META Group Study Dispels Common Myths About ERP/ERM Implementation Costs and Overall Value Comprehensive Study Assesses ERP/ERM Issues and Compares Top Vendors

Business Wire, April 1, 1999

STAMFORD, Conn.--(BUSINESS WIRE)--April 1, 1999--META Group Inc. (Nasdaq:METG) today announced findings from a survey of more than 60 organizations that have recently implemented enterprise resource planning (ERP/ERM)(a) systems. The survey compares seven leading vendors in such areas as implementation costs, total cost of ownership (TCO) and time to benefit, quantifying the benefits and net present value of ERP/ERM systems.

"To say that implementing ERM solutions requires an enormous commitment is an understatement. They are expensive, time consuming and require change in virtually every department in the enterprise," said Peter Burris, META Group senior vice president and co-research director. "With so much at stake, META Group wanted objective market information. What we found through our broad-reaching study was eye-opening and, in some instances, shocking."

According to the study, the time to implement ERM applications ranges from 18 months (for SSA implementations) to 26 months (for Oracle implementations) with an average time to implement of 23 months.

The TCO for the implementation and the following two years ranges from 0.4 percent of the user company's revenues for Lawson implementations, to 1.1 percent for Baan implementations. However, SAP, which has a reputation for being expensive to install, is actually below the average TCO (as a percentage of corporate revenue) at 0.67 percent.

META Group reports it takes 2.5 years from project initiation to achieve a quantifiable return on investment (ROI) for an ERM system. Ninety percent of these quantified benefits are associated with cost reduction. The average net present value of all the companies studied was negative $1.5 million.

While the study indicates it is possible to achieve savings by reducing IT costs through consolidation of disparate systems in a single ERM solution, the greatest rewards are associated with fundamental business transformation. To be successful, ERM must be part of a comprehensive business plan, or driven by a strategic issue such as Year 2000 (Y2K), and must prompt integration and change.

"While the statistics gathered from META Group's report are meaningful and can greatly assist our clients in forming realistic implementation scenarios, the report's deeper value lies in helping clients define the true value proposition of ERM implementations," said Barry Wilderman, vice president of META Group's Application Delivery Strategies service. "Enterprises must evaluate the broader impact of ERM on supply chain economies, customer loyalty, application interoperability, and faster business cycles