For a long time, the ruler of project reports was Standish Group’s (in)famous Chaos report, which analyzed IT project success/failure factors. While many of the Chaos report’s findings applied to ERP implementation, the report as a whole was primarily about software development projects. And as we all know, implementing ERP is not the same thing as software development. Hopefully.
Panorama Consulting Group, an independent ERP consulting firm from Denver, Colorado, has conducted a market research in 2008, that explains ERP implementation project success factors and reveals some interesting metrics about real ERP costs, duration and benefits. Finally, we have a decent ERP project report, which reveals some important facts about Microsoft Dynamics.
Panorama Consulting Group recently published their ERP Report, the final result of a comprehensive study of 1322 companies that have implemented ERP in US, Europe, Australia and India.
The report comes in two parts. The first part explains ERP project challenges, risks, duration, cost vs. budget ratios, post-implementation benefits and success factors.
The second part focuses on specific ERP products, and demystifies some basic facts about top ERP project vendors.
According to their findings, 72% of ERP customers chose SAP, Oracle or Microsoft’s solutions, while only 28% of the customers chose other vendors. The report continues by revealing average and median project durations, costs, and satisfaction breakdown by top three vendors (Tier I) and other vendors (Tier II). This part reveals some interesting facts about Microsoft Dynamics.
Microsoft Dynamics ERP solutions (the report doesn’t break it down by specific product lines) are the 3rd most common, with 14% market share—as much as the combined market share of Baan, Epicor, IFS, Infor and Sage.
Microsoft Dynamics solutions come with shortest average implementation duration of the Tier I vendors, and the lowest implementation cost of all ERP vendors. But saying “the lowest” doesn’t do Microsoft Dynamics right: “the lowest” means 6,5 times less than average SAP implementation costs, 4,9 times less than average Oracle implementation costs, and 3,25 times less than average implementation costs of all ERP solutions.
Also, from cost perspective, implementing Microsoft Dynamics solutions proves to be the most predictable choice: quartile deviation of Microsoft Dynamics is 9% that of SAP, 11% that of Oracle, and 20% that of all ERP vendors.
Finally, Microsoft Dynamics has employee satisfaction rate of 76,9%, the highest employee satisfaction rate of all ERP vendors, 12,5% higher than overall average for all ERP vendors.
Microsoft Dynamics isn’t made from pure gold, though. It lags behind other vendors in executive satisfaction, and it has larger quartile deviation in project duration, making it the least predictable in project duration. However, with the shortest average duration of the Tier I solutions and lowest costs of all solutions, the duration deviation alone doesn’t blur the fact that its provides most bang for the buck, and by far so!
If you missed the link above, click here to access the whole report.
{ 2 comments… read them below or add one }
But here’s the tough thing about the report, the actual dollar figures. If you are a Dynamics fan it’s nice to point out that the cost of implementing Oracle appears to be about 5x that for Dynamics, and that SAP is 6.5x the cost of Dynamics. But that $2.6 million figure for a Dynamics implementation is a little hard to swallow. The author of the report tells me it includes all costs associated with the implementation, so internal costs as well as the license and consulting fees paid out. Even so, as I talk to Dynamics partners most cannot imagine why the number in the report is so high as their averages are all consistently, and considerably lower.
JasonC: I can’t argue with the customers who said what their actual figures are. I also can’t argue with Panorama, who says that the cost include internal costs as well. From partner’s perspective, the cost of project is usually expressed as license + services, which is not everything. Hardware can be expensive (I’ve seen Dynamics projects where hardware costs alone were above $1.5M) but partners rarely take these costs into account. Additionoally, internal costs can easily exceed the costs of license + services. If you take it as such, I have no problems believing that average Dynamics implementation is $2.6M. Plus, it’s average, and it includes AX, SL, GP and NAV. I can’t imagine SL project of that scale, I can hardly imagine GP on that scale, but I can imagine (and I’ve worked on more than a couple) NAV projects of that scale, and about AX, well–it can easily exceed that figure.
Also, there are Dynamics partners who can’t imagine selling a project of that scale, because they sell to small and lower mid-market where there are rarely more than 20-50 users involved. If you ask those partners who sell to enterprises, who can easily sell 500 to 1000 user projects, then price tags are significantly above those $2.6M average. That’s the problem with the average. But again, it’s provides a good picture and gives you feeling of what kind of scale of costs can you expect if you go with this or that solution.