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Retail still suffering ERP project pain

Retail still suffering ERP project pain
Monday December 16 2013

Survey of IT decision-makers lack of clarity over systems and costs, leading UK retail businesses to call for greater transparency as only 15% of projects come in on budget

Results of a survey of UK retail IT and finance directors released today reveals continuing disappointment with enterprise resource planning (ERP) implementations.

Four out of five (92%) retail IT and finance directors polled were not totally satisfied with the roll out of their ERP projects, while none deemed their new system easy-to-use, despite 100% saying they believed it was critical to the finance and supply chain operations of the business.

Overspend remained a massive source of frustration. According to the study of 190 financial and IT decision makers carried out this September by market researcher Vanson Bourne, on average, businesses exceed their original budget by almost a fifth (13%), costing the average mid-market UK business an additional £76,000.

Lack of roll out transparency
 
The research suggests a lack of transparency is at the heart of the issue. Over three quarters (86%) of retail ERP decision makers believe technology partners could be more transparent when it comes to the total cost of the project, while a third admit they are unsure about the level of honesty offered by their partners. 

And, although organisations continue to move applications and infrastructure into the cloud, for two thirds (64%) of respondents, transparency is far more important than where the systems are hosted.
 
Andrew Fox, managing director of integrated business systems provider K3 FDS, which commissioned the research, commented: “A company’s ability to see a return on an ERP project often depends on how quickly it can deploy the new system, and whether it’s in line with what was promised at the outset. 

“Given ERP is one of the biggest IT investments businesses make, particularly for mid-size organisations, any delay or overspends can have a massive impact. It seems the industry still has a long, long way to go in delivering the transparency customers are demanding.”

Avoid overcomplicated customisations
 
Unnecessary complexity is also hindering successful roll outs. Three quarters (79%) of respondents find the range of ERP solutions on offer confusing and well over half (57%) said they would be happy to have more standardised systems if it meant significant savings were made to both project time and budget.
 
Fox highlighted that, when customisation increases, so does the cost and complexity of ERP projects. “So it makes sense to keep implementations as standardised as possible, focussing on the customisations that really add value,” he said.

But he added: “This is clearly not happening enough. At the heart of this is investing significantly more time at the start of an implementation to scope out and agree what success looks like. It’s also crucial that businesses have an on-going dialogue throughout the process with their partners, and are comfortable that they fully understand what is happening at every stage of implementation. This is the bedrock of the transparency that’s missing.”

Tagged as: Survey | software | supply chain | ERP | finance | business change | processes | upgrade | customisation | Vanson Bourne | K3 FDS