The 2020
ERP REPORT© 2020 Panorama Consulting GroupAll rights reserved.

INTRODUCTION
2020 ERP REPORT
Every year, Panorama analyzes industry trends to determine the mostimportant success factors for organizations desiring more than just atechnology implementation.
Panorama’s

2020

ERP

Reportprovidesvaluableinsights

fororganizations considering, or in the midst of, an ERP implementation ordigital business transformation.
The report investigates ERP trends across industries, organization sizes
and geographic locations. It summarizes Panorama’s independent
research into organizations’ selection and implementation decisions
and their project results.
While the report contains data from 2019, Panorama expects the trends
we’ve identified to continue into 2020.
The findings from this year’s report point to one important concept:
Replacing outdated technology helps organizations achievesignificant business benefits when they seek organizationalchange management guidance.
Legacy systems and other outdated technology are becoming
increasingly burdensome as we move into the post-digital era. As aresult, more organizations are replacing their old systems with modern
ERP systems and are gaining competitive advantage.

2© 2020 Panorama Consulting GroupTABLE OF CONTENTS
2019 Look Back

5

ERP Selection & Implementation

7

ERP Selection Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9

ERP System Satisfaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15

The Cloud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

Digital Business Transformation vs. ERP Implementation . . . . . . . . . . . . . . . . . .

20

Implementation Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21

Strategic Alignment
People, Processes and Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24

Expected vs. Actual Business Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27

Executive Buy-in & Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

32

Employee Buy-in & Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35

Consultants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

37

People & Processes

40

Business Process Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41

Organizational Change Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45

ERP Implementation Results

53

Project Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

54

Project Duration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

58

Success & Failure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

61

Conclusion

324© 2020 Panorama Consulting Group62

RESPONDENTOVERVIEW
Data Collection Timeframe: June to December 2019
Number of Respondents: 181

Average Annual Revenue: $1.9 billion

Average Number of Employees: 7,243

Average Number of Software Licenses Purchased: 482
Percentage of Multinational Organizations: 48%

Percentage of Organizations That Have Completed
Implementation: 47%

Average Time Since Go-live: 8 months

INDUSTRY BREAKDOWN

4© 2020 Panorama Consulting Group

2019
LOOK BACKNOTABLE ACQUISITIONS

2019 NOTABLEFAILURES• Revlon’s failed SAP
implementation• Worth & Co.’s lawsuit against
Oracle• LeasePlan’s failed SAP
implementation• Hertz’s lawsuit against
Accenture5© 2020 Panorama Consulting Group

2019
LOOK BACKOTHER ERP NEWS•Microsoft Azure was selected as an SAP preferred partner to easecustomers’ transition to SAP S/4HANA and the SAP Cloud Platform.
•

Infor Healthcare customers now have access to Amazon Business,where they can drive spend management with thousands of suppliers.
•

Oracle Communications’ released a new cloud native deployment

option for Billing and Revenue Management, giving companies theability to embrace 5G, IoT and future digital business models.
•

SAP and Accenture co-developed a new cloud-based solution for

utilities companies, called SAP Cloud for Utilities.
•

Infor announced the general availability of its Infor Coleman AI

Platform for embedded machine learning models.

6© 2020 Panorama Consulting GroupERP SELECTION &IMPLEMENTATIONERP SOLUTIONS
Potential buyers of ERP software have hundreds of systems to choose
from. In fact, we track more than 250 systems in our internal ERP vendor
database to help us provide data to clients.
Many of these ERP vendors provide a wide range of capabilities andhave industry-standard business processes built into their software.
For example, many vendors have strong reporting capabilities that
ensure data consistency across departments and enable real-time data
insights.
With so many functional products on the market, organizations often
have a difficult time selecting the right system. This section of the reportprovides ERP selection advice and analyzes the selection decisions fora variety of organizations.

7© 2020 Panorama Consulting Group

UNDERSTANDING THE ERP VENDOR LANDSCAPE
Panorama categorizes ERP systems into Tiers based on factors such as target organization size, vendor
revenue, target number of users and other factors, such as functional complexity:

8

TIER I

These systems are designed for enterprises
with more than $750 million in annual
revenue. Most enterprises of this size arecomplex, either due to complex operational
processes or complexity in their entity
structure and consolidation needs. Tier I
applications address multiple industries andscalability.

Example:SAP S/4 HANA, Oracle CloudApps, Infor M3, Infor LN

UPPER
TIER II

These systems typically serve small to
midsized organizations with $250 million
to $750 million in annual revenue.
Organizations of this size may encompass
multiple industries and multiple business
units.

Example:Microsoft Dynamics 365 forFinance and Operations, IFS, Sage
Enterprise Management

LOWER
TIER II

These systems typically serve small to
midsized organizations with $10 million
to $250 million in annual revenue. These
organizations usually represent only one
industry and have a single entity to manage.

Example:Infor CloudSuite Industrial, Infor
CloudSuite Distribution, NetSuite,abas, IQMS, Plex, Microsoft
Dynamics 365 Business Central,
SYSPRO, Acumatica

TIER III

There are hundreds of software providers inthis tier serving mostly smaller organizations.
However, there are also some very robust
point solutions with niche functionality thatare often used to supplement a larger ERP
system.

Example:Sage ERP 100, Sage ERP 300,
Aptean, ECI, ASC© 2020 Panorama Consulting Group

THE CONSOLIDATION OF THE ERP INDUSTRYAs IFS and Acumatica come under common ownership to form synergies while remaining mostly independent,
we are reminded of all the other acquisitions that have recently happened in the ERP industry. The synergies
various ERP vendors form with each other are typically unique.
In addition to the private equity firm acquisition of Acumatica, IFS announced partnerships with Microsoft
and Tata Consultancy Services, which will help expand their footprint. Oracle and NetSuite continue to gain
benefits from their merger. NetSuite customers have gained advanced applications to enhance their system
functionality, and Oracle has improved their Saas offerings.
Most mergers and acquisitions within the ERP market are about reaching new markets and enhancing cloudtechnology. In 2020, we expect to see many more of these types of acquisitions.

ERP SELECTION DECISIONS
Many companies we work with have a futuristic outlook, so they are looking for an ERP vendor that does,
as well. When selecting an ERP system for both current and future goals, it’s important for organizations to
consider what functionality they will need within the next five years.
With a clearly defined digital strategy and an understanding of business goals, organizations can determine
if a particular vendor would be a good choice in the long term. For example, is the vendor moving in the
direction of trends like AI (Artificial Intelligence) and IoT (Internet of Things), or do they not even have theseideas on their product roadmap?
Organizations with a long-term digital strategy that involves rapid growth and innovation often look to large
ERP vendors, like SAP, Oracle and other Tier I providers. One advantage large vendors have oversmaller vendors is other applications in their portfolio complement their main ERP system. This may be an
AI solution that can analyze a massive amount of data, or an IoT solution that assists in the efficient
picking and packing of products.
Tier I vendors SAP and Infor are leaders in the practical use of AI on the shop floor. They’re making AI moreaccessible, and they’re giving tangible evidence of how to use AI with workflow automation and businessintelligence.
9© 2020 Panorama Consulting GroupERP SELECTION DECISIONS (CONTINUED)
For example, IoT sensors and other devices can integrate with manufacturing execution system data to
generate automated alerts and workflows for corrective action if data is outside defined tolerances.
In addition, machine learning can develop anunderstanding of shop floor equipment and help
monitor production and safety more efficiently.
Largeorganizationsusing

legacysystems

often move to Tier I ERP systems. While this is asignificant change, it can be successfully achieved

Homegrown systems are still very

prevalent with 34% of respondents
moving away from legacy

systems. Last year, only 14% oforganizations were moving awayfrom legacy systems.

with the right guidance.

COMMON SELECTION SCENERIOSAs organizations grow, they need a system that can scale to meet their needs and support complex operations.
Sometimes, these organizations simply need a software upgrade. Other times, they need to completely
replace their old system because it is a legacy system, or it is a poor fit for their business.

