2018
ERP REPORT5975 S. Quebec Street, Suite 207
Greenwood Village, CO 80111
Phone: 720.515.1377
Email: info@panorama-consulting.com
Website: www.panorama-consulting.com©Copyright 2018 | All Rights Reserved.

CONTENTS

1

2

Respondent Overview

3

Industry5

Average Annual Revenue of Reporting Organizations

8

Respondent Vendor Selections

9

Deployment Options | Type of ERP

11

Reasons for ERP Implementation

13

Level of Customization

16

Organizational Change Management

19

Business Process Improvement

21

Project Budget

23

Budget Overruns

25

Project Duration Overruns

27

Payback Period

28

Operational Disruption

30

Benefits Realization

32

Types of Benefits Realized

34

Implementation Outcome

36

Vendor and Software Satisfaction

37

Reason for Using Consultants

38

Data Summary by Year

39

About Panorama Consulting Solutions

2018 ERP REPORT

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INTRODUCTIONRESPONDENT OVERVIEW
Through research and rigorous quality assurance, we
discounted certain feedback based on the following(valid responses totaled 237):

Duplicate responses were filtered out using the following criteria:

1.
2.
3.
4.
5.
6.

Duplicate/Similar IP’sSame Location
Email Matches (same e-mail addresses used multiple
times)
Pasted/Unusual Responses
Submissions Completed in Under Two Minutes
Projects Costing Less Than $100,000

RESPONDENTDEMOGRAPHIC:NORTH AMERICA // 91%
EUROPE//

7%

ASIA //

2%
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2

INDUSTRYThis year’s respondents largely represented organizations within the manufacturing
vertical space. Historically, Panorama has seen a sizable percentage of survey
responses coming from manufacturing, education and distribution companies.
This year we have seen a growing number of organizations in the professional
services and public sectors implementing end-to-end management solutions. Thisshouldn’t come as a surprise, since ERP systems were first tailored to fit companies
manufacturing and supply chain processes. As software vendors have started totransition into offering more SaaS or best-of-breed applications within their corepackages, the ability to support other organizations with more niche best practices,is becoming commonplace.

3

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Telecommunications , 2%

INDUSTRY

Construction, 3%
Healthcare, 3%
Education, 3%
Other, 3%
Non-Profit, 5%

Manufacturing, 43%Professional Services, 6%Information Technology,
10%

Retail & Distribution,
11%

Finance, Insurance &Realty, 11%©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

THIS YEAR WE HAD MORE SURVEY
PARTICIPATION FROM MANUFACTURING,RETAIL AND DISTRIBUTION
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4

AVERAGE ANNUAL
REVENUE OFREPORTING
ORGANIZATIONS

Respondent organizations represent a wide range of company sizes. The majorityof organizations reported between $50M - $300M in total annual revenue. With
such a wide range in the average organization implementing an ERP solution,
the important takeaway is to understand what makes a small/medium size firm
want to embark on an ERP initiative. Companies of varied sizes approach ERP
implementations differently in order to improve or solve a range issues. Indeed,
the business case and expected benefits realized can differ by company size. For
example, larger companies tend to take a more strategic approach and seek morerobust solutions continuing to scale as their businesses grow. Whereas, smaller
companies are often more tactical and typically look for improved performancearound their core processes, such as in production and supply chain.

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Total Annual Revenue (U.S. Dollars)
2% 2% 2%
12%

13%

29%
40%

$1M - $25M
$25M - $50M
$50M - $300M$300M - $500M$500M - $1B$1B - $5B
$5B+

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

THE AVERAGE ANNUAL REVENUE OFREPORTING ORGANIZATIONSWAS $439 MILLION.
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6

