Single ERP and HR apps cut costs, say report

Consolidating enterprise applications can deliver up to 30% savings on costs, independent business advisory body Hackett Group said this week.

Consolidating enterprise applications can deliver up to 30% savings on costs, independent business advisory body Hackett Group said this week.

Its latest report, Optimising a Return on Business Complexity: Performance Metrics and Practices of World Class Companies, has found that companies can cut the cost of finance operations by 23% if they replace disparate IT systems with a single enterprise resource planning application.

Philip Carnelly, senior research adviser at Hackett Group, said, "IT plays a large role in determining the level of complexity in large businesses."

The more complex the IT environment in terms of middleware  legacy system IT integration, the costlier it is to run.

The research found that by avoiding customisation of standard applications, a user can reduce operational costs significantly.

According to Hackett's report, companies that fail to reduce the complexity of IT spend 30% more on finance operations and 18% more on human resources per employee than companies that succeed in this area.

Michael Campbell, vice-president of Hackett in Europe, said businesses that have invested in common HR systems require 35% fewer HR staff and the cost of running an HR system is 27% less than running mixed systems.

Campbell said substantial savings can be made in procurement operations by deploying self-service systems such as online catalogues listing common suppliers. He said, "Every reduction of 2,000 suppliers can generate 5% savings on procurement costs. With fewer companies to deal with, businesses can get more closely aligned with suppliers."

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