ERP SOFTWARE SELECTION DECISIONS

10© 2020 Panorama Consulting GroupSHIFTING AWAY FROM LEGACY SOFTWARE
Homegrown systems are still very prevalent with 35% of respondents moving away from legacy systems. Last
year, only 14% of organizations were moving away from legacy systems.
In today’s competitive business environment, more organizations are finding they have no choice but toimplement a modern system if they want to keep pace with their competitors.
Legacy systems fall short in many areas, but one of the most important areas is advanced analytics. Legacy
systems are unable to integrate and analyze large amounts of data.
If organizations want to build competitive advantage, they must have access to real-time data insights. These
data insights are especially important when it comes to improving the customer experience or optimizing a
supply chain.
For example, when inventory is managed through a legacy system, it is not always accurate and may not
integrate with other systems. This causes a multitude of issues:• It is difficult to confirm and schedule orders when
there is no simple way to determine if there is enough
It can cause supply chain issues as buyers can’t

determine when to re-order inventory since they
don’t know how much inventory they currently have.
•

Assigning inventory to jobs and tracking lot

numbers

throughout

theproduction

homegrown system for their

supply chain management andinventory on hand to complete the order.
•

One of our clients uses a

process

becomes manual and time-consuming.

another for quality control. Theirsales and order management
are done manually through a
combination of "tribal

knowledge" and Excel

spreadsheets. With theacquisition of a new division,and goals to greatly increase
Modern ERP systems have many advanced capabilities
that provide organizations with actionable analytics
and enable them to make business decisions that
optimize inventory management and increasecustomer satisfaction.

11© 2020 Panorama Consulting Grouprevenue, they are at the decision
point to implement a new ERP
system.

UPGRADING
Many organizations are deciding to keep their current ERP system andupgrade it. However, compared to last year, there has been a 14%
decrease in organizations that are upgrading.
While upgrades tend to be less expensive and less time-consuming thanfull ERP implementations, this is not always the case. For example, if anorganization has heavily customized its ERP system, it may be difficult
or impossible to upgrade.

One of our clients is trying todecide whether to upgrade
their current system andimplement it in their newly
acquired division or selectan entirely new system to

implement throughout alldivisions. We are conducting
requirements gathering

sessions to understand theAnother reason organizations may choose not to upgrade is because
they associate their current vendor with their operational problems,company’s current state andtheir needs going forward.

and they don’t think an upgrade will make a difference.
We have found that this belief is often a misconception. The software is not usually responsible fororganizations’ pain points. Instead, a lack of business process management and organizational change
management is often to blame.
In fact, when organizations upgrade their ERP system – while also focusing on change management andbusiness process management – they often experience immediate business improvements. This is because
most ERP vendors make several enhancements throughout any given year, so if an organization is even justa year behind on upgrades, it may be missing out on key functionality that addresses its pain points.

Whether shifting from Tier III to Tier II, Tier II to

Tier I, or from Tier III to Tier I, 13% of organizations
in our study are moving to a higher tier ERP
system.

12© 2020 Panorama Consulting GroupSHIFTING TO ANOTHER TIER I
Compared to last year, 10% more organizations are shifting from one Tier I system toanother.
While SAP, Oracle, Microsoft and Infor products are comparable in terms of basic
functionality, it’s their advanced functionality that often sets them apart. For example,
advanced warehousing functionality may differ between vendors in terms of complexity or
user experience.
As the ERP market becomes more competitive, many Tier I vendors are shifting
their marketing to be more oriented to specific industry verticals. While these vendors
are a good fit for a variety of industries, they are especially appealing to the industries
and verticals they target.
Here are two questions we ask clients that are considering a move from one Tier I system
to another:

1. Is there another product from the same ERP

2. Can your company handle the risk of a TierIf an organization finds that most of its operational

Tier I systems are complex and robust with differing

problems lie with the ERP software rather thandata structures. It’s important to secure adequate

their people or processes, then it may want toresources and expertise as well as strong project

consider whether their current vendor has othermanagement, clearly defined business processes

viable solutions. This can be a wise choice because

and effective change management. This is essential

the vendor may be able to provide migration credit

for addressing the significant differences between

and other financial incentives to stay in their family

the old and new software solution and relatedof products. Also, the implementation of a sisterbusiness processes.

vendor that can address your needs?

product from the same vendor can be less risky andcostly.

13© 2020 Panorama Consulting GroupI ERP implementation?

SHIFTING TO A HIGHER TIER
Whether shifting from Tier III to Tier II, Tier II to Tier I, or from Tier III to Tier I, 13% of organizations in our study
are moving to a higher tier ERP system.
This is an 11% decrease from last year, which may be due to the fact that more organizations in our study
were originally using Tier I systems or were using legacy systems (which don’t technically fall into any tier).
The organizations that did move to a higher tier likely did so for similar reasons as the organizations moving
away from legacy systems: data insights, customer experience, competitive advantage, etc.
While organizations preparing for growth are likely to move to a higher tier, many organizations that havealready experienced significant growth often shift to a higher tier, as well. Tier I and Tier II systems are better
able to scale to support global operations when compared to Tier III systems.

ERP consultants are helpful in all phasesof ERP selection, but they are especiallyessential in the Analyze phase. They cananalyze RFPs based on your requirements
and determine what percentage ofrequirements each vendor can handle outof-the-box. In addition, they can provide afive-year total cost of ownership analysis foreach vendor and deployment model.

14© 2020 Panorama Consulting GroupERP SYSTEMSATISFACTION
While many companies implement ERP systems with the intent of improving business processes, they often
end up with an ERP solution that replicates their old system’s inefficiencies. In our experience, inefficiency isa leading causing of ERP system dissatisfaction.
When clients ask us for software selection guidance, we always recommend that they look for opportunities
for process improvement before evaluating systems. This is essential because a new system will not
automatically improve business processes – not even if an organization is moving from a legacy system to amodern ERP system.
Once organizations have improved theirprocesses, they should invite vendors foron-site discovery, allowing the same amountof time for each of their top vendors tounderstand their requirements.
It appears that many organizations arefocusing on process improvement andrequirements definition since most of theorganizations in our study are satisfied with
their choice of ERP system. This is consistent
with last year’s findings, where 66% weresatisfied.
15© 2020 Panorama Consulting GroupERP SYSTEM SATISFACTION

SELECT THE RIGHTSYSTEM IN 4
PHASES
1. PLANDuring this phase, organizations should define thescope of the selection. In other words, what business
units, functional areas and locations will be using the
new software? This is also the time to secure buyin from stakeholders and designate process owners

2. DISCOVER

and subject matter experts, as well as build a coreThis

team. It’s also important to define project goals andrequirements

deliverables during this time.

can understand pain points within their current

isbusinesswhenorganizations
gatheringprocesses.

shouldworkshops,

Requirements

conductsoshouldtheybecaptured at a level of detail consistent with the

3. ANALYZE

organization’s complexity. Process mapping and

If a business is highly complex, it will want torequirements gathering workshops.

process improvement are essential activities during

send a request for information (RFI) to thevendors on their long list before sending arequest for proposal (RFP) to their top choices.
The

organization

shouldthenanalyze

RFP

responses and write demo scripts. Once vendors
have presented their demos, it’s important toanalyze the demo scores both cross-functionallyand broken down by functional area.

4. SELECTThis is when organizations should conduct a total
cost of ownership analysis, paying close attention to
the hidden costs that many organizations overlook.
Once organizations understand the costs, they cannegotiate with ERP vendors to achieve lower softwareand service costs. During this time, organizations
need a solid understanding of the scope of work andwhat activities they will be responsible for versus
what the vendor is responsible for.

16

© 2020 Panorama Consulting Group

THE CLOUD
The cloud refers to software hosted in datacenters with providers managing the platform. This software isaccessed over the Internet, instead of locally within a computer on which software is installed.

CLOUD VS. ON-PREMISE ERP SOFTWARETYPE OF ERP SOFTWARE

More than half of organizations
are selecting cloud software
instead of on-premisesoftware.
Cloud

softwareis,bynature,hosted in the cloud and can either
be deployed in a hosted model or
SaaS(Softwaremodel.