ERP COST AS A PERCENTAGE
OF ANNUAL REVENUEERP Cost as a % Annual Revenue
50%

45%

44%
40%

35%

30%

25%

26%

20%

15%

14%

10%

10%

5%

4%

0%

Less than 0.5%

Between 0.5
and 1%

2%

Between 1 and Between 2 and Between 3 and More than 5%
2%
3%
5%

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

The above graph represents what respondents reported they spent of their annual
income. 84% of respondents had an expected or actual spend on ERP of less than
two percent of annual income. However, it is important to note that these numbers
are affected and differ by the size of an organization, in this case, it was gauged byannual revenue. Our data shows smaller companies are on the higher end of thistwo percent metric. It is not uncommon for the total cost of the project to exceed
four percent of annual revenue depending on the type of ERP implementation,
attention to Business Process Management (BPM) and Organizational ChangeManagement (OCM). When budgeting for an ERP implementation, it is important
to consider all costs, not just the licenses and services. Also consider internal costs,
such as the percentage of time your own employees will need to spend on the
project, along with the backfilling of any positions.

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RESPONDENT VENDOR
SELECTIONSSELECTED ERP
33%

35%
30%
25%
20%

16%

15%

15%
8%

10%

5%

5%
0%

6%

6%

5%

5%
1%

OracleSAP

Microsoft

Sage

EpicorInfor

NetSuite

IFS

IQMS

Other

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Oracle, SAP and Sage represented some of the most frequently selected ERP vendors
among our respondents. With such a diverse range of industries represented inour respondents, this data does not provide much insight, aside from an indication
there isn’t much bias toward any particular vendor.
At Panorama we are vendor agnostic in our selection projects; this is importantbecause one vendor does not fit all organizations. 42% of respondents selected a
Tier I vendor for their implementation. The larger Tier I vendors tend to support
a diverse array of functionality and may often cost more. Tier II vendors offer
software packages that are mid-ranged in terms of complexity and size. Panorama
focuses on functional and technical fit to ensure the solution is well aligned withcurrent and future business objectives.
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8

DEPLOYMENT OPTIONS
One of the main reasons an organization
may select a SaaS model is lower entry
cost, especially in a growing business.
The bigger ERP vendors might not be
viable as an on-prem model and may be
more likely to contend when the SaaS
pricing model fits.
This year we saw a major uptick in the number of respondents who selected SaaS,with an increase of 37 percentage points resulting in implementations of cloud/SaaS having prominence the first time in our ERP report. This should come as no
surprise as ERP vendors are heavily pushing their customers to the cloud. They arecontinuously building out their service platform and infrastructure to host solutions
at both the business and enterprise levels. With options to digitize the customer
experience, workforce engagement, supplier management and the movement
to support IoT enablement, more and more companies are entrusting software
providers and leveraging services which would typically be utilized in-house. Whilelarger organizations may still have concerns being the early adopters to solutions
that may not be as fully baked as their on-premise competitors, vendors have beenreactive and adjusting for more price competitive implementation quotes.

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2018 | Type of ERP Software
15%

21%

64%

On-premise

SaaS

Cloud ERP

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2017 | Type of ERP Software
6%
27%
67%

On-premise

SaaS

Cloud ERP

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10

REASONS FORERP IMPLEMENTATIONIMPROVE BUSINESS PERFORMANCE
Given the high costs to implement such an initiative, what motivates anorganization to implement an ERP system? Does the perceived ROI play a majorrole in the decision to implement? How does an organization decide what
solution to implement? The single most compelling reason our respondents
implemented new ERP systems was to improve business performance. Many
were also interested in positioning their organizations for growth, reducing
working capital and serving customers better.
Comparing this with last year, we saw less emphasis on making employees
jobs easier and replacing legacy systems. What this translates to is improved
integration between the different functional areas within a value chain to
ultimately optimize an organization’s business processes and ensure
crossfunctional alignment of business processes. Laying the foundationfor optimizing critical processes, will help the selected ERP system enableorganizational strategies, helping to support further growth on a scalable
platform.

