UK companies put ERP on hold

ERP systems are difficult and time-consuming to implement, and more than 60 percent of UK companies are postponing them temporarily or indefinitely, according to a new study
Written by Matthew Broersma, Contributor

The economic downturn has derailed ERP projects at a majority of British companies, according to a study by the National Computing Centre.

In addition, the difficulty and expense of getting ERP (enterprise resource planning) systems up and running has contributed to a willingness among companies to slash budgets, said Steve Fox, managing director of the NCC's Evaluation Centre, which carried out the survey.

Nearly one-quarter of the 100 businesses surveyed had put all future ERP spending on hold indefinitely, according to the report, which was released on Tuesday. Another 41 percent had postponed such software projects to a later date.

Only 29 percent were not experiencing any cutbacks in the area, while six percent were increasing investment, said the NCC, a not-for-profit organisation that provides advice to IT decision makers.

Delays in implementation were highlighted as a problem by the NCC. Its study found that the length of time needed to get ERP systems working exceeded what companies had anticipated in more than half of cases and, in another quarter of cases, greatly exceeded expectations.

Only 12 percent of respondents said their implementation had come in on time, and six percent said it had taken less time than planned.

The delays caused systems to take longer to begin showing a return on investment, the NCC said. The time to cost-benefit was worse than expected in 24 percent of cases, and greatly worse than expected in another 24 percent of cases. However, another 24 percent said that the time to cost-benefit met their expectations.

"In these challenging times, it is more imperative than ever that ERP vendors demonstrate an effective return on investment for their software, and this includes making their systems easier to implement and manage," NCC's Fox said in a statement.

In August, Oracle released a tool called the VM Template Builder specifically aimed at reducing the time and complexity of enterprise software rollouts, including ERP and CRM systems.

Overspending was another problem identified in the NCC report, with respondents saying their ERP implementations had gone over budget in 53 percent of cases.

More than half — 58 percent — said they might consider a software-as-a-service (SaaS) option for ERP as a way of avoiding future implementation problems. Six percent have currently adopted SaaS for ERP and another six percent are evaluating it.

Overall, less than half of businesses, or 47 percent, said their ERP systems are meeting the majority of their requirements.

In July, BA cancelled the deployment of an integrated ERP system that would have been one of the largest projects of its kind in Europe.

The NCC surveyed more than 100 companies from the manufacturing, public sector, retail, distribution and logistics, IT and telecoms and financial services sectors.

A separate report on SAP upgrades released last week also shed light on how ERP is faring in British companies. On 2 November, the SAP UK and Ireland User Group published research finding that most organisations, or 70 percent, felt the cost of upgrading their software was too high. SAP is one of the largest providers of ERP systems.

The survey of 100 SAP user organisations in the UK and Ireland found that more than half were nevertheless planning upgrades over the next 12 months.

Time issues were again a key problem. Almost all — 93 percent — of those surveyed said they were either concerned or very concerned about the length of time it would take to perform an upgrade. System downtime was identified as a cause for concern by 79 percent, and 59 percent were concerned about losing data during an upgrade.

Forrester noted in a report in June that enterprise software vendors such as SAP have become more flexible on pricing as a result of the economic downturn.

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