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By Tim Ferguson, 25 September 2009 10:01

NEWS

Cost over-runs on the largest ERP implementation projects can reach tens of thousands of pounds per month - so what are the classic stumbling blocks that delay the roll out of these gigantic projects.

The late completion of ERP projects can create problems in terms of additional cost, delayed savings and potential loss of revenue, meaning the CFO has a real interest in reducing these delays. According to research commissioned by ecommerce technology maker GXS, 84 per cent of businesses it surveyed had experienced ERP roll-out delays due to integration issues with suppliers and partners.

The research also found that when the biggest ERP deployments are delayed this can waste as much as $45,000 per day - more than $1m per month.

Tony Lock, programme director at Freeform Dynamics told silicon.com: "There are certainly delays in ERP projects but that, I think, is not specific to ERP projects, it's rather a symptom of IT projects in general. There are very few major projects that go off perfectly on time with few challenges along the route."

One big issue is that ERP implementations significantly change business processes - meaning people have new responsibilities and are working in new areas - something Lock said also has political connotations that can be tricky to resolve.

Christian Hestermann, research director for ERP at Gartner, said that many ERP projects suffer from delays as they involve a large number of different people within the business and "a lot of distributed responsibility".

He added: "Normally it does not only have to do with technology. It's more things like poor planning, unclear responsibilities, people pointing at each other. These implementations look like a technology project but it's much a business and people kind of thing."

To minimise the potential for problems, Hestermann said these projects need management buy-in and good planning. They also need to have clearly defined objectives and processes in order to reach the right conclusion.

Freeform Dynamics' Lock added there aren't actually that many people with the necessary experience around big ERP projects, so it's hard to find the right people and even if you do, their services come at a cost.

"Changing technology is difficult, changing processes is more difficult, changing people is the hardest task of all," he said.

Another problematic area is the scope of the ERP project. The GXS research found that 34 per cent of data in ERP systems originates from outside the enterprise - for example from customers and suppliers - adding further to the complexity.

Lock said: "ERP by its very nature tries to embrace quite a wide swathe of the infrastructure so the actual technical integration aspects of it can be quite challenging in and of themselves."

Angela Eager, senior analyst at the Ovum Butler Group, added: "The complexity of the system in terms of scale (functionality, users, instances, physical and virtual locations), and integration to other systems are also significant factors."

Eager said the scope of this kind of project isn't often "set in stone" so is subject to change during implementation. The need to be flexible therefore means completing projects in a set timeframe is often difficult.

Despite these concerns, Lock feels the issues affecting ERP rollouts are increasingly becoming well understood.

He said: "I don't think that the delays are getting worse. I think that we are getting more experience with big ERP projects and we are beginning to learn not to reinvent the wheel each time but to take the best practice that's already been established and exploit that."

Ovum Butler Group's Eager added there is a trend away from "big bang" implementations which "virtually guarantee delays" to more incremental approaches which make ERP implementations more manageable and likely to be delivered on time. She said many businesses she works with have found this approach more successful.