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Gartner projects almost 100 percent failure rate for cloud ERP projects

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March 3, 2016

Earlier this morning, Gartner said it projects nearly a 100 percent failure rate for all cloud ERP projects in two years from now or even before.

Overall, about 90 percent of organizations rolling out what Gartner has defined as “post-modern ERP” will succumb to the traditional ERP headaches of higher costs, greater complexity and failed integration by 2018.

Gartner added that the fact that an ERP solution is implemented through the cloud (SaaS-style) instead of on-premises doesn't remove the problem. If anything, it makes it even worse, security-wise.

One of the many problems the market research firm is seeing is the lack of an application integration strategy and related skills in the typical enterprise that contemplates using ERP. (SAP anybody?)

Gartner defined “post-modern ERP” as systems that are loosely coupled and no longer from a single, monolithic provider such as Oracle, IBM or SAP. This is what defined the huge ERP rollout wave during the 1990s that Gartner defined as the "modern" ERP age at that time.

Overall, about 80 percent of those will lack the capability to successfully deliver on their postmodern ERP strategy, Gartner said.

Carol Hardcastle, Gartner research vice president, said in a statement-- "This new environment promises more business agility, but only if the increased complexity is recognized and addressed per se. Twenty five or more years after ERP solutions entered the IT applications market, many ERP projects are still deeply compromised in time, cost and more insidiously in business outcomes. And that's sad."

Today, there’s a dawning recognition that post-modern ERP is “no quick nirvana” with companies moving from on-premises to cloud lacking little or no skills to integrate applications together. Mistakenly, they assume the vendors peddling the cloud will take care of it. When inevitably they don't, customers are the ones left scrambling and holding the bag.

As in the pre-modern world of the 1990s, it’s the difficult push from business leaders and vendors that’s setting up today’s looming issues for cloud ERP applications in the enterprise IT community.

“Today, organizations need to resist the easy temptation to succumb to pressure from business leaders to get started before the organization is really ready, and without a business-agreed ERP strategy. CEO's, CFO's and business leaders must understand what it will take to ensure success,” Hardcastle warned.

To be sure, nobody was singled out by Gartner, but it’s been the iPad toting, cloud-friendly sales and executive classes who have driven the need of business software providers such as Salesforce, side-lining the more considered counsel of those in IT who could have taken a more measured approach.

But according to Gartner, to a large degree, vendors are also guilty, putting business self-interest ahead of their customers, and that needs to be addressed.

“But the blame for this does not lie just with end-user organizations that lack the experience and skills to avoid many of the pitfalls. System integrators and ERP vendors have to be accountable to their customers,” Hardcastle added.

But it will be interesting to see how this all pans out in 2016. For now, Gartner is pessimistic on cloud-based and SaaS when ERP is concerned, and it has good reasons to belive so. As always, we'll keep you posted on these and other developments.

Source: Gartner Market Research.

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