Users struggling to get ROI from SAP

Fewer than half the organisations using SAP software have achieved a positive return on investment, according to analyst firm...

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.

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