For

asa

example,Service)both

Microsoft D365 ERP applications
have been re-developed in cloud(Azure) technology and can be deployed and licensed in a variety of ways. Some organizations purchase
D365 applications as a perpetual license - a one-time purchase of licenses that an organization owns inperpetuity. Other organizations prefer a SaaS model as it more closely resembles a leasing method of
payment.
On-premise software can also be purchased as a perpetual license, and it can be hosted internally or
externally. Most legacy systems are run on-premise (i.e., in the organization’s own data center), and thethought of not only moving to a new system but also a new type of infrastructure (the cloud) can bedaunting to organizations replacing those legacy systems.
We advise clients in these situations to carefully weigh their options and understand their business
requirements as many cloud ERP systems are stronger in some functional areas than others.
We saw many organizations transition to the cloud in 2019. In fact, many mid-sized manufacturers that are
running aging legacy ERP systems are making the move to cloud ERP systems and finding a better total costof ownership. While vendors vary greatly in their cloud model offering, the cloud is generally cost-effective
for organizations looking to reduce implementation costs.
17© 2020 Panorama Consulting GroupDEPLOYMENT MODELSERP DEPLOYMENT MODELS

Panorama found that nearly 90%

of companies that selected a cloud

based ERP system, opted for a SaaSmodel over a hosted model.

Organizations must weigh the benefits and costs of different digital strategies as hosted/managed and SaaSmodels have tradeoffs that may or may not align with a particular strategy.
The relative ease of use of SaaS software is one benefit that attracts organizations. SaaS software is entirely
managed by the vendor, which means updates are automatic. This translates to lower IT maintenance costs.
However, one of the drawbacks of SaaS is that vendor updates can create changes to process flows
creating the need for continual training and process documentation updates. Another disadvantage is thatorganizations have limited ability to enhance the software themselves – other than by making suggestions in
an online community.
Some vendors, like Syspro, do not offer a SaaS model but just a hosted model and an on-premise option.
Other vendors, like Workday, only provide SaaS deployment. Workday has been able to gain significant
market share lately – not just due to its recent acquisition of e-sourcing solution, Scout RFP, but also due tothe growing popularity of HCM functionality, in general.

18© 2020 Panorama Consulting GroupHOSTING OPTIONSERP HOSTING OPTIONS

Many of the organizations selecting
on-premise software have a lack ofknowledge about cloud offerings. This
explains why so many are deciding

against external hosting of their onpremise software.

REASONS FOR NOT CHOOSING CLOUD ERP
Among those organizations that are not choosing cloud ERP, the most common reason is “Lack of informationor knowledge about offerings.” This is consistent with last year. Cloud ERP is relatively new in the ERP
industry, and organizations are still learning about its benefits and limitations.
The least common reason for not choosing cloud ERP or hosting is “Risk of security breach.” Last year, thiswas the most common reason. It appears that organizations are realizing how vigilant ERP vendors andhosting providers are when it comes to the security of their customers’ information. In fact, we have foundthat most cloud vendors are, by necessity, extremely vigilant about security because they know they are
popular targets for security breaches.

REASONS FOR NOT CHOOSING CLOUD ERP

19© 2020 Panorama Consulting GroupDIGITAL BUSINESSTRANSFORMATION VS.
ERP IMPLEMENTATIONTYPE OF PROJECT

According to Gartner, digitalbusiness transformation

is defined as “the process
of exploiting digitaltechnologies and supporting
capabilities to create arobust new digital businessmodel.”

Less than half oforganizations (43%) describe
their project as a digitalbusiness transformation.
In our experience, most organizations fall somewhere along the spectrum between an ERP implementation
and a digital transformation. It all depends on the size and complexity of their organization.
For example, large and complex organizations often pursue digital transformation, while large but less complex
organizations may pursue business optimization, which is a middle ground between the two. Digitaltransformation requires an intensive project roadmap that includes a current state assessment,
customer journey mapping, business design, software selection, pre-implementation planning andimplementation.
At the other end of the spectrum, a project might only include a current state assessment, selection andimplementation. Most organizations in our survey are closer to this end of the spectrum because, in our
experience, most companies are not in position to transform everything at once.
Among organizations moving from legacy systems, only 28% describe their project as a digital business
transformation. It’s not surprising that fewer of these organizations are pursuing digital transformation as thetransition from a legacy system is often more technology-focused than business-focused due to the technicalcomplexities of activities like data migration.
Regardless of the type of project an organization is pursuing, it’s important to achieve alignment between
systems and business requirements and ensure all stakeholders are aligned in terms of organizational goals.
20© 2020 Panorama Consulting GroupIMPLEMENTATIONAPPROACH

When choosing an implementation approach, organizations shouldcarefully weigh their options, as the ideal phasing strategy depends on

This year, less than half oforganizations are using amany factors.

phased approach, but more

For example, how quickly will employees adapt the new ERP system?

a big bang approach or athan half are using either

How much risk are we comfortable with? How much money are we

hybrid approach.

willing to spend? These are just a few questions organizations should
ponder before deciding on an implementation approach.
Before implementation, we work with project teams to review businessprocesses, which allows us to determine the most effective way toimplement the system.

ERP IMPLEMENTATION APPROACH

21© 2020 Panorama Consulting Group

THE HYBRID APPROACH
The most popular implementation approach among respondents is the hybrid approach. This approachcombines several different phasing approaches based on an organization’s unique needs.
It is a particularly good choice for large organizations with many employees, which is probably why there has
been an increase in organizations using this approach since last year. Organizations in our study this year
have an average of 6,163 more employees than last year.
In a typical hybrid implementation, organizations may choose to use the big bang approach for smaller
business units and a phased approach for larger business units.

THE BIG BANG APPROACH
Another common implementation approach among respondents is the big bang approach. In this scenario,
organizations go live with all modules and offices at the same time. This is a common approach for
implementations involving only one or two business units.
Since this year’s dataset included larger organizations, use of the big bang approach is less prevalent thisyear. For large implementations involving multiple business units, the big bang approach is less common
since it’s risky to have multiple business units simultaneously go-live on a new system.
However, among organizations moving from legacy systems, the big bang approach is actually more prevalent
compared to this year’s average. In fact, 40% of the organizations moving away from legacy systems reportusing a big bang approach.
This is surprising considering that legacy systems are usually too complex to phase out all functionality at thesame time. They are often homegrown, and only a few resources understand their configuration.
Regardless, all of these organizations consider their project a success. This is likely because 80% sought theguidance of a consulting firm. Consultants with experience in complex implementations can help organizations
minimize the risks of the big bang approach.
Despite the risks, the big bang approach can work well for organizations that are looking for a faster andlower cost implementation. Organizations that do use the big bang approach should develop contingency
plans to account for the possibility of the new system crashing.
22© 2020 Panorama Consulting Group

THE PHASED APPROACH
There has been a decrease in this approach since last year because more organizations are choosing a
hybrid approach. This is likely because they want to simultaneously benefit from the cost savings of the bigbang approach and the lower risk of a phased approach.
In a phased implementation, users move to the new ERP system in a predetermined series of steps. The
advantage of a phased rollout is that employees have more time to learn and adapt to the new system.
Unfortunately, this approach takes longer than the big bang approach and several adjustments may need tobe made along the way to keep the two systems temporarily bridged. Bridging the two systems is essential
because the first modules to be implemented may not function optimally without critical information frommodules yet to be implemented.

In a phased approach, an organization rolls
out one part of the ERP system at a time,

beginning at the core and then deploying
additional modules in phases.

23© 2020 Panorama Consulting GroupSTRATEGICALIGNMENT
When implementing ERP software, a clearly defined strategy is essential. Stakeholders shouldbe aligned around the organization’s digital strategy and desired business benefits. Alignmentis also necessary between people, processes and new technology.

PEOPLE, PROCESSES AND TECHNOLOGY
We have found that many companies are predominately focused on the technical aspects ofimplementation. However, if organizations want to achieve expected business benefits, theymust account for not only the technical aspects but the people and process aspects, as well.
Many of our clients pursue projects focused on people and processes. Before they select ERP
software, we help them define an enterprise strategy. We also help them design new businessprocesses to support this strategy.

24© 2020 Panorama Consulting GroupTECHNICAL ASPECTS ARE EASIER THANPEOPLE AND PROCESS ASPECTS
Of those organizations that have completed implementation, more than three quarters found the processchange aspects of their projects to be difficult or very difficult. A slightly smaller percentage of organizations
found the organizational change aspects difficult or very difficult, and an even smaller percentage found thetechnical aspects to be difficult or very difficult.

