ERP Study Suggests Tier II Solutions May be Preferable

The results of a 1,300 company ERP survey have been completed and the results suggest Tier II ERP solutions may be preferable to the Tier I providers especially during these tough economic times. Specifically this is because the Tier II solutions cost roughly a quarter of the Tier I solutions ($12.6-$16.8M vs $2.6-$3.5M) and there was also no appreciable difference in the satisfaction (only 3%) between Tier I and Tier II solutions and additionally, the Tier II solutions were implemented an average of two months faster than Tier I implementations.

Panorama Consulting Group, an independent ERP consulting firm in Denver, CO, has issued Part Two of its 2008 ERP Report. The study includes findings about the differences between leading Tier I and Tier II ERP solutions, as demonstrated by actual implementation results from our study of 1,300 ERP implementations across the globe.

Tier II enterprise resource planning (ERP) software offers many of the same benefits as Tier I software but often at a lower cost, according to part two of a study issued today by Panorama Consulting Group, an independent ERP consulting firm in Denver. The report reveals that while the majority (77 percent) of companies surveyed chose Tier I ERP solutions (including SAP, Oracle
and Microsoft products), Tier II solutions actually took less time across the board and cost significantly less than Oracle and SAP. Further, only the vendor SAP garnered a higher satisfaction rating (73 percent) than Tier II solutions (70 percent).

“Tier II vendors have clearly stepped up their strategies to compete with the ‘big boys’ of Tier I,” says Eric Kimberling, president of Panorama Consulting Group. “But now that the field has more qualified players, the burden is on the buyer. Savvy companies must take the time to analyze, plan and evaluate all of their software options before signing with any vendor – no matter how impressive their pitch.”

Although Tier I and Tier II ERP solutions took similar times to implement, SAP averaged the longest duration (20 months) while Tier II solutions averaged the shortest (17.8 months). Of the vendors mentioned in the survey, SAP and Oracle cost the most with totals averaging $16.8 million and $12.6 million, respectively. Tier II packages averaged $3.5 million and Microsoft averaged $2.6 million.

“While it would be easy to speculate that the high ratings and low cost of Tier II
solutions mean they are automatically the best choice for a company, it is important to
note that they also had the highest business risk factor at 61.8 percent. Conversely, the
two most popular – and expensive – vendors in our survey, SAP and Oracle, had the
lowest business risk factors (50 percent and 56.9 percent, respectively), ”
says Kimberling.

“When it comes to ERP software selection, there is just no easy answer or
‘one-size-fits-all’ software. For instance, although Oracle packages are typically
implemented in less time and at a lower cost than SAP packages, customers are generally
more satisfied with SAP. Third-party consultants can cut through the confusion and help
companies evaluate the risk and reward factors for each option to make the choice that
best suits their needs, expectations and budget.”

To offer further analysis of the study results, Kimberling will present the free webcast, Not All ERP Software is Created Equal: A Comparison of Leading Tier I and Tier II ERP Software Solutions, on February 26 at 1 p.m. EST. Register for the seminar at http://www.panorama-consulting.com/ERPWebcasts.html.
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