11

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MANY WERE ALSO INTERESTED IN POSITIONING THEIRORGANIZATIONS FOR GROWTH

Reasons for Implementing ERPOther (please specify)

7%

To standardize global business operations

7%

Because other companies have ERP

24%

To ensure reporting / regulatory compliance29%

To appease the parent company or other key stakeholders

32%

To replace an old ERP or legacy system

38%

To better integrate systems across multiple locations

41%

To make employee jobs easier49%

To better serve customers

54%

To reduce working capital57%

To position the company for growth57%

To improve business performance

64%

0%

10%

20%

30%

40%

50%

60%

70%

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

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12

LEVELOF CUSTOMIZATIONTHIS YEAR’S SURVEYRESULTED IN AN
OBSERVATION THAT COMPANIESARE CUSTOMIZING A MORE
SIGNIFICANT PORTION OF THEIR ERP,
WITH 37% OF ORGANIZATIONS CUSTOMIZINGBETWEEN 26%-50% OF THEIR ERP APPLICATION.
Comparing the averages from last year to this year, we saw an 11%
increase. The average level of customization last year was 16%; comparedto this years’ respondents at an average of 27% customization. Customization
requires code to be written to enable functionality not already enabled by
the ERP system. The concern (typically associated with customization), iscustomized code is most often not supported in system upgrades and code
will often need to be reviewed and tested during an upgrade.

13

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There is, however, a place and need for customization. ERP software often
needs to be customized to enable key business functions that provide anorganization with competitive advantage in their market place or to support
optimal transaction efficiency. It is a balancing act between changing thesystem to fit your process or changing your process to fit the system. Few
typically want to customize their system, no one wants to change the way
they’ve been working. During these decision points, it’s important to ask
oneself how these changes align with the business and IT strategies of theirorganization. It is a slippery slope when over-customizing the system, due toresistance to changing processes. On the other hand, recognizing where topreserve your competitive advantages is critical during the design as well as
post-deployment of the ERP system.

Level of Customization
Completely customized, in house developed, or bestof breed solution

1%
1%

Extreme customization (Over 50% of code modified)0%

Significant customization (26-50% of code modified)

8%
37%

4%

33%

Some customization (11-25% of code modified)

70%
10%

Minor customization (1-10% of code modified)

13%
11%
12%

No customization
0%

2018

10%

20%

30%

40%

50%

60%

70%

2017

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IT IS A BALANCING ACT BETWEENCHANGING THE SYSTEM TO FITYOUR PROCESS OR CHANGING YOURPROCESS TO FIT THE SYSTEM.
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14

All companies go through some form of customization, although thisyear’s numbers are surprisingly high (rule of thumb is anything over 20%
when implementing a new system is a red flag). Typically, factors that drive
customization include complexity of processes or transactions, supporting
competitive advantage and the size of the organization. The majority of
our respondents are fairly large organizations, with 85% of all respondents
representing organizations $50M or more. The degree of customization varies
significantly across the size of a company, with larger companies typicallycustomizing more to preserve their competitive advantages, while smaller
companies tend to leverage the “out of the box” functionality and bestpractices to help support growth.

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15

ORGANIZATIONALCHANGEMANAGEMENT
This year’s responses indicate
an 11% decrease for thenumber of organizations who
have either a moderate or
intense focus on OCM, while
27% of respondents indicatedtheir organization had little orno focus.

16

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Organizational Change Management

13%

27%

60%

Very little or no focus on change management
Moderate focus on change management
Intense focus on change management©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Organizational Change Management includes a variety of activities executed
throughout the project lifecycle. These encourage buy-in and support forthe organization to change. These activities include, and are not limited to,communication, planning and training. The objective of OCM is to instill adesire for change, prepare users for change, in doing so, ease employees
through a change initiative with minimal disruption to the organization. Those
who most highly value change management are typically individuals who haveexperienced a failed initiative.

