IT, telecoms and professional services markets.

About the Evaluation Centre

The Evaluation Centre - an interactive service for end users and consultants to assist them in the procurement process for software, services and technology.