DIFFICULTY OF DIFFERENT ASPECTS OF ERP IMPLEMENTATIONThis is the same as last year, which isn’t surprising considering what we’ve experienced with clients. For
example, in our project recovery engagements, we often work with organizations that have overlooked
current state processes mapping or business process improvement. These organizations have put their old
processes into the new system, inadvertently encouraging workarounds, dependence on tribal knowledge
and use of manual processes. Organizations’ lack of focus on processes can breed resistance to change as
employees feel like they’ve had no input.
It is no wonder that organizations like this find the process aspects of implementation to be difficult.
Another difficult process-related aspect of ERP projects is defining process and data ownership. With
clear ownership, organizations can ensure long-term data accuracy and build a foundation for continuous
improvement. Consultants are helpful in this respect as they often will facilitate process mapping to helporganizations determine who owns processes and data. This informs decisions about who to involve in theselection process.
We recommend involving stakeholders from all departments. This collaborative approach results in process
improvements that align with business goals.

25© 2020 Panorama Consulting GroupCONSULTANTS CAN MAKE
ORGANIZATIONAL CHANGE EASIER
Later in the report, we analyze organizations’ use of consultants. When that data is correlated with the above
data points, we found that, of those organizations that sought change management guidance from a consultant,
only 8% found the organizational change aspects of their ERP implementations very difficult.
One of the most difficult organizational change aspects of ERP projects is obtaining employee buy-in.
Consultants are helpful in this respect because those with the right expertise can help organizations evaluate
their organizational culture and employees’ openness to change in order to develop a change management
plan. This plan guides communication with employees before, during and after ERP selection.

MOVING FROM A LEGACY SYSTEM
CAN LEAD TO CHANGE RESISTANCE
While 65% of all organizations in our study foundorganizational change difficult or very difficult, thiswas true of 83% of organizations moving from legacy
systems. This significant difference be attributed to
the fact that legacy systems and modern ERP systems
each have a very distinct user experience and may
involve the use of different business processes.
This leads to change resistance among employees,
especially when a big bang implementation approachis used.

26© 2020 Panorama Consulting GroupEXPECTED VS. ACTUAL
BUSINESS BENEFITSOne of the top warning signs of ERP failure we’ve seen is the lack of a business case and benefits realization
plan. When organizations define metrics of how they expect the new system to improve their business, it
ensures their investment is not wasted. We recommend using this business case beyond go-live as the ERP
system is refined and optimized.
A strong focus on benefits realization is likely is one reason that, among organizations thatcompleted implementation, more than half realized the benefits they expected to the extent they
expected in all but one category.

BENEFITS REALIZATIONThis is similar to last year, except that realizing benefits related to growth & competition was an additional
struggle area for organizations last year. It is not an area of struggle this year for two possible reasons:• More organizations are moving awayfrom legacy systems and toward modernchange management (see People &able to meet their growth goals simply byusage and leads to faster benefits realization.

ERP systems. These organizations may be
implementing basic ERP functionality.
27• More organizations are focusing on© 2020 Panorama Consulting Group

Processes section), which increases system

OVERALL BENEFITS REALIZATIONThis year, the average benefits realization for all categories is 61% – meaning 61% of organizations that
expected one of the benefits outlined in our survey realized this benefit (note: this section was only applicable
to respondents who said they have completed implementation). This is in line with our findings on how manyorganizations outlined measurable benefits before implementation – 63% reported that they did this.
Last year, the average benefits realization for all categories was only 37%. We did not ask organizations if theyoutlined measurable benefits, but based on the low benefits realization, it’s likely that fewer organizations
outlined benefits last year.

More than half of theorganizations that anticipatedspecific benefits realized them.

28© 2020 Panorama Consulting GroupBENEFITS REALIZATIONBY CATEGORYOne of our clients is lacking a
manufacturing execution system(MES). While their current system

REPORTING AND VISIBILITY BENEFITS

tracks some data, other data must
be manually calculated. This iscausing discrepancies in production
numbers as employees are focused

Among the different types of benefits, organizations

on producing as many products as

are most likely to realize reporting-related benefits.

possible instead of keeping accurate

Following are some examples of reporting andproduction counts. Inaccurate

visibility benefits we included in our survey:

production numbers can create
inventory issues as there is no• Gaining access to real-time data

accurate way to determine how• Ensuring regulatory compliancemuch more inventory is needed if
you do not know how much you

With data visibility becoming increasingly important

have used. We recommended theto businesses today, organizations are more likely

client implement an MES system

to pursue implementations with this goal in mind.

that can integrate with many types

Many of these organizations are likely defining key

of large manufacturing equipment

performance indicators related to data visibility andto capture valuable data. With anensuring their project stays focused on meeting

MES system, costs can be recorded

these targets.

more accurately and in real-timeon the shop floor by tracking

While today’s ERP software has more robust data

scrap, downtime, maintenanceinsights than in the past, this fact alone does

and labor. This cost data can be

not increase organizations’ chances of achieving

used to evaluate the profitability ofreporting-related benefits. All the robust functionality

production runs, which can informin the world is useless without a plan for how to

price adjustments or process/leverage it.

sourcing alterations. In addition,
the organization can realize cost

29

For example, to take advantage of advancedsavings from the ability to detect

reporting functionality, many organizations improve

quality issues during a production

business processes within their customer journey.

run. These are just a few reporting

This allows them to identify areas where they could

benefits that a modern MES systemcreate a more personalized customer experience.

will provide our client.

© 2020 Panorama Consulting GroupOPERATIONAL EFFICIENCY BENEFITS
Organizations also are likely to realize efficiency-related benefits.
Following are some examples of operational efficiency benefits we
included in our survey:• Improving productivity and efficiency• Reducing operating and/or labor costs• Optimizing inventory levels• Removing silos• Standardizing operations
With more organizations focusing on change management compared
to last year, organizations are likely seeing high system usage as theiremployees eagerly embrace new processes and technology. As a result,productivity increases as more workflows are streamlined.
Aside from change management, the best way to achieve efficiency gains
is by defining process improvements and measuring key performanceindicators throughout the project.

One of our clients has no maintenance management system in place. The shop floor
houses millions of dollars’ worth of machinery that is manually maintained by one
individual. Poor awareness of parts life and replacement needs can lead to excessive
machine down time as maintenance waits for parts to arrive. Therefore, we
recommended the client implement a maintenance management system that can
provide alerts for routine maintenance and keep track of the lifecycle of parts. This will
help them avoid machine failures that cause downtime, and it will make the process ofmaintenance monitoring much more efficient.

30© 2020 Panorama Consulting GroupGROWTH AND COMPETITION BENEFITS
More than half of the organizations that anticipated these benefits realized them. Following are someexamples of growth-related benefits included in our survey:• Improving the customer experience• Improving interactions with suppliers• Building new operating models
The reasons that more organizations are achieving these benefits compared to last year may be that more ofthem are moving away from legacy systems and more are focusing on change management.
Change management is essential to benefits realization because organizations can’t realize business benefits
if end-users aren’t using the new software. Therefore, it’s important to communicate with and train employees
as early as possible.
We use organizational readiness assessments to help clients identify resistance to change early in the project,so they can proactively address it. The organizational readiness assessment leads to the development ofa change management plan that reduces change resistance and helps employees understand how theirindividual processes support the organization’s growth.

TECHNOLOGY BENEFITS
Only 15% of the organizations that outlined technology-related benefits r ealized t hese b enefits. The
technology-related benefit included in our survey was “Reducing IT maintenance costs.”
One possible reason more organizations are not realizing this benefit is – as mentioned later in this report –more organizations are forgoing business process management or only focusing on it after software
selection.
This can create a greater need for software customization as overlooked business needs are recognizedlater during software implementation. Customization can greatly increase maintenance costs, especiallybecause of upgrade challenges.

31© 2020 Panorama Consulting GroupEXECUTIVE BUY-IN& INVOLVEMENT
Executives who truly support a project are involved in the following
activities (at minimum):•Approving the project budget•

Assembling a steering committee•

Actively participating in key project decisions•

Attending project status meetings•

Approving changes to scope that make business sense•

Judiciously approving software customizations•

Championing the project

Executive involvement ensures the ERP implementation doesn’t
become a technology project but aligns with the organization’s overall
strategy. It also ensures that key decisions are made in a timely
manner and resources are allocated appropriately.

32© 2020 Panorama Consulting GroupEXECUTIVE BUY-IN CAN DECREASE
THROUGHOUT THE PROJECT
Among those organizations that completed implementation, executive buy-in before selection was fairly high,but after selection it was quite a bit lower.

EXECUTIVE BUY-IN BEFORE AND AFTER ERP IMPLEMENTATION

Unfortunately, sometimes executive interest wanes as they move on to other priorities after selection.
Executive support is equally as essential after selection as it is before selection. It’s important to usechange management techniques to continually encourage executive engagement.

33© 2020 Panorama Consulting GroupHOW TO GAIN EXECUTIVE BUY-IN
1. Find Out What Executives Want from the

6. Provide Options

ERP System
Many executives like to see a variety of options. While
This may sound simple, but even the process oforganizations may feel like a new ERP system is themaking them sit down and define it will increase their

only viable option, it’s important to demonstrate thatinvolvement.

other options have been carefully considered.

2. Engage a Third Party

7. Develop a Risk Management PlanA third-party, like Panorama Consulting Group, can A risk management plan ensures that organizations
add credibility to organizations’ recommendations. mitigate risks that their project team may not see.
Executives may be more prone to listen to an This will decrease executives’ fears about potential
independent expert than their own staff.

cost overruns, timeline overruns and other risks.

3. Get Some Numbers Together

8. Seek Alliances from Other Functional Areas

If executives aren’t grasping the seriousness ofProblems with systems and processes generally

the situation, pull figures from our reports. Theseoccur in multiple departments. The more people that

datapoints can help demonstrate the need forare supporting the business case, the more likely

executive involvement.

executives are to seriously consider the proposition.

4. Understand the Problems with Current

9. Learn from Previous Change Management

Systems

Mistakes

Ask employees about their pain points andOrganizations should investigate and document

communicate them to executives by quantifying

previous change management initiatives conducted

their cost to the organization.

by their company. What worked? What didn’t? This
helps organizations position the new project as a

5. Develop a Business Casewell-thought-out initiative based on lessons learned
from previous failures.

Executives should have a clear picture of the total
cost of ownership (TCO) of the new system over the
next five years. It’s also important to outline businessbenefits and cost savings over time, then compare
this against the costs.
34© 2020 Panorama Consulting GroupEMPLOYEE BUY-IN & INVOLVEMENT
While executive buy-in frequently decreases after selection, employee buy-in often increases.

EMPLOYEE BUY-IN BEFORE AND AFTER ERP IMPLEMENTATIONOf those organizations that had little employee buy-in before selection, 83% had at least some buy-in after.
This is because it takes time to gain employee buy-in, and sometimes, no matter how much organizations
communicate with employees before selection, employees need to actively be involved in selection activities
in order to feel confident about the project.
We recommend involving employees in selection
activities, like requirements gathering, so they feel likethey have input into what system is ultimately selected.

One of our ERP selection and

They also should attend vendor demonstrations andimplementation clients achieved strong

rate system functionality. By participating in these

executive buy-in, which they leveraged

activities, employees will come away from the selection

to gain employee buy-in. We designed

process with a clear understanding of how the chosen

a communication plan to ensure thesystem can make their jobs easier.

communication from management wasconsistently supportive of change andEvery client we’ve worked with has had several

focused on a clear, unified message that

employees who initially resisted change but became

employees easily understood.

supportive of the project once they had the opportunity
to communicate their concerns. This communication
often took place one-on-one, but sometimes it was
facilitated through “town hall” meetings.
35© 2020 Panorama Consulting GroupWHY DOES EXECUTIVE BUY-IN DECREASE
WHILE EMPLOYEE BUY-IN INCREASES?

Before selection, executives are typically very excited about the idea ofgetting rid of outdated technology, while employees like their familiar
processes. However, after a system is selected, employees often
become more open to change because they’ve had a chance to share
their operational pain points and see firsthand how a new system canmake their jobs easier. Executives, on the other hand, often shift theirfocus to implementation once a system is selected and this reminds
them of the time, cost and effort ahead of them and their team.

If you want an accurate cost estimate for your project, be sureto accurately scope your project and account for some of themost overlooked costs. ERP consultants can help you set realistic
expectations that won’t scare executives or get you fired for causingbudget overruns.

36© 2020 Panorama Consulting GroupCONSULTANTS
ERP implementation expertise is vital when it comes to setting realistic expectations and reviewing lessons
learned from the most successful and least successful implementations. Oftentimes, organizations can only
find this expertise in a third-party, like an ERP consultant or business transformation consultant.
More than three quarters (78%) of organizations in our study are using some type of consultant to assist
with their ERP projects, and the most common guidance organizations are seeking is ERP implementation
guidance.

CONSULTANT GUIDANCEThe need for implementation guidance was evident in last year’s report, as well. This indicates that the typeof organizations implementing ERP software generally are not the type with a large number of sophisticatedtechnical resources on staff.
This is in line with the fact that more than a quarter of organizations in our survey this year are replacing
legacy software. These organizations have no experience implementing a modern ERP system, so they often
seek the experience and expertise of third parties.
Our clients often fall into this category, as well.
They seek guidance on implementation activities,
such as system design, configuration and testing.
In addition, many seek guidance on the people andprocess aspects of implementation, such as change
management and business process management.

37© 2020 Panorama Consulting GroupCHANGE MANAGEMENT AND BUSINESSPROCESS MANAGEMENT ARE ESSENTIAL
IMPLEMENTATION ACTIVITIES
Among the organizations in our survey that are seeking implementation guidance, 49% are seeking
implementation and change management guidance, and 43% are seeking implementation and businessprocess management guidance.
It’s interesting that less than half of organizations seeking implementation guidance understand thatpeople and process activities should be woven throughout implementation. Another possible explanation isorganizations think they can focus on people and processes without external guidance as long as they haveexternal guidance for the technical aspects of implementation.
Among all organizations in our survey, we see a more positive story about change management: 51% areseeking change management guidance, which is a 7% increase over last year. This indicates a trend toward
an increased awareness of the value of change management.
This increased awareness is something we’ve also seen among our newer and prospective clients. Thismay be due to the focus of our website and other published content, but we are also seeing an increase inchange management-focused content across the industry, especially among ERP vendors – many of whom
have blogs and other published content of their own.

38

© 2020 Panorama Consulting Group

THE DANGERS OF SELECTING
SOFTWARE WITHOUT THIRD-PARTYGUIDANCE
Surprisingly, there has been a 10% decrease in organizations
seeking selection guidance from consultants. With the increasing
popularity of software review websites, some organizations
may feel that they can select software without expert guidance.
However, growing volumes of data available online can be
overwhelming and can waste time as organizations look for

One of our clients approached us

information on the actual functionality of the various systems.

with the goal to increase revenue
and implement a new ERPWhile these websites can be one part of an organization’s

system. As we assist them in theselection toolkit, they should only play a small role. The rapid

selection of an ERP system andpace of technology development means a software review from

CRM system, we are conducting

a few months ago may already be obsolete.

onsite requirements gathering
sessions and identifying unique

Another problem with review websites is that every company ispain points, such as a manual

unique, and just because an organization is looking at reviews

sales and order managementfrom similar organizations does not mean their experience willprocess. Insights like thisbe the same. Furthermore, most of these review websites are notare informing our software

truly independent and unbiased, as they promote software vendors

recommendations.

that pay them for lead generation.
For example, it can difficult to know what kind of change
management activities an organization used when implementing
the software. Without this knowledge, it’s impossible to knowwhether their software satisfaction (or dissatisfaction) was
influenced by organizational variables or the software itself.
In contrast, evaluating software with the guidance of an ERP
consultant ensures organizations select the best system for theirunique needs and budget. It also gives organizations access to
up-to-date user experience insights from the consultant’s otherclients.

39© 2020 Panorama Consulting GroupPEOPLE &PROCESSES
A successful ERP implementation is not strictly an IT initiative. To
ensure employees understand this concept, CIOs should shift focus
from IT strategy to business strategy.
This is no small feat. Navigating the dizzying array of technology options
is time-consuming, leaving little time to consider business objectives.
In addition to understanding business objectives, it’s important for
executives and the project team to understand the magnitude of
proposed changes. This enables organizations to understand the impact
of change so they can plan for the appropriate change management
activities.
When executives are clear about the project goals and the degree ofchange, they will know how to support the ERP project team.