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17

Number of Full-Time Internal Users Dedicated to the Project
50%

42%

40%
30%
20%

17%
9%

10%
0%

12%

12%

7%

1%

1 - 2 FTE's

2 - 3 FTE's

3 - 5 FTE's

10 - 15 FTE's

15 - 20 FTE's> 20 FTE's

5 - 10 FTE's©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Most organizations reported having three to five full-time internal resources
dedicated to ERP implementation. The number and types of resources
committed to a project, often, significantly impacts the project’s likelihood forsuccess. These resources should also have an appreciation and responsibility
for the change management aspect of an ERP implementation. Throughout
the implementation project, there are different resources with different
skillsets, all will have different commitment expectations. Project managers
and SME’s are typically utilized more since they will be involved in activities
such as requirements gathering, functional design, testing, data conversions
and training activities across the program timelines. However, owners of theprocesses themselves, will have to be pulled off their day jobs to sign-off
on the future-state design. These resources are often critical to the day-today operations of the organization and it’s always a challenge to have them
involved in the project while keeping the wheels turning internally. Staffing
and backfilling of positions will need to be planned for.

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18

BUSINESS
PROCESS
IMPROVEMENTA SIGNIFICANT 26 PERCENTAGE POINT DROPFROM LAST YEAR WHERE 75% OF RESPONDENTS
IMPROVED ALL BUSINESS PROCESSES
19

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95% of respondents improved some or all of their business processes.
This is an important data point to consider when you embark on an
ERP initiative. Both the technology and the processes are changing.
Managing this change can be a significant feat and should therefore
be a consideration, even in the early stages of planning an ERP
initiative.

Business Process Improvement
5%

46%

49%

Improved all business proceseses
Improved key business processes
We did not improve business processes©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

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20

PROJECTBUDGET

A significant number of our
respondents (64%) had theirprojects exceed their budgets.
This is an improvement overlast year’s 74%of respondents
being over budget. This
year’s respondents were also
relatively satisfied with theirimplementation costs.

21

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Project Budget

36%
64%

Did not exceed Budget

Exceeded Budget©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Implementation Cost Satisfaction

31%
26%

18%

21%

4%
VERY DISSATISFIEDDISSATISFIED

NEUTRALSATISFIEDVERY SATISFIED©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.
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22

BUDGETOVERRUNS

A COMMON REASON FOR
IMPLEMENTATION FAILURES,OR IN THIS CASE BUDGETOVERRUNS, IS NOT HAVING EYES
WIDE OPEN AS TO WHERE THE COST AND
TIME DEDICATED TO THE PROJECT WILL ARISE.

When projects go over budget there may be more than one reason,
we asked our respondents to select all of the reasons why their projects
exceeded budget. All of our respondents reported more than one reason forexceeding their initial budget.
Last year the top three reasons quoted as being most likely for budget
overruns were, related to unanticipated technical or organizational issues,
initial project budget was not realistic or the addition of technology
requirements. Results this year are aligned.

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Understanding and budgeting appropriately for the total cost of ownershipof the implementation is a common pitfall for scope creep and running overbudget. A proper evaluation of potential systems prior to selecting an ERP
solution will help in establishing a more accurate scope for the project. This
will account for potential customizations and integration costs, BPM andOCM projects, as well as any additional hardware upgrades or third party
bolt-on products.
Larger, more complex organizations require larger and more complex ERP
systems. Not every organization needs all the bells and whistles the Tier I
packages can provide. A more realistic approach is to consider viable ERP
solutions, flexible enough and scalable enough to support current andfuture growth, aligning with the organization’s business and IT strategies.

Reasons for Budget Overages
Consulting fees rose as project schedule slipped
Underestimated consulting fees

2%
9%
45%

Unanticipated technical/organizational issues
Underestimated project staffing

35%
41%

Additional technology requirements
Expanded scope
Unrealistic budget

31%
43%©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

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24

PROJECTDURATIONOVERRUNS

This year we saw 79% of our respondents reporting that their projects exceeded
their initial timelines. Last year only 59% reported having exceeded their project
durations. Those who reported duration overruns attributed the overruns toorganizational issues, unrealistic timelines and expanded project scope. All thesereasons have been reported as the most likely causes of schedule overruns
for the past two years. Overall, the average implementation duration was 17.4
months and increase over last year’s reported average of 16.9 months. After a
project plan is built and the implementation has begun, it is still critical to walkthe halls and look for warning signs of potential disruptions. Monitoring end-user
and process owner involvement is critical throughout all stages of the project. By
proactively implementing training and other change management exercises, anorganization can proactively identify, assess and resolve risks that can continue topush out the go-live date.
25

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Reasons for Schedule Overages
5%

Training issues

10%

Priority conflicts

40%

Resource constraints

46%

Vendor did not deliver in timely manner
23%

Data issues

76%

Organizational issues
41%

Technical issues

61%

Expanded project scope

74%

Unrealistic project timeline
0%

10%

20%

30%

40%

50%

60%

70%

80%

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

ERP PROJECT DURATION21%,
On Schedule

Over schedule,
79%©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Projects respondents were asked to provide reasons for why their ERP projectexceeded the original timeline and to check all options that applied, their
responses are reflected above.

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26

PAYBACKPERIOD
Timeline to Recoup Costs
3% 1% 2% 4%
16%

24%

50%

Less than 1 year
3 years
5 years or more
Don't know / not sure

2 years
4 years
Have not recouped costs©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

This year, 50% of organizations recouped the cost of their ERP implementation
within three years. This is an increase of 31% over last year’s 19%.
While last year, 15% of respondents realized benefits within one year, this year
only four percent recouped their costs within only one year.
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OPERATIONALDISRUPTION
Experienced Operational Disruption

34%
66%

Yes

No

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

66% of organizations experienced operational disruption
while implementing a new ERP. This is a increase of 10
percentage points over last year’s 56%.

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Length of Operational Disruption
9%3-6 months

20%

2-3 months

46%

1-2 months

16%

2-4 weeks

9%

1 week or less
0%

10%

20%

30%

40%

50%

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

• 46% of respondents reported that their operational disruption lasted 		
between one and two months.
• While only nine percent experienced disruption that lasted over three		months.
Project success won’t have anything to do with technical features, rather it will
come down to how well you handle business process reengineering (BPR) andOCM – the most important success factors for any ERP implementation. We often
hear organizations say the biggest obstacle to the success of their ERP initiative
was misalignment between project management and change management.
Often, people involved think they should had invested more into change
management, sponsorship and resourcing.
BPR AND OCM ARE THE MOSTIMPORTANT SUCCESS FACTORS FOR ANYERP IMPLEMENTATION.

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29

BENEFITSREALIZATION
Respondents realized between 30% - 80%of their projected business benefits.

Benefits Realized
48%
43%

50%
40%
30%
20%

8%

10%
0%

1%
0%-30% ofprojected
benefits

31%-50% of
projected
benefits

51%-80% of
projected
benefits

81%-100% of
projected
benefits©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Interestingly, this year’s report did not have any respondents reporting they
didn’t have a business case against which to measure benefits realized. Most
respondents realized between 51%-80% of their projected business benefits.

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Months Until Benefits Realized
10%

24-36 months post 'go-live'

13%

19-24 months post 'go-live'

37%

13-18 months post 'go-live'
26%

7-12 months post 'go-live'
13%

4-6 months post 'go-live'
1%

0-3 months post 'go-live'
0%

5%

10%

15%

20%

25%

30%

35%

40%

©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

This year we saw most respondents realizing business benefits within
13-18 months of going live. This is a significant shift from last year when 48%
of respondents reported realizing business benefits within the first six months
following go-live.

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31

TYPES OF BENEFITSREALIZED

Typically, organizations are looking to realize multiple benefits through an ERP
implementation.
Our survey respondents were offered the option of checking all the options thatapplied to their implementation.
Too many organizations start to truly document what benefits they would like toachieve during the implementation or even post go-live. The creation of abusiness case, performance metrics or a benefits realization plan doesn’t
just help with scope creep, it also helps with defining and measuring success,prioritization of pain points and opportunities for improvement. The otherbenefits are establishing accountability around benefits achieved andexpectations management.

