Study on realization of ERP benefits

Expectations on a new ERP-system are often high. However, once the system goes live, studies show that most businesses experience unachieved realizations of their expected benefits.

Benefits of a modern ERP system

A few years ago, the major driver for implementing a new ERP system was to replace legacy systems. Today, focus is on increasing business performance by leveraging benefits that a modern ERP system provides. Benefits can be categorized as:

  • Reporting & visibility
  • Operational efficiency
  • Growth & competition
  • Technology

Most businesses are seeing performance benefits after an implementation. However, studies show that a majority of businesses only realize half of their expected benefits. As an example, technology benefits are rarely realized. Reasons for this are many but one important aspect is the often lower prioritization of technology benefits.

“Studies show that a majority of businesses
only realize half of their expected benefits”

Customizing software drives IT costs

Among unrealized benefits, reduced IT costs are highly ranked. One possible explanation is that many overlook business process management or focus on it after software selection. Often, this results in a high degree of software customization, which in turn drives IT maintenance costs.

The trend towards increased benefit realization

Despite the low degree of benefits realization, the trend shows that businesses are heading in the right direction. The realization of benefits has increased compared to earlier years. In general, benefits such as real-time data and increased compliance are prioritized in view of the current challenges and increased importance related to data visibility.

“One explanation is the increased focus on
implementing change and user-training”

Furthermore, many are seeing growth and competitive benefits realized by improved interactions with customers and suppliers. One explanation for this high degree of realization is the increased focus on implementing change and user-training. These aspects are essential to realize benefits since it is them that must use the system to its full potential.

In the end, it is the realized benefits that count

Realizing benefits of ERP systems should be highly prioritized and the trend is in the right direction. It is, however, still important to focus on project execution to realize key benefits.

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