A Massachusetts Institute of Technology study found that agency managers can encounter up to a year of declining returns on the ERP investment while the agency works out the kinks, Luellen said. Another study, by the Gartner Group Inc. of Stanford, Conn., found that at least half of all ERP initiatives are completed 200 percent over budget, Luellen said. Nearly 70 percent of all IT initiatives, including ERP projects, fail before completion, he added. There are other management challenges as well. Such an overhaul to an organization's operation can transform a stable, long-term staff into one prone to turnover, Luellen said.
Managers often leave because of stress.
And new employees who are given high-tech training to operate the new system become targets of recruiting by the private sector. Problems can result when departments fail to work cohesively with one another, said Vice Adm. John Lockard, commander of Naval Air Systems Command. The Navy will change little from the SAP model. And once installed, ERP systems need plenty of attention, such as continuous upgrades. A third of all expenditures on an ERP system should be for regular upgrades and improvements, Luellen said.