The current buzzword for any company wishing to improve its business functions is enterprise resource planning (ERP). The ERP software market has shown significant global demand since its development in 1992.
Not only are ERP systems the sure way to improve business performance, but their integration with current cloud applications makes it’s very easy to use. However, if you’re considering switching over to an ERP system, it might be challenging to find the right one.
Reviewing the current ERP statistics is an effective way to make the most beneficial decision for your organization. Accurate statistical information provides you with the data to establish what other organizations have done wrong, what can be improved, and what information you should use to get the most out of your software selection.
In today’s article, I’m going to cover some of the most important ERP statistics that will give the insight you need to make the most informed decision.
Why ERP Statistics Are Important?
ERP systems were originally developed for use in the manufacturing industry. ERP had the sole purpose of streamlining business processes in manufacturing companies. However, market trends show that in recent years ERP software has become essential for all types of companies and organizations.
Why then is it important to consider past and current ERP statistics when selecting a new software system for your company? Simply put, ERP statistics show the different facets of how this software platform is implemented and received in various organizations.
How Successful is ERP Implementation?
The ERP software market was successfully valued at $38.81 billion in 2018. Added to that, the global ERP software market is projected to reach an impressive $78.40 billion by 2026. Several factors need to fit into place before ERP implementation can be regarded as being successful.
Some of these factors include cost-effective user training, and engaging user experience and data accuracy within your organization.
The ERP implementation statistics that can help you determine the market trends’ effectiveness are listed below:
- A recent survey of IT decision-makers has shown that 53% agreed that an ERP system is not only an investment but a priority.
- 95% of businesses have shown an improvement in business processes. This is largely due to a faster, more reliable, and user-friendly system.
- An independent study of companies who have implemented ERP shows that 82% achieved ROI within their expected time frame. When systems are operating more efficiently, it becomes easier to achieve set goals at the required time frames.
- The survey also shows that midsize companies with $100 million to $250 million revenue experienced the speediest implementations averaging 6.6 months. Larger companies with an excess of $25 billion revenues took longer at 12.35 months.
- 62.7% of companies making use of an ERP system have selected Cloud ERP above on-premise software. Cloud ERP also shows a saving in HR expenses as some of the business functions can be replaced by AI and cloud storage.
What Are The ERP Obstacles?
Enterprise resource planning (ERP) isn’t without its challenges. Like any other acquired data system, ERP, if not applied correctly can result in serious financial costs to the organization.
It’s important to review the statistics relevant to the obstacles of ERP because this will give you an idea of how often something can go wrong. By knowing what other organizations have struggled with will provide you with the information necessary to avoid similar problems and obstacles.
Some of the statistics to consider in your quest to have an objective view of ERP implementation include the following:
- Almost 50% of ERP implementation programs fail the first time around. Refer to the reasons listed below.
- When it comes to budget calculations, 65% of companies require additional modifications to improve efficiency and usability. Unfortunately, companies only realize this after the implementation process has started. In some instances, the budget can’t be amended and this results in a delay of the whole project.
- Eager stakeholders often set unrealistic goals resulting in implementation taking 30% longer than originally anticipated.
Crucial Factors to Ensure Successful Implementation
Since successful ERP implementation is critical to any organization’s success, the factors necessary to achieve this should be given their due diligence. So, let’s have look at the most important points to consider.
- Project scope: The first step is to define the scope of your planned project. Set up business goals and establish if the system will help you achieve these goals.
- Vendor Choice: When you’re selecting the right vendor for your project, it’s important to choose one that will give you the best value for money. Your vendor also needs to provide you with the necessary backup service and support needed before, during, and after the implementation process.
- Long-term: Invest in an ERP system that provides the flexibility to accommodate future growth. Consider the financial impact of upgrades and add-on features that will be required to allow your system to grow with your business needs.
- Efficiency: The workflows and best practices of the ERP system should be easy to adapt to. Converting your current business flow to the system will be more complex and time-consuming. It’ll be easier to find a system that is similar and then convert it to that business process. The system you choose should be efficient and user-friendly.
- Training: Ensure that efficient training programs are put in place to facilitate change management. Employees should “buy-in” to the new system as that will make the transition period much easier. Training should be job-specific so that each employee can perform at their best.
- Customization: While customization makes it easy to adapt any system to your industry’s particular needs, it’s important to remember that upgrading customized systems can be costly. If you need to customize any parts of the system, factor the costs into your initial budget.
- Project experts: It’s important to team up with a system expert that has advanced skills and experience in the system you’ve selected as well as the industry the program needs to work for. You’ll also need a project manager to oversee the project and provide the necessary IT support when the system is in its implementation stages.
