Inside ERP Budgets: Slicing and Dicing the Corporate Pie

AMR Research survey data shows how companies are spending their ERP operating budget dollars and why many are struggling to achieve the right mix.

Lately, much of the furor encircling ERP costs has revolved around software maintenance and support fees. The global recession has forced customers of Big ERP vendors—SAP, Oracle, Lawson, Infor—to question the value they receive from the fees.

According to AMR Research, however, all parts of the ERP budgeting pie "are under more scrutiny." In an October report, Bill Swanton, a VP and research fellow at AMR, breaks down survey data that shows overall ERP operating budget spending. (To participate in the survey, click here.)

AMR Research pie chart

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Swanton notes that employee salaries and service-provider fees are the two biggest items associated with the ERP budget. It's also noticeable that application and database maintenance fees are another substantial chunk of the ERP spending pie—"a large and growing expense," Swanton writes.

"Running hundreds (and, in a few cases, over a thousand) of dollars a year per user, we did find more variation than expected," he writes of the results. "Some of this is courtesy of companies paying fees for shelfware that has yet to be deployed or under utilized because of the declining user base in the recession."

Swanton lays out some tough questions facing facing CIOs and their companies:

Are you getting all the value from ERP that you expected? Does the CFO believe your benefits numbers? Does the business believe all this effort is worth it? Are you doing the right things to get and demonstrate the value of your hard work in improving business processes with ERP?

Right now, Swanton adds, "Too many companies are struggling to get this right."

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Copyright © 2009 IDG Communications, Inc.

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