40© 2020 Panorama Consulting GroupBUSINESS PROCESSMANAGEMENTBusiness process management involves the mapping of current processes, the identification of pain points
and the design of future state processes. We have two different approaches to business process
management, depending on each client's unique needs:•

Value Chain Mapping - Top-down phased approach to business design utilizing best practicebusiness process reengineering techniques to break down functional silos and provide end-to-end
process understanding.
•Value Stream Mapping - Bottom-up business process improvement utilizing Lean/Six Sigmatechniques to model lower-level process activities and workflows that are prioritized, defined andoptimized for goods or services.
Of those organizations that completed implementation, almost all of them improved business processes aspart of their project.

FOCUS ON BUSINESS PROCESS MANAGEMENT

41© 2020 Panorama Consulting GroupBUSINESS PROCESS MANAGEMENT(CONTINUED)
Improving only key business processes is more common than improving all business processes. This makes
sense since most organizations have some processes that don’t need improvement. Keeping these processes
in their current state allows more time for improving processes that are truly inefficient.
Compared to last year, there has been a decrease in the percentage of organizations improving only key
business processes. This is due to the increase in the percentage of organizations that did not improve any
processes.
These organizations are not recognizing the value of business process management. This may be partially
due to the fact that ERP vendors are increasingly promoting industry best practices, leading organizations tobelieve they can rely on technology to define all their processes. Organizations replacing a legacy system areespecially vulnerable to these marketing tactics.
However, in our experience, when organizations invest in business process management, their chosen
ERP system aligns more closely with their business needs. In addition, employees and executives are moreinvested in the project’s success.
In fact, we’ve found that one of the leading causes of budget and timeline overruns is a lack of focus on
business process management. This also appears to be true of organizations in our study. In addition to
the decreasing focus on process management, we also saw an increasing severity of timeline and budget
overruns (see the ERP Implementation Results section).

While we do recommend using pre-configured bestpractices for processes related to how work is done,
we don’t necessarily recommend pre-configurations
for high-level processes related to business policy
or process policy.

42© 2020 Panorama Consulting GroupWHEN TO IMPROVE BUSINESS PROCESSES
Executives and managers with a deep-seated passion for making the business run better are likely to dedicate
a strong focus to business process management. These individuals prioritize process work over considering
new technologies. They understand that streamlined cross-functional processes enable efficiencies and neworganizational capabilities.
However, more than half the organizations that completed implementation improved processes after
selection, and more than a quarter improved processes during selection. Only 7% improved processes
before selection.

TIMING OF PROCESS IMPROVEMENT

It’s surprising to see so few organizations improving processes before selection, as this is what we recommend
for most of our clients. However, some of our clients are only interested in investing in current state process
mapping.
This involves asking clients for a high-level description of their processes, which allows them to identify pain
points and process owners. This is important because employees may be experiencing unique pain points
that the ERP vendor may not have accounted for when designing best practices.
Vendors also have not considered process enablers or constraints. For example, there may be multiple
owners of one process, and this could constrain efficiency. In cases, like this, it’s important to develop a RACI
matrix to define who is responsible, accountable, consulted and informed for each process.
We have had to educate many clients about the importance of understanding employees’ pain points. This isan especially difficult point to convey to clients who see their ERP project as an IT project instead of businessproject. However, we have successfully managed to convince these clients to include business stakeholders
in the project before evaluating systems.
While these organizations are at least mapping their current state, those that do not invest in future stateprocess mapping before ERP selection may be missing the opportunity to improve their high-level processes
based on their organizational goals rather than system functionality.
43© 2020 Panorama Consulting GroupTRANSFORMING THE CUSTOMEREXPERIENCE

Our clients often focus their process improvement
efforts on the customer experience. We work withthem to assess their current state and determine
what is working and what isn’t.
Following are some opportunities for customer
experience transformation we’ve found in several
organizations:
•

•

•

•

Using new analytics capabilities toenhance customer intelligence

Leveraging new technology (mobile,

wanted to launch a newstore in a new country andpursue digital transformation.
We helped them map theirecommerce, etc.) to enhance sales

current customer journey andIntegrating customer touch points into a

implementing a new ERP system.

seamless experience

Automating processes to allow workers tofocus on innovation and creativity rather
than repetitive efforts•

Using real-time data to improve•

Augmenting physical products/services

performance managementwith digital products/services to sharecontent across organizational silos

44

One of our recent clients© 2020 Panorama Consulting Group

implement improvements while
This client now understands thatprocesses are organizational
assets and should be managed
as such.

ORGANIZATIONAL CHANGE
MANAGEMENT
Organizational change management is an important aspect of ERP implementation. Organizations that
dedicate the right amount of focus to change management typically see the following results:•

High system adoption•

Increased productivity•

High benefits realization

Of those organizations that have completed implementation, most dedicated at least a moderate focus tochange management.

FOCUS ON CHANGE MANAGEMENT

Many companies assume that the ERP vendor willhandle change management, but many vendors
don’t. Those that do still require involvementfrom internal employees. For example, whilevendors may train employees on how to use the“vanilla” software, they may not customize thetraining to reflect the company’s unique software
configurations.

45© 2020 Panorama Consulting GroupCHANGE MANAGEMENT(CONTINUED)
The percentage of organizations reporting a moderate to intense focus on change management has
increased since last year, which makes sense considering the increase in use of expert guidance for change
management. In fact, 85% of organizations that used consultants for change management dedicated amoderate to intense focus to change management.
When consultants like Panorama Consulting Group provide change management guidance, they
ensure that it isn’t an afterthought. They prepare employees for change well before implementationby conducting readiness assessments and analyzing the results to develop a comprehensive change
management plan.
While some consultants moderately focus on change management, Panorama intensely focuses on change
management because we know that people and processes directly impact the effectiveness of technology.
Further evidence that an intense focus on change management is essential is the fact that, amongorganizations that are intensely focusing on change management, 100% consider their project a success(project outcomes are discussed in the ERP Implementation Results section).

One of our clients from the agriculture industry
hired us because they were dissatisfied withthe change management plan their ERP vendor
provided. We developed a more in-depth change
management plan for them and provided a moreexperienced change management team thanthe vendor had. This is helping them prepare
employees for change.

46© 2020 Panorama Consulting GroupEMPLOYEE COMMUNICATION IS ESSENTIAL
One of the most important aspects of change management is to proactively communicate with employees bydeveloping a communication plan that identifies the who, what, why and how of the change.
However, only 30% of organizations that completed implementation began communicating with employees
before selection.

TIMING OF EMPLOYEE COMMUNICATION

Among those organizations that intensely focused on change management, employee communication wasstronger – 57% of these organizations began communicating with employees before selection. While this issignificantly higher, it still means almost half the organizations that intensely focused on change management
still had an incomplete understanding of change management best practices.

47© 2020 Panorama Consulting GroupEARLY COMMUNICATION DIRECTLYIMPACTS PROJECT SUCCESS

It’s unfortunate that more organizations don’t communicate earlybecause all of the organizations that communicated with employees
before selection consider their project a success, while only 86% of
the organizations that began communication during or after selection
consider their project a success.
It can be concluded that waiting to communicate reduces the likelihoodof ERP success by at least 14%. This is because uninformed employees
are much more likely to resist change than employees who understandthe project’s impact on the business and their individual jobs. Thischange resistance leads to budget overruns, timeline overruns andslow benefits realization.

48© 2020 Panorama Consulting GroupESSENTIAL CHANGE MANAGEMENT ACTIVITIESThe most common change management activities among organizations that completed implementation were
customized training and developing a change management strategy. The least common change management
activities were developing coaching plans for leaders, building feedback loops and managing resistance.

CHANGE MANAGEMENT ACTIVITIESCoaching plans, feedback loops and resistance management are important aspects of a change management
strategy, so it’s interesting that not all organizations that developed a change management strategy focusedon these key components. Among organizations that developed a change management strategy, only 32%
developed coaching plan, 42% built feedback loops and 37% focused on resistance management.

49© 2020 Panorama Consulting Group

6 TIPS FOR COACHING EMPLOYEES
Remove barriers

Highlight the tangible benefits

Barriers to change may relate to family, personalCase

issues or physical limitations. Coaches should fully

demonstrate the benefits of change. Conducting

understand the individual situation of each employee

pilot programs and sharing the successful outcomesto determine how to remove barriers.

is also useful for generating buy-in.

