SaaS ERP adoption grows, cost overruns persist according to 2015 Panorama ERP Report

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For the last five years, Panorama Consulting Solutions of Denver has published an ERP Report focused on ERP software selection, implementation, and satisfaction trends across industries, organization sizes, and geographic locations. The report summarizes Panorama’s research into the experiences of ERP customers with regard to enterprise software, vendors, consultants, and overall implementations.

The average cost of ERP implementations has fluctuated since 2010, according to the firm’s data. This year’s survey found an average implementation cost of respondents coming in at  $4.5 million, lower than the $5.5 million in 2010 but higher than last year’s average $2.8 million. Meanwhile, cost overruns have dropped from 74 to 55 percent of total implementation cost.

“Unrealistic timelines” was pinpointed as the primary reason for the schedule overruns, while “expanded scope” played the biggest role in budget overruns.

Among the various reasons for implementing ERP, the most common reason that organizations reported this year was to replace their old ERP or legacy system (17 percent). By comparison, the most common reason last year was to improve business performance (15 percent). Overall, organizations anticipate significant benefits from their ERP systems – they expect to improve business performance, integrate systems across multiple locations, and position their organization for growth.

Panorama ERP Report 2015 - Type of ERP Software

Eric Kimberling, Panorama’s president, said in an interview that software-as-a-service (SaaS) adoption among ERP users was one report metric that stood out this year.

“Basically, SaaS adoption was up exponentially this year over last year – from 4 percent to 33 percent,” Kimberling says. “That’s a pretty big jump.” Driving much of that growth is a customer that has “finally taking advantage of all of the deployment options in the marketplace,” he points out. “That speaks to some of Microsoft’s strategies behind the cloud and the way it’s providing different deployment options for Dynamics customers.”

Once they’ve short-listed their ERP options, about 13 percent of users select Microsoft Dynamics, according to the 2015 Panorama report. “That percentage has remained relatively steady,” says Kimberling, who points out that SAP may have gained some ground in 2015 at the expense of Oracle in terms of ERP selection and adoption.

Another key change that emerged in this year’s ERP report, according to Kimberling, is an increase in the level of customizations (i.e., just how much users are customizing their chosen software applications). Calling Dynamics AX “a very flexible solution,” he says the system’s backbone enables easier customization – a move that about 93 percent of firms are making during the implementation process. “That’s up from about 90 percent last year, so customization is definitely on the rise,” says Kimberling. “That somewhat points to the strength in Microsoft Dynamics, which is better than some of its competitors at providing a tool set for customization.”