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Midsize business are adopting enterprise resource planning (ERP) in large numbers, and the most successful ones rely upon service providers to ensure smooth installation and integration with existing processes, according to a new report by Aberdeen Group.

"Using Services to Support a New Generation of ERP" is based on a survey of 174 market organizations that have implemented ERP. It found that 84% of midmarket respondents have implemented ERP and that 87% of the organizations that Aberdeen characterizes as "best in class" have used ERP service providers to assist in product selection and implementation.

Organizations that use service providers reported better return on investment (ROI) than organizations that implemented the solutions internally. They also saw a 14% reduction in operational costs as a result of ERP, compared to 5% for those not using services.

Best-in-class organizations are also more likely to industry-specific ERP solutions. "For example, a manufacturer may be looking for a solution that can support lean manufacturing. Or a distributor may need improved supply chain planning capabilities," the report says. "These solutions already contain the functionality and best practices vital for success in the given industry. Therefore, they require less customization, keeping costs and implementation times low."

Qualified service providers can provide value by helping customers choose providers that are well-aligned with their internal operations or by reshaping processes to match the strengths of the ERP solution. They can also contribute significant value in training and support, which contributes to ease-of-use and user satisfaction.

Aberdeen found that best-in-class organizations place greater value on cross-application integration and data analytics than less-effective organizations. Top performers are 32% more likely than all others to share data transparently among applications and 54% more likely to use business intelligence or analytical tools. Again, the research found that service providers can contribute significant value in these areas.

The bottom line is that the typical best-in-class ERP adopter reported:

  • 18% reduction in operational costs;
  • 13% improvement in profitability over the last two years;
  • 42% of employees exceeding performance metrics;
  • 100% on-budget performance for ERP implementation.

The Aberdeen report can be viewed and downloaded here.

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Vijay Nachimuthu

By Vijay Nachimuthu

Vijay Nachimuthu is a Managing Principal of AltaFlux. His blogs mainly focuses on latest cloud technology trends and its impact on enterprises.