In the last year or so, Unit4/Agresso has commissioned research projects with CFO magazine and IDC. The most recent research certainly generated a lot of discussion at the event and it continues to drive conversations within the blogger community. Specifically, I’ve participated in blogger conversations re: this research at the recent SAP Influencers Summit. Enterprise Irregular bloggers have been conversing about it, passionately I might add, this week, too.
So, what’s in the research and why is it sparking so much discussion?
The report is titled: “Modifying and Maintaining ERP Systems: The High Cost of Business Disruption” (IDC, author: Michael Faucette, December 2009). You can download this report here . Additionally, you can download the prior CFO report, “The High Cost of Change for ERP”, by CFO Research Services, from CODA .
The purpose of the IDC research was to see how a software customer is impacted when they must make changes to ERP software to accommodate software or business driven changes. The research looked at the experiences of over 200 software customers and the disruptive impact that ERP software changes had on their firms.
Building off of the prior CFO research effort, IDC focused on the top five drivers of systems change:
– regulatory requirements
– organizational reorganization/restructuring
– mergers and acquisitions
– financial management-driven changes
– new or changed business practices
From these, IDC reviewed nine categories of disruption cost metrics. These included:
– decreased operational efficiency
– decreased decision-making efficiency
– delayed cost reduction plans
– drop in customer satisfaction
– delayed product launch or increased product time to market
– lost market share
– payment of fines for noncompliance
– missed opportunity for or delayed an acquisition
– decreased stock price
Now, this part is really important to understand. The study respondents were asked to report if they experienced any of the disruption cost categories for each of the five top drivers of systems’ change. IF THEY DID, they then had to choose from a list of estimate ranges that defined the extent of the disruption they encountered. IF THEY DID NOT, no estimate was given and those null responses were not added to the basis.
So, when you read the report and you see that under the Reorganization/Restructuring change driver there is a score of 22.6 for Decreased Stock Price, this means that of those firms that undertook an ERP systems change due to a restructuring or reorganization AND experienced a drop in their stock price, THEN the stock price fell an average of 22.6%.
The data in this report will make you think as it puts some numbers behind the cost of change for ERP beyond the usual technical costs. The cost categories aren’t fees paid to hardware vendors or to systems integrators, these costs point to factors like lost market share and fines for non-compliance.
ERP software vendors that are still selling products that: