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ERP Survey Finds Inertia Rules for Vendor (Re) Selection

March 10, 2008

ERP vendor Agresso has released survey results showing what it says is "a clear trend by business software buyers to favor and re-select their current ERP vendors, despite facing substantially higher than expected costs after implementing those vendors."

 
The survey sponsored by Agresso and conducted by IDC as part of its quarterly AppStats Survey includes more than 250 companies in the U.S. and U.K. An overview of the survey results, titled "Mid-Market Service Companies' Enterprise Investment Strategies and Adoption Trends,"1 is available at www.agresso.com/IDC.
 
Forty-seven percent of the respondents said their financial applications costs exceeded their planned budgets as much as 100 percent. According to IDC, this buyer complacency to continue down the same path with the same vendors may be costing public and private sector businesses millions of dollars annually.
 
Eighty-three percent of ERP customers say they will still buy from the same vendor despite cost over-runs and change issues.
 
"Companies need to acknowledge the hidden costs of their ERP systems following initial implementations," said Albert Pang, director of enterprise applications research, IDC. "Many users need to ask whether they should continue to stick to their current ERP system providers. If they don't, it seems to suggest that they are not willing to consider the options of using new, perhaps lesser known vendors."
 
Pang said that business leaders need to analyze and perhaps adjust their buying behavior to review a wider array of alternatives before deciding on replacement products.
 
In related news, the City of Ventura in California has selected Agresso over a product from its current vendor for its ERP needs. "Making a strategic choice, versus an automatic replacement choice is a little more work but can save a lot of dollars down the road," said John Emerson, Senior IT Executive, City of Ventura.
 
Emerson said the City completed a formal Request for Proposal process that was responded to by a number of vendors. The City of Ventura signed a $1.3 million deal with Agresso this past December, and according to Emerson, Agresso can now be selected by government entities throughout the State of California.
 
"I recently saw data showing that government employees spend 29 percent of their time waiting for needed information," Emerson said. "This drives up administrative costs, which can run about 30 percent in government agencies."
 
In February Agresso won a five-year software subscription license with the City of West Linn, Oregon, for a product suite. The agreement, valued at $690,000, provides the West Linn government with an on-demand software delivery model.  
 
Steve Arndt, Chief Technology Officer for the City of West Linn, said with the expense the city was incurring to make ongoing changes to their former product, "we could never get ahead and the functionality was still lagging."
 
Asked if he any of the larger ERP providers, Arndt said he received an initial proposal from Microsoft Dynamics and another from an Oracle back-end support product. 
 
"Microsoft's proposed product fell short both on functionally and from a web-deployment perspective," Arndt said. "And as for Oracle, I considered that thought for all of five minutes. I've been down that road with Oracle before and know that they are a massive undertaking that usually costs a lot more than you planned."
 
In November Agresso, announced the availability of Agresso CRM, a customer relationship management product aimed specifically at the mid-market services sector that Agresso's been working as an ERP vendor for over 20 years.
 
Agresso CRM was rolled out globally via either a standard, on-site license or software-as-a-service agreement.
 
David Sims is a contributing editor for ContactCenterSolutions. To see more of his articles, please visit his columnist page.
 
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