2000

92% of companies disappointed with ERP systems yet 80% planning post ERP projects - latest survey findings from PA Consulting Group - 04 July 2000

An overwhelming 92% of companies are dissatisfied with results achieved to date from their ERP implementations and only 8% achieved a positive improvement in their performance. These are findings from new research – Unlocking the value in ERP – launched today by PA Consulting Group. The research looks at the current state of ERP implementation across industries, reveals the true extent of the value deficit within organisations, and proposes a way forward to true value creation from the £6 billion spent annually on these systems worldwide.

Gary Miles, Head of Systems Integration and Solutions at PA Consulting Group, believes that companies should now take a much a broader perspective and look at ERP implementations as much more than an IT deployment. Mr Miles comments:

"This survey reveals a gap between companies’ original expectations of their ERP systems and what these systems have actually delivered – particularly in terms of staff productivity and customer service. However, it also reveals a determination to press onward with ERP initiatives – in the belief that there is a huge potential to unlock value from these systems. Mining this value isn’t a question of spending huge sums, it is about understanding what the system can do and then making marginal incremental investments to fine-tune it."

PA’s research explored how companies can realise the true potential and value from investments in integrated business systems (what PA call ‘Value Mining’). Key findings of the survey are:

• Organisations have experienced a significant overall shortfall against anticipated business benefits – The biggest shortfall between expectation and reality is in customer service and responsiveness, staff productivity and business management. Around 20% of respondents admitted that further investments have been made in these areas in an attempt to realise the hoped-for benefits.
• Specific targets and expected results have not been achieved – around half of those companies in the PA survey had sought to streamline and integrate business processes, or improve productivity. In reality, only 5% felt that progress had been made in this area.
• Organisations are suffering from systems that are poorly aligned with business needs – having gone through the pain of scrutinising existing processes and efficiencies, and asking users to think creatively about how processes ought to look, companies often found that they ended up with a system which has been implemented differently in each functional area with little cross functional understanding and poor control procedures.

However, going live with the ERP implementation is just the first milestone and not the end point, as 66% of respondents to the survey stated. Furthermore, over 80% are now planning post-ERP projects. Gary Miles adds:

"During our research we found that many organisations did not really understand how their ERP system had been implemented. It is quite common for the ERP system that was delivered to be different from what was originally designed. So companies need to take stock in order to understand their current situation and agree what steps need to be taken to achieve performance objectives."

PA believes that organisations must now view their ERP systems as solid building blocks, where targeted effort and incremental investment will help deliver further business objectives. Mr Miles concludes:

"Companies can mine value from ERP post-implementation. They need to understand what their ERP systems can do and then make marginal investments in people, training, and in tailoring their systems to better match their business requirements. Only by doing this will they achieve a significant return from their multi-million pound investments and gear themselves up to compete in the digital economy."

Copies of the report Unlocking the value in ERP are available by emailing info@pa-consulting.com

For more information, please contact:

Polly Ferguson PA Consulting Group 123 Buckingham Palace Road London SW1W 9SR United Kingdom Tel: +44 20 7333 5653 Fax: +44 20 7312 4612 E-mail: polly.ferguson@paconsulting.com

Notes to editors

1. A copy of the survey report Unlocking the value in ERP is attached, together with charts.
   
   
2. About the research
   In its work around the world, PA has witnessed a growing debate centred around return on ERP investment. Many senior directors are looking more closely at the investment made in ERP systems and asking themselves whether they really got value for money. PA’s research explored how companies can realise the true potential and value from investments in integrated business systems.
   
   
3. Survey methodology
   The survey was carried out over a nine-month period with over 50 senior directors at CEO, Finance and IT Director level across Europe and Scandinavia. These were predominantly representatives of multisite, multinational organisations across the manufacturing, finance and energy sectors. The survey, based on a series of face-to-face interviews, sought to explore the business case and rationale for ERP investment, and to examine experiences of implementation. The implications of these findings enabled PA to gauge how far expectations have been met, to explore hidden areas of value to be unlocked and to identify potential constraints in future benefits realisation.
   
   
4. PA Consulting Group is a leading management, systems and technology consultancy, with a unique commitment to the integration of these capabilities. Established almost 60 years ago, and operating worldwide from over 30 offices in some 20 countries, PA draws on the knowledge and experience of about 2,700 employees, whose skills span the initial generation of ideas and insights all the way through to detailed implementation, including:

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