Respondents to a survey carried out by IDC Group on behalf of business software developer, Agresso, indicated that many mid-to-large sized companies are losing as much as $10 to $15 million in lost opportunities, thanks to inflexible enterprise resource planning (ERP) systems. Many businesses report that not being able to modify their ERP systems slowed decision-making and caused them to delay product launches and acquisitions.
“Change to ERP paralyzes the entire organization in moving forward in other areas that can bring more value,” said one survey respondent. Another added: “Capital expenditure priorities are shifted into IT from other high payback projects” just to keep the ERP system in line with business.
According to the research, underperforming ERP systems feed through to the bottom line, with average stock prices experiencing a 20.9% decline, average lost revenues of 14.3% resulting from delays, and a 16.6% decline in customer satisfaction.
“The wrong ERP choice in a high-change industry spells disaster,” said Ton Dobbe, VP of Product Marketing for Unit4Agresso. “Companies operating in industries that are highly regulated, consolidating via M&A activity, frequently replacing leaders, or making other important changes, need to adjust their ERP selection criteria appropriately when choosing new systems.”
The survey’s results also indicate the pace of change in the current business environment forces organizations to modify their systems. Nearly 17% of the survey participants make monthly changes to their systems, with 43% making changes “as needed.” Only 2.8% of the organizations questioned had not made changes to their ERP systems.
The main danger for ERP buyers in such high-change environments lies in failing to appreciate the potential costs and business impacts of trying to modify their software system. The IDC white paper concluded: “Architectural agility to support ongoing change may be the single most important buying criterion to minimise change-related revenue loss, business disruption, stock price declines and the lost business opportunities.”
The High Cost of Business Disruption is available as a free download from the Agresso Web site.
This article first appeared on our sister site, AccountingWEB.co.uk.