- Constant communication: It’s important to communicate all the decisions concerning the project and its implementation process. Keeping employees informed will keep them motivated and engaged. It’ll be easier for staff to maintain enthusiasm if they continuously feel like they’re part of the process. This will also encourage them to learn as much as they can in order to become familiar with the system. It should guide them in finding solutions to problems they might encounter when using the different applications of the system.
Reasons Why ERP Could Potentially Fail
Knowing and understanding the reasons that could cause an ERP implementation to fail will save your organization a considerable amount of money. Understanding the notification frequency lifecycle state (the stages of your implementation program) will help you guarantee you have the right people, training, and budgets in place.
Some of the reasons ERP implementation could fail can include:
- Failure of organization employees to embrace change: This happens when employees are incorrectly informed and trained regarding the process of the new ERP system.
- Lack of commitment by necessary stakeholders: When stakeholders fail to accurately identify business needs it becomes difficult to align the ERP system to the expected business practices. The initial stakeholders might not have the necessary commitment to see the project through to the end. This could be because the process takes longer than expected or they lack the skill to deal with the obstacles.
- Inadequate or lack of capable project managers: This happens when organizations choose to handle the implementation of the platform by using only their own IT employees. It’s important to team up with an ERP implementation partner who has experience in the different stages of the process. Project managers will have insight into the ERP market, network access, and product development.
- Inability to align the new ERP system with the proposed business processes: When industry trends haven’t been considered it might be difficult to align the old system to the new business applications.
- Completion and implementation goals aren’t set realistically: Eager business owners might not consider market statistics or available data analytics to set up a realistic date for the various implementation processes. Provision might not have been made for potential system issues or training obstacles.
- Inadequate budget set aside for complimentary software or upgrade applications: This happens when the organization requires additional software during the implementation process or future upgrades that require the system to function efficiently. It’s generally estimated that about 64% of all ERP conversion projects use more than their allocated budgets.
- IT department employees overburdened with continued issues: When the project hasn’t been planned in advance with trained project managers, the burden falls to the IT department. Essentially, the project scope might have been greatly underestimated.
- System requirements don’t match the system functionalities: This usually happens when the software selection wasn’t done correctly. A proper review of the organization goals and requirements might not have been done correctly. This then results in a mismatch between what is required and what can be produced.
How Important is Cloud Technology in ERP Software?
Cloud technology is the new catchphrase around upgrading your traditional software programs. This upgrade has made its way into current ERP systems as well. Cloud platform services are exponentially improving the efficiency of organizations investing in ERP software.
Not only are cloud subscriptions much cheaper, but they’re also relatively easier to install. Subsequently, they don’t require the traditional IT infrastructure which saves the organisation costs on the employment of IT consultants and employees.
Some interesting statistics surrounding cloud-based ERP include:
- Researchers estimate global cloud app expenditure could reach $226.9 billion by 2022, making this a huge chunk of the market size. Investing in a cloud-based ERP system should be on every organisation’s shortlist to consider.
- It’s also expected that 83% of all Enterprise Workloads will be uploaded to the cloud by 2021.
- On average, 42% of organizations use multi-cloud. Not only does this aid them with faster customer data recovery but it also enables companies to have more cloud space.
- The average organization places 41% of its customer information in a private cloud. Many regard this as an effective customer management system.
What’s New With ERP Software in 2021?
ERP software systems are showing extensive market growth for one simple reason. ERP systems are streamlining their processes and making their applications more user-friendly. In addition to a faster, simpler system, they’re providing more concise and accurate enterprise data.
Unlike older ERP systems, more advanced platforms are offering customizable features. This makes the system easy to be used across different platforms and sectors. How exactly are these new features affecting the organizations using them?
The usage statistics speak for themselves.
- On average, 43% of market leaders are currently looking for new and upgraded technologies in their ERP systems. Not only do they want systems to be easier to upgrade but faster to operate.
- A staggering 80% of IT developers firmly believe that a considerable amount of ERP processes can be replaced by AI or machine learning. This will considerably reduce staff costs and simplify processes, enabling your organization to provide a strong best practices policy.
A very positive and effective factor of an ERP system is that it streamlines the organization by joining all the various business platforms. Business efficiencies have never been easier to achieve.
As an added incentive to the ERP software, the inclusion of artificial intelligence facilitates the process of turning your system into effective business solutions. The more developed ERP systems allow the system to advance and grow as your business does, making it significantly easier to reach business goals.
Applying the statistics we’ve covered in this article will enable you to make more informed decisions about the type of ERP system needed for your organization’s continued success.