Too Many Organisations Ignore Software Alternatives Despite Hidden Costs

Lazy buying habits are costing businesses millions in hidden consultancy and supports costs, according to the latest research from IDC.

In an Agresso-sponsored survey "Mid-Market Service Companies' Enterprise Investment Strategies and Adoption Trends", Albert Pang, director of enterprise applications research at IDC found too many companies are overspending on ERP software due to complacency and relying on brand names.

“Companies need to acknowledge the hidden costs of their ERP software following initial implementations,” said Pang. “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. There is either a sense of complacency or one of hopelessness that costs can never be reined in.”

Forty-seven percent of the respondents stated that their financial applications costs exceeded their planned budgets by 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 pounds annually.

Eighty-three percent of ERP customers say they will still buy from the same vendor despite cost over-runs and change issues. Pang said that business leaders need to analyse and perhaps adjust their buying behaviour to review a wider array of alternatives before deciding on replacement solutions.

“Enterprise software vendors have to wake up and stop taking customers for granted,” said John Crooks, UK MD of Agresso. “Escalating support costs are killing businesses and this is down to a lack of forward thinking by vendors. Change is part and parcel of modern business and enterprise software has to acknowledge this by being agile enough to not demand expensive consultants every time the business grows. Unfortunately with most ERP vendors this is not the case although we have worked hard to ensure our software is agile enough to not incur huge costs after implementation.”

by: Editor
06th Mar 2008