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Compared with last year, more organizations
realized improved information availability andfewer were able to reduce the duplication ofeffort.

Types of Benefits Realized
Transform our business

10%

Improved interaction with customers

13%

Better visibility into operations

14%

Reduced IT maintenance costs

14%

Improved interaction with suppliers

15%

Better informed decision-making

17%Standardize operations

18%

Less duplication of effort

23%

Reduced operating/labor costs

37%

Controls for compliance38%

Better decision-making

43%

Improved lead time and inventory levels

44%

Improved productivity and efficiency

44%

Increased interaction/integration of business operations/process
Improved data reliability

46%
55%

Availability of information

80%©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

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33

IMPLEMENTATIONOUTCOME
It’s important to note, many
companies don’t clearly define
success, which is why so many don’tknow if they were successful or not.

				

42% of respondents this year would deem their
ERP Implementation a success. This is a
substantial drop from the 82% of respondents who
considered their projects to be a success last year.

Defining your organization’s quantitative metrics for
implementation success prior to project initiation will
help your project teams focus, serve to help communicate
project progress and provide the ability to continually alignproject plan corrections to achieve these metrics.

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Implementation Outcome

30%

42%

28%

Success

FailureDon't know

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Measuring the project regularly will also help your team identify issues as theyarise and mitigate the risk associated with the issues via early identification.
These are a few examples of metrics of project success that you may choose
to use:• Key Business KPI’s• User Adoption• Project Actuals vs Budget (time and financials)
When these metrics are in place and regularly monitored an organization isable to determine their ability to achieve overall project success.

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35

VENDOR AND SOFTWARESATISFACTION©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

Overall Experience With ERP Vendors
1%

9%

22%

16%

68% of respondents weresatisfied or very satisfied attheir overall experience withERP Vendors, with only 23%
expressing dissatisfaction.
This is a decrease of 37% in
dissatisfied ERP customers.

52%

When an organization
begins to engage with a
Dissatisfied Neutral Satisfied Very Satisfied Very Dissatisfied
vendor there should bealignment between thevendor(s) and the organization on expectations. Expectations you may want togain alignment on prior to starting the project include:• Vendor consultants experience with the software• Culture fit with your organization• Ability to lead or support project• Frequency and quality of interactions
Vendor interactions that are well managed and have very clearly defined
expectations leave both vendor and customers more satisfied.
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2018 ERP REPORT

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REASON FOR USINGCONSULTANTS
Reasons for Using Consultants
Support internal resources with external specificskills and expertise3%

Turn around an at-risk implementation

9%

Provide organizational change management support

23%

Manage implementation

19%

Conduct an unbiased software selection

24%

Strategic partner from planning throughimplementation

22%
0%

5%

10%

15%

20%

25%

30%

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The above results are in alignment with results we have seen in the past.
Implementation planning and OCM focus can, when executed effectively,
improve a project’s likelihood of success.

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DATA
SUMMARYBY YEAR©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

38

2018 ERP REPORT

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ABOUT
PANORAMACONSULTING
SOLUTIONS
Panorama Consulting Solutions specializes in enterprise consulting,infrastructure consulting and digital transformation for mid-to large-sized,
private and public sector organizations across the globe. One hundred
percent independent of affiliation, Panorama helps firms evaluate and selectsoftware, implement software and navigate organizational changes to ensurethat clients realize the full benefits of their enterprise software projects. We
also offer our clients IT strategy, business process reengineering, IT staffing,
independent verification and validation, project management oversight,
expert witness testimony and litigation support.
Panorama maintains a global presence with clients and consultants
throughout the world. More information can be found on our website,
Panorama-Consulting.com and social media.

www.panorama-consulting.com©Copyright 2018 Panorama Consulting Solutions. All Rights Reserved.

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