CFO Research | The High Cost of Change for ERP
A Report from CFO Research and UNIT4 Business Software Provides Critical Benchmarks For Managing Change in Enterprise Resource Planning (ERP) Systems
CFO Research today announced research results from a survey of 157 senior finance executives, examining ongoing Enterprise Resource Planning (ERP) system ownership costs. A key finding of the report reveals that the continuing costs to an organization to keep their ERP system in line with their business is substantial, especially after the system is customized and installed (up to over $1.24 million annually).
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The Punishing Cost of Keeping An ERP System Current Does Not Appear in the Sticker Price
The report is critical reading for organizations seeking a realistic picture of the ongoing cost of an ERP system.
Some findings include:
- The price tag for making changes to an implemented ERP system can be almost double annual maintenance and support fees.
- Independent evidence that companies are spending far too much on modifying or updating their ERP systems.
- Benchmarks for ongoing ERP ownership costs.
- That 61% of respondents undertook moderate or substantial ERP changes just to respond to new or changed business processes.
- Mid-market companies could spend an average of $1.24 million annually on ERP maintenance, modifications and updates.
- Some companies are adapting their processes to avoid impacting their ERP systems. One executive admitted "we will not make custom modifications to the software; we will modify the business process if necessary or create an offline procedure".
"It is clear that in many instances the systems are ruling the companies instead of the other way around, which is unacceptable. In times of economic recession, the flexibility to adjust to changing market circumstances is critical - it can mean the difference between success or failure. Thus being able to adjust an ERP system quickly and cost effectively is crucial. It is a real shame that most ERP system vendors seem incapable of offering this type of flexibility to their users."
- Ton Dobbe, Vice President, Product Marketing, Unit 4.
The findings of CFO Research support UNIT4 Business Software's advice: a proper evaluation of ERP solutions must not ignore the ability to manage change, or companies risk overlooking significant ownership costs.