Agresso Studies Show ERP Systems Are Too Inflexible, And Costly

Unit 4/Agresso has been commissioning research projects with CFO Magazine and IDC, and their most recent study was a look at how customers are affected when changes must be made to ERP software to accommodate both software and business changes. The report, titled “Modifying and Maintaining ERP Systems: The High Cost of Business Disruption,” was just another affirmation of what ERP vendors have known for a while: clunky, hard-to-upgrade products requiring a complex system of integrators cannot keep up with modern business needs.

IDC surveyed 200 software customers, and focused on five stimuli of systems change, and nine categories of disruption cost metrics. The motives for systems change are: regulatory requirements, organizational reorganization/restructuring, mergers and acquisitions, financial management-driven changes, and new/altered business practices. Types of disruption cost metrics: decreased operation efficiency, decision-making efficiency, customer satisfaction, or stock price; delayed cost reduction plans or product launches; lost market share; missed opportunity for or delayed acquisition; and payment of fines for noncompliance. It’s important to note that participants were asked if they’d experienced one of the disruption costs for each of the five systems change drivers. If they did, they were asked to quantify the effect; if they didn’t, their answers were considered null.

About 73% of respondents named the addition of modules or functionality as one of the changes made to their ERP system, and integrations and modifications to existing applications were the 2nd and 3rd biggest factors, respectively. Other highlights: 22.6% said changes caused a drop in stock price, there was an overall 14% revenue loss due to delayed launches, and a 16.6% decline in customer satisfaction. Those are all pretty major divots on any business’s landscape.

The solution, of course, is not new. This report only underscores the need for ERP systems that are more agile, and
can meet the needs of businesses that are constantly—on a day-to-day basis—in flux. ERP vendors need to shape up their products, and fast.

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