SOURCE: UNIT4 Business Software

UNIT4 Business Software

June 28, 2013 14:32 ET

Survey: Business Change Driving ERP Costs Sky High Despite IT Advances

ERP Software Change Issues Related to Business Events Are Not Resolved by Newer Systems; Business Change Drives 15% of Companies to Full Re-Install After 60% Already Spent $2.5m+

VICTORIA, BC and MANCHESTER, NH--(Marketwired - Jun 28, 2013) - UNIT4 Business Software, the North American subsidiary of UNIT4, the global leader in software that supports business change, today released new survey results compiled in an IDC White Paper that clearly show that business-related change events are driving enterprise resource planning (ERP) system costs sky high despite the newer ERP systems recently introduced into the market. The survey, conducted by IDC, included 167 executives across North America and Europe.

A copy of the IDC White Paper with survey results, "Maintaining ERP Systems: The Cost of Change" (May 2013), is available to download here: http://bit.ly/137r0m4

Most organizations that purchase and implement ERP systems, which are large in scope and connect to all of a business' operational areas, expect and budget for a hefty cost connected to the system's deployment. While ongoing annual maintenance costs are predictable, the technology "budget buster" for many organizations is the unexpected high additional cost of managing ERP systems to meet business change requirements. According to the results of the survey, the price of change requirements averages $1.2 million per year and in the extreme can exceed $4.1 million a year after the initial deployment costs are borne. In fact, business-related circumstances forced 15 percent of the survey respondents to have to re-implement their entire ERP system; of those organizations, 60 percent report this was after an original $2.5 million cash outlay.

Many of the market's leading ERP vendors, including SAP and Oracle, have introduced major new releases and even new architectures in the recent past. "It would be a reasonable assumption that systems implemented in the last three years would be more modern ERP systems, and thus be more flexible and easy to modify," said Michael Fauscette, global vice president of Software Business Solutions, IDC. "The survey data though shows a very different picture."

Nearly 70 percent of the respondents had implemented new ERP solutions in the past three years, and this group was the most likely to have needed to make moderate to substantial modifications to their systems due to business events, such as merger and acquisition activity, business process change, regulatory and financial change, and organizational change. While many of the newer ERP offerings cite the ability to support interoperability of various hardware and software systems, and use language like "agility" and "flexibility" in their marketing materials, the survey data shows that supporting business change is going to be costly, disruptive and time consuming for many organizations.

For example, to modify the underlying data structure underpinning the ERP solution just one time, the average estimate for the level of effort was almost 14 business days. Additionally, ERP system modification sidelines both IT and business people resources away from other strategic business activities, resulting in a substantial amount of lost organizational productivity. 

There seems to be a sense of surrender by ERP users that the cycle of cost and disruption is inescapable. "The frequency of change and subsequent investment to make the ERP system support the business has become so common that many businesses simply accept that there is no better way to operate business," Fauscette said. "When evaluating the costs of an ERP system, it's not sufficient to look only at the upfront implementation and licensing investment. Organizations also need to factor the ongoing system costs tied to inflexible systems that cannot accommodate business change -- which include even the newest solutions introduced in the past three years. IDC found that companies need to do their due diligence and seek out ERP systems that can provide the flexibility to continue to meet business needs with low investment of scarce company resources."

About UNIT4 Business Software

UNIT4 Business Software is the North American subsidiary of UNIT4, a $624 million global business software and services company that creates, provides and supports software for Businesses Living IN Change -- delivered via the cloud or on-premise. It offers solutions that help these fast-changing public, private, non-profit and higher education 'BLINC' organizations embrace business change -- simply, quickly and cost-effectively. UNIT4 Agresso, the company's flagship Enterprise Resource Planning (ERP) suite and UNIT4 Coda Financials, its best-of-class financial management software, are used by 6000+ organizations in more than 100 countries. For more information visit our website or follow the company on Twitter, LinkedIn and our company blog.

Contact Information

  • Media contact:

    Margaret Bonilla
    Birnbach Communications
    Phone: (603) 548-0693
    Email: Email Contact
    Twitter: @Marg_Bonilla