Build desire by providing choices

Use money or power

Employees need to know, in simple and clear terms,

This tactic works well with mid-level and senior

what their choices are and what consequences they

managers that are critical about the success of theface for making a particular choice. This puts a level

ERP project. Offering higher pay in exchange forof control back into the hands of employees.

project support can be worth the investment.

Create hope
Employees are more open to change when it isframed as an opportunity for a better future. Coaches
can create desire for change among employees byexpressing their own excitement and enthusiasm.
While this tactic is effective, it can be misused if
coaches create false hope and don’t believe in thechange themselves.

studiesandtestimonials

cantangibly

Coaching Plan
A detailed outline of how you
will mentor employees to accept
change.

Feedback Loops
Detailed, clearly definedprocesses outlining how end-

Convert the strongest dissenters
By focusing their energy on the most vocal dissenters,coaches can reduce the spread of negativity. Anotherreason that converting vocal dissenters is worthwhile
is because they may be some of the most vocal
advocates when converted.

users should share ideas andvoice concerns. This also includes
processes outlining how the
project team should respond.

Resistance Management
Any strategically planned activity
aimed at reducing employees’
aversion to change.

50© 2020 Panorama Consulting GroupEDUCATING ORGANIZATIONS ABOUT
CHANGE MANAGEMENT DOESN’T ALWAYS
WORK
While 30% of organizations developed a resistance management planand 30% built feedback loops, these activities were even less common
among organizations replacing a legacy system. In fact, only 17%
developed a resistance management plan and 17% built feedback
loops.
It’s not surprising that change management awareness is significantly
lower among organizations without modern ERP experience. Change
management is a much more popular talking point among ERP vendors
and ERP consultants today than it was a decade ago.
If organizations aren’t used to hearing about the importance ofcomprehensive change management, they likely will dismiss the concept
when they first hear about it. After all, the new technology concepts are
already providing an information overload.

Without a change management team, the project team will most likely
become overwhelmed by project fatigue and conflicting priorities.
That’s why it’s important to build a change management teamresponsible for working with third-parties to develop strategies that
address communication, training and benefits realization.

51© 2020 Panorama Consulting Group

THE IMPACT OF CHANGE
Organizational change management is important because change has a significant impact on an organization’s
workforce. When employees hear the word “change,” they know they will be asked to give up their familiar
methods of performing tasks. They also worry that their job may be replaced by automation.
The former is usually true, while the latter isn’t necessarily the case in every ERP project. In fact, our datashows that the most common workforce impact of ERP projects and digital transformations is reskilling, while
the least common impact is downsizing.

CHANGE IMPACTS

In the “other” category, some of the impacts mentioned were increased collaboration among employees andthe need to hire external resources to fill the day jobs of project team members.
In a successful ERP project, the positive impacts of change will outweigh the negative impacts – both from theperspective of executives and employees.
Ultimately, change is essential for organizations that want to grow and thrive in this competitive environment.
Instead of giving up hope that employees will accept change, it’s important to follow change management
best practices and articulate to the employees that a new system can make their jobs easier and is not there
to replace them.

52© 2020 Panorama Consulting GroupERP IMPLEMENTATIONRESULTSA successful ERP implementation not only requires a focus on people
and processes, but it requires a focus on timeline development, project
governance and resource planning. Without a focus on these preimplementation activities, the ERP implementation may be delayed orover budget.

53© 2020 Panorama Consulting GroupPROJECT COST
The costs associated with an ERP project can be difficult to estimate. There are many activities organizations
don’t consider upfront, and these unrealistic expectations can lead to unexpected costs and budget overruns.

OUR CLIENTS TYPICALLYANTICIPATE THESE COSTSWE OFTEN EDUCATE OUR
CLIENTS ON THESE COSTS•

License•Customizations and integrations•

Maintenance•

Optional products•

Hosting•

Internal resources (core team, SME’s, etc.)•

Support and systems management•

Backfill•

Technical implementation•

Change management•

Travel•Pre-implementation tasks•

Hardware•Project governance

THE FREQUENCY OF BUDGET OVERRUNS IS DECLINING
Of those organizations that have completed implementation, more than half (62%) completed
their projects at or under budget. This is an increase of 7% over last year.
However, those that did experience overruns were an average of 66% over budget with
$2,651,183 as their expected budget and $4,395,623 as their actual budget. Last year,
organizations’ budget overruns were less significant (24% over budget).
This could be due to the fact that, last year, more organizations were focusing on businessprocess management. As mentioned earlier, a lack of business process management can increasecustomization needs, which is an unexpected cost that accumulates as employees submit changeorders throughout implementation and beyond.

54© 2020 Panorama Consulting GroupORGANIZATIONAL ISSUES ARE A PRIMARY CAUSE OF
BUDGET OVERRUNSThe most common reasons for budget overruns were organizational issues (i.e., governance issues, resistanceto change, process redesign) and scope expansion.

REASONS FOR BUDGET OVERRUNS

A system that doesn’t align with an organization’s business processes causes employee frustration and otherorganizations issues. On a related note, scope expansion is often caused by frustrated employees making
change requests, which leads to unexpected customizations.
These two reasons also were the most common reasons for budget overruns among organizations replacing
legacy systems. Scope expansion was the most common reason, and this is likely because organizations thathave never implemented a modern ERP system do not understand the complexities of modern technology,
and ERP vendors are not providing realistic expectations.

QUICK REFERENCE
Organizational Issues (i.e. governance,resistance to change, process
redesign, etc.)
Technical issues (i.e. hardware or database issues, scalability, system
integrations, etc,)
Data issues (i.e. reconciling multiple data sources, ensuring data
integrity, etc.)55© 2020 Panorama Consulting GroupORGANIZATIONS HAVEREALISTIC EXPECTATIONS ABOUT CONSULTING FEES
The least common reasons for budget overruns were underestimated consulting fees and additional
technology purchased. Compared to last year, fewer organizations underestimated consulting fees.
In our experience, unrealistic expectations about ERP success factors is a leading cause of underestimatedconsulting fees. It is encouraging to see more realistic expectations this year. It appears that organizations
are realizing their need for success factors, like change management, before the project is underway, and as
a result, they are encountering fewer unexpected costs.
During client engagements, we are seeing more stakeholders with realistic expectations about the need forchange management. These stakeholders are not surprised to see us propose a significant focus on change
management.

HOW MANY INTERNAL RESOURCES
DO ORGANIZATIONS NEED?
While “resource constraints” was not a common reason for budget
overruns, our clients frequently inquire about the level of internal
resource commitment they need.
Our report reveals that small and medium sized businesses that havecompleted implementation used an average of 18 full-time internal
resources, and large enterprises used an average of 31 full-time
internal resources.
Overall, the average number of internal resources was 25. This is nineresources more than last year, which may be attributed to the fact thatlarger organizations are participating in our study compared to lastyear. These organizations have more employees and are purchasing
more software licenses. More employees means more resources
are needed to conduct training and lead other change management
activities.

56© 2020 Panorama Consulting Group

Some internal roles

essential to change
management:•

Project Manager•

Project Sponsors•

Sponsor Coach•Change Leader•

Change ChampionNEGOTIATING WITH ERP VENDORS
Despite the cost overruns organizations experienced, many organizations (including those that have notcompleted implementation) saved a significant amount on their software purchase by negotiating with their
ERP vendor. Our study shows that organizations are saving an average of 27% from the vendor’s initial costestimate.
Of course, cost savings are relative to the size of the organization. This is what our study found in regard toorganization size:

Cost Savings

Licenses Purchased

SMBs

27%

251

Large Enterprises

39%

992

Large enterprises saved 15% more this year compared to last year. This is likely because they spent moretime developing an overall negotiation strategy and relying on third-party guidance throughout the process.
While only 24% of organizations used consultants for negotiation guidance, this is a 3% increase over lastyear.
Organizations that work with consultants for negotiation likely find more negotiating leverage with vendors
due to consultants’ ability to use the increasingly competitive vendor landscape to the client’s advantage. This
may account for the majority of the increase in cost savings.
When working with a third party for vendor negotiations, we recommend looking for experts that provide
their clients with negotiation workbooks detailing apples-to-apples price comparisons.

