According to the 2014 Manufacturing ERP Report by Panorama Consulting Solutions, a leading independent ERP consulting firm, there are several differences among ERP for the manufacturing industry and ERP across all other industries. This report provides insight into the unique challenges the manufacturing industry faces related to ERP implementation cost, budget overruns, customizations and more.
One of the most noteworthy differences found in Panorama’s report was the cost of implementation. According to the report, the average cost of ERP manufacturing software implementations was almost 15% more than implementation costs across all other industries. Higher implementation costs stresses the significance of budgeting and planning in the early stages of ERP initiatives. According to Eric Kimberling, managing partner of Panorama Consulting Solutions, “Manufacturing organizations that fail to develop and execute a strong implementation plan often encounter unexpected costs related to integration, customization and change management.”
In addition to higher implementation costs, the report also found that manufacturing ERP had greater cost and time overruns compared to the average for all ERP projects. The average cost overrun for manufacturing ERP was $3 million, compared to $1.7 million for all other ERP projects and average implementation time was 18.5 months, compared to an estimated project time of 14.1 months. Additionally, the report suggests that 63% of manufacturing ERP implementations go over budget, compared to 59% of ERP implementations across all industries.
One of the main factors driving implementation cost and time is related to the degree of customization required in an ERP system. Manufacturers often have complex processes that require more customization. This equates to a more expensive and time consuming project. According to the report, when manufacturers chose to customize their ERP manufacturing software, they were more likely to apply more customization than other industries.