The Top 10 ERP Headaches for Mid-Sized Firms
By Paul Marry, Intact Software CEO
Among its enterprise resource planning (ERP) trend predictions for 2011, Forrester listed customers demanding better flexibility, cost transparency and mobility. This was echoed in a survey we recently conducted with YouGov. The research questioned IT and finance managers in mid-sized businesses and found that software cost, inflexibility and underperformance are the top ERP problems encountered.
When a company is looking to replace business management/ERP software, it will look for a new system to replicate and enhance current business processes so that the organization can maintain its competitive edge. Similarly, should the business model change, the company will want the system to be flexible enough to adapt to the changing requirements as and when they happen and not as part of a costly upgrade.
If you consider the findings in more detail a picture emerges of customer frustration, disappointment and failure. Often this is as a result of both external and internal issues that need to be addressed as a matter of urgency if companies are to reap the full benefit of their investment.
Top-ten ERP headaches
The survey found the top ten problems encountered with business management software or ERP systems are:
1. Costly to upgrade (30 percent of respondents)
2. Costly to maintain (22 percent)
3. It is inflexible and cannot adapt to meet changing business needs (20
4. It is expensive to bring in outside help to make changes (20 percent)
5. They hold separate databases for different departments, so have to maintain
multiple systems (20 percent)
6. They cannot extract all the information they need
7. They have to change their business processes to fit the software
8. They cannot get one view of all their data
9. They have to buy expensive add-ons to ensure the system better reflects their processes
10. The information they are able to extract is not accurate
Cost is a critical issue: Just under a third (30 percent) of respondents complained that their ERP system and business management software is costly to upgrade, with 22 percent saying that it is costly to maintain. To ensure that the software is fit for purpose, 20 percent of respondents said they had to bring in expensive outside help to make modifications and 12 percent said they had to buy expensive add-ons.
Rigidity hampers implementation and acceptance: One fifth (20 percent) of respondents said that their ERP system is inflexible and cannot adapt to meet changing business needs. The same number explained that their company holds separate databases for different departments, which means having to maintain multiple ERP/business management systems. According to 12 percent, their organization had no choice but to change its business processes to fit the software. More than half (58 percent) of respondents said that ERP projects fail because the software fails to match their business processes
Underperformance undermines everything: Just under a fifth (18 percent) of respondents said they were unable to extract all the information they needed from the system, with 7 percent commenting that the information they could extract was not accurate, and 12 percent saying that it was impossible to get a single view of all their data. Over a third (37 percent) of respondents said the software is just not fit for purpose.
Lack of trust: 61 percent of the companies surveyed using at least one of the three most well known brands, SAGE, SAP and Microsoft Dynamics, were experiencing problems with their provider causing a lack of trust. Upgrade costs have driven this trust issue with 56 percent of SAP and 38 percent of Microsoft Dynamics encountering problems with this.
However, internal issues such as poor project management and a lack of staff training and acceptance frequently compound the lack of business compatibility delivered by many current ERP and business management software solutions. Over half (58 percent) of respondents blame poor project management for a lack of project success and a lack of training was given as a reason for failure by 44 percent.
Put simply, our research found that existing ERP and business management software packages are just not meeting the needs of customers.
Edited by Kevin Scarpati
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”