57© 2020 Panorama Consulting GroupPROJECT DURATION
Like the project budget, the project timeline is influenced by a variety offactors that many organizations don’t consider when developing theirproject plans.
Even with a carefully crafted timeline, most organizations find the needto adjust the timeline throughout the project. This is generally a goodthing as long as it is done infrequently and strategically (and long before
go-live).

58© 2020 Panorama Consulting Group

THE FREQUENCY OF TIMELINE OVERRUNS IS DECLINING
Of those organizations that have completed implementation, more than half (53%) completed their project
within the expected timeline. This is an increase of 11% over last year. Again, an increased focus on change
management likely is a large contributor.
In addition, the decrease in the use of the "big bang" implementation approach may have contributed.
This approach tends to be riskier than organizations anticipate, so opting for another approach may
reduce the likelihood of encountering unexpected, time-consuming roadblocks. Organizations thatexceeded their original timeline were an average of 33% over their expected timelines with 12 months
as their expected timeline and 16 months as their actual timeline.
Last year, organizations were an average of 11% over their expected timelines. This increased severity oftimeline overruns is closely related to the increased severity of budget overruns.

ORGANIZATIONAL ISSUES LEAD TO TIMELINE OVERRUNSThe most common reason for timeline overruns was the same as that of budget overruns: organizational
issues (i.e. governance issues, resistance to change, process redesign). The least common reasons for timeline
overruns were technical issues and resource constraints.

REASONS FOR TIMELINE OVERRUNSIn our experience, organizational issues are often a result of underestimating the amount of business-related
activities involved in an ERP project and overestimating the IT-related activities.

59© 2020 Panorama Consulting GroupSCOPE EXPANSION IS A STRUGGLE AREA FOR
ORGANIZATIONS REPLACING LEGACY SYSTEMS
Among organizations that replaced legacy systems, scope expansion was the most common reason fortimeline overruns – just as it was the most common reason for budget overruns. Again, this likely is due toan organization's lack of experience as well as unrealistic expectations from vendors.
Many ERP vendors make unrealistic estimates for project timelines. They do not account for resource
constraints or essential project activities, like resistance management. We recommend developing a timeline
broken down into phases and activities and detailing the level of core team and project management
commitment required each month.

RECOUPING COSTS
Organizations take an average of seven months after go-live to recoup ERP project costs. Our clientstypically realize full business benefits from out-of-the-box functionality within nine to twelve months of golive. By “full,” we mean the full amount of benefits they expected.
In our experience, many organizations recoup ERP project costs sooner than they achieve full benefits
realization because the expected benefits we outline together are typically long-term benefits or part of acontinuous improvement plan.

60© 2020 Panorama Consulting Group

SUCCESS &FAILUREWe asked organizations that completed implementation whether they would consider their overall ERP project
to be a success or failure. Nearly all (93%) organizations said they consider their ERP project a success.
This makes sense, considering the increase in on-time and on-budget projects and the increase in overall
benefits realization.

HOW TO DEFINE ERP
SUCCESS
Some companies’ measurement of success iswhether the project is on-time and on-budget andthe ERP system is being used. For them, true
return on investment is an afterthought.
Instead of taking this approach, we recommendthat organizations define and quantify how they willmeasure success. For example, is their measureof success to reduce inventory costs and internal
overhead? Is it to materially improve customer
service and satisfaction? If so, by how much?
Whatever benefits an organization hopes to achieve,
it is important to define key performance indicatorsand communicate them to all stakeholders. This
will help the ERP project team determine what ERP
software and business processes are necessary toachieve the company’s goals.

61© 2020 Panorama Consulting GroupCONCLUSIONAs organizations replace their old systems, they are realizing their need for change management guidance.
Transitioning from old technology to new technology typically requires a more intense focus on change
management than moving from one ERP system to another.
In fact, the stark differences between old technology and new technology make training more challenging
and change resistance stronger. This steeper learning curve means that preparing employees requires moretime and money than many ERP vendors estimate since they’re often basing their estimates on clients thatmoved from one modern ERP system to another.
While organizations continue to struggle with the specifics of organizational change management, they are
dedicating more focus to it than in years past.
While more organizations are seeking change management guidance, each consulting firm’s methodology
is different, which explains why many organizations are overlooking several important change management
activities. The change management activities we recommend for clients – especially those transitioning
from legacy systems – are focused on building awareness, desire, knowledge and ability among
employees and reinforcing change through performance management.
The increased focus on change management this year yielded more positive results in terms of benefits
realization. It also resulted in fewer budget and timeline overruns.
Clearly, the importance of change management cannot be argued – whether an organization is moving awayfrom a legacy system or from one ERP system to another.

62© 2020 Panorama Consulting GroupA FEW FINAL TIPS FOR ERP PROJECT SUCCESSFROM PANORAMA'S EXPERTS
1. Ensure Executives are on Board
Executives

shouldunderstandtheimportanceofchangemanagement

andunderstand what activities are necessary for change management success. This is essential
because the most effective change management strategies start at the top. People model
the behavior they see, and inconsistency erodes employees’ trust in leadership.

2. Build a Project Team
When it comes to large-scale projects that involve many stakeholders, it’s essential toform a project team. Part of this project team should include an organizationalchange management

team

responsiblefordetermining

employees’changereadiness and developing a change management plan.
We also recommend designating change agents as key influencers within the change
management team responsible for executing many of the communication activities within
the change management plan.

3. Facilitate Organizational Readiness Assessments
An organization cannot implement transformational change without understanding
their employees and their organizational culture. Conducting an online survey andseries of focus groups can give organizations an idea of the strengths andweaknesses of their organizational culture. This insight can identify the root causes ofchange resistance and help organizations determine strategies for implementing change.

4. Conduct Organizational Impact Assessments
Organizations can simply inform employees that their jobs will change, or they can
explain exactly how they will change. An organizational impact assessment helps
organizations understand the degree of change and nature of change, so they caneffectively communicate this to employees. Communication should be targeted,personalized and continuous.
63© 2020 Panorama Consulting Group5. Begin Training Early
There is a common assumption among project managers that employee training should be
conducted a few weeks before changes are rolled out. Instead, employees should receive
multiple rounds of training well before they are expected to adopt new processes andtechnology.
While it is tempting to train employees in one session, this is never a productive practice.
Regular training sessions ensure employees retain information and learn to use newsoftware functionality as it is rolled out over time.

6. Customize Employee Training
While most ERP vendors have training materials for their products, the training isn’t
customized. When organizations train employees without considering the nuances uniqueto their organization, employees may experience confusion, and training won’t be nearly
as effective.
Training materials should be tailored to an organization’s unique business processes. A
training program should cover more than just how to use the ERP system. Employees alsoneed to know what processes and decisions need to happen outside the system.

7. Listen to Employees’ Concerns
Bottom-up communication is important because end-users may have insights that seniorleaders don’t have. End-users have this insight because they are the ones performing thebusiness processes.
In addition to insights, end-users will also have concerns. These should not be taken lightly,
as employees respond much more positively to change when they know their concerns areseriously considered.

These seven tips will help your organization achieve ERP project success. You
also will need a strong focus on business process management and strategicalignment. Request a free consultation on the following page to learn more
about the success factors necessary for achieving organizational goals.

64© 2020 Panorama Consulting GroupABOUT PANORAMA
CONSULTING GROUP
Panorama Consulting Group is an independent, niche
consulting firm specializing in business transformation and ERP
system implementations for mid- to large-sized private- andpublic-sector organizations worldwide. One-hundred percent
technology agnostic and independent of vendor affiliation,
Panorama offers a phased, top-down strategic alignment
approach and a bottom-up tactical approach, enabling eachclient to achieve its unique business transformation objectives

Contact Info
+1 720 515 1377
info@panorama-consulting.com
Panorama Consulting Group
5975 South Quebec Street
Suite #207
Greenwood Village, CO 80111

by transforming its people, processes and technology.

PANORAMA SERVICES(Click below to learn more)

ERP Selection

Change Management

ERP Implementation

Business Process Management

ERP Contract Negotiation

Human Capital Management

ERP University

M&A Integration

Digital Strategy

Crisis Management

Technology Assessment

Turnaround Analysis

Project Auditing & Recovery

Financial Restructuring

Software Expert Witness Testimony

Operational Restructuring

Still have questions?
Click below to speak with a Panorama expert.

Free consultation65© 2020 Panorama Consulting Group