Fewer than half the organisations using SAP software have
achieved a positive return on investment, according to analyst firm
Nucleus Research.Nucleus based its claim on responses from 21
of the 90-plus reference customers listed the website of the
enterprise resources planning software giant.
The researcher said organisations achieved
clear benefits from deploying SAP, including improved productivity
and reduced head count, improved operations management and improved
organisation and access for decision making.
However, the report noted, "A majority of [of
the organisations surveyed] reported that these returns had not yet
outweighed the costs of implementing, customising and supporting
their SAP infrastructure."
Nucleus said obstacles to getting a positive
return on investment from SAP implementations included:
- Lack of breadth and repeatability
- High personnel costs
- Excessive customisation.
One SAP customer that achieved a positive ROI
did so by rolling out the system to 1,000 internal and 7,000
external users, "So small savings in efficiency per transaction
produced significant returns," said Nucleus.
In contrast, one UK-based services company
warned that a supplier relationship management implementation has
fallen short of expectations because the technology was not yet
appropriate to its industry.
"By now we were hoping to achieve returns of
£600m. I think we were grossly optimistic about the kind of cost
reductions that this was going to bring," the company said.
In an initial response to the report, SAP said
its tone was, "largely neutral - pointing out how customers find
value in their SAP projects".
However, the software giant went on, the
"sample size of 21 customers, even 'reference' users, out of
19,000, makes for a very weak basis to draw any conclusions. SAP is
currently working on a methodology to measure return on investment,
which is a central concern for the company".
Nucleus recommendations for SAP
deployment
- Ensure that software being licensed does not exceed the
foreseeable business and functional needs of the organisation
- Develop a clear roadmap for the full exploitation of
functionality to a wide breadth of users and departments within a
reasonable period of time.
- Conduct a thorough review of reference users in similar
industries to evaluate whether the promised benefits really apply
to the industry and user base in question.
- Avoid excessive customisation of the solution and its
interfaces, focusing instead on deployment of a useable system that
will deliver returns within a measurable time frame.
- Conduct a predeployment ROI analysis that evaluates expected
returns and costs, taking into account the probability of achieving
those returns and the payback period for the investment.