When it comes to the ERP software landscape, Tier 1 ERP vendors continue to reign supreme -- even when their subjects are less than satisfied with the results, according to a new study from Denver, Colo.-based Panorama Consulting Solutions.
"We knew from our 2013 ERP report, which was published earlier this year and looked at all ERP implementations, that most projects had gone over budget, taken longer than expected, and failed to deliver expected business results," said Eric Kimberling, managing partner at Panorama. "However, we didn't know how the different vendors might compare to one another."
In the new study for 2014, named Clash of the Titans, around 400 users of ERP from the top three vendors -- SAP, Oracle and Microsoft -- described their experiences with software implementation and performance. This is Panorama's third year comparing the three ERP industry "titans."
One of the most noteworthy findings is that average implementation timelines -- and in some cases, even project success -- aren't necessarily affecting ERP buying decisions. According to Panorama, SAP is more popular than competitors Oracle or Microsoft, despite the fact that Oracle users reported the highest post-implementation success rate and Microsoft Dynamics users reported the shortest implementation duration.
Tier 1 ERP implementations longer, more expensive than desired
On a whole, the report showed expectations for ERP implementations seldom reflect reality, with the majority of projects exceeding budgets, timeframes and allotted resources. Microsoft Dynamics users reported the largest disparity, with the average implementation lasting 12.5 months vs. the 8.5 months that most users expect going into these projects.
Implementation project timelines differed greatly among vendors, the report noted. Oracle implementations take around 25% longer than the average SAP implementation and nearly twice as long as Microsoft Dynamics. These projects also regularly go over budget, with Microsoft Dynamics projects tending to run 18% over budget, SAP 13% over and Oracle 4% over.
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Return on investment also differed among vendors, according to Kimberling. "We suspected that SAP and Oracle would probably cost more on average than MS Dynamics -- which proved to be true -- but we were surprised by the shorter payback periods of those investments in SAP and Oracle," he said. "In addition, we were surprised by the high degree of operational disruption experienced by customers implementing all three solutions." The report noted that 69% of SAP projects run into some level of material operational disruption, with Microsoft Dynamics users reporting 67% disruption rates and Oracle users reporting 50%.
Tier 1 ERP still outselling smaller vendors
In the wake of this less-than-stellar data, one might think the "big three" are in real trouble, considering all the smaller competitors they face. Not so, Kimberling said.
"I think the three titans will always face pressure from smaller and more specialized vendors, but our data shows that they are responding well to it," he said. "The market share for all three increased over last year, while the market shares for Tier II and Tier III vendors decreased as a whole. This reverses the trend we saw last year that showed smaller vendors had been taking away market share from the bigger vendors."
The report numbers reflected this continued confidence in the Tier 1 ERP vendors. According to the data, 71% of companies that have implemented Oracle consider their projects successful, while 67% of those implementing Microsoft Dynamics and 62% of those implementing SAP also claim success.
The key takeaway from the report, according to Kimberling, is that each of the three vendors has distinct strengths, weaknesses and customer tradeoffs. "There is no clear-cut 'winner' in our analysis and comparison," he said. Readers should not look at Panorama's findings as the be-all and end-all of ERP vendor analysis. "While the report shares some very interesting data points, it is no substitute for defining your specific business requirements and carefully evaluating and selecting the software that makes the most sense for your unique needs," Kimberling said.
Based on the report results, Kimberling urges companies embarking on ERP projects to set realistic expectations. "Customers of the big three vendors don't know what to expect in terms of duration, cost, benefits and operational disruption," he said. "It's important to leverage independent, unbiased and third-party expertise that can help navigate the planning and implementation process in an objective way."
"Remember that at the end of the day, sales reps are trying to sell software, not necessarily set realistic implementation expectations," Kimberling said.
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