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Majority of ERP software projects still over time and budget, survey finds

Organizational issues are cited as the top culprit for late projects, according to Panorama Consulting's new report

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Cost and schedule overruns are continuing to plague the majority of ERP (enterprise resource planning) software projects, according to a new study from Panorama Consulting.

The company, which provides ERP software selection and project advisory services, surveyed 192 companies with annual revenue ranging from below US$25 million to more than $2 billion between January 2013 and February of this year.

Fifty-four percent of respondents said their projects went over budget, compared to 53 percent in a survey Panorama conducted last year. The average cost of projects fell sharply from $7.1 million in 2012 to $2.8 million in the current study, but the percentage of respondents saying their implementation went behind schedule jumped to 72 percent from 61 percent.

Moreover, 66 percent said they had failed to realize more than half of the expected benefits from their project, up from 60 percent in the earlier study. Only 9 percent said they had received 81 percent or more of the anticipated benefits.

The majority of respondents who said projects ran longer than expected cited "organizational issues" as the primary reason, according to Panorama. This was a change from the last survey, in which "scope increase," or an expansion of the project's original size, took the most blame.

Twenty-five percent of respondents in the new study said their projects ran on time, while another 36 percent said the delays amounted to 25 percent or less of the original timeline. But 15 percent reported that their implementations ran 76 percent or longer behind schedule.

It's crucial that companies embarking on ERP projects get healthy cooperation or "buy-in" from employees if they are to keep the implementation running on time, Panorama said.

"Now, more than ever, our findings are emphasizing the importance of organizational change and business process management and their impact on implementation duration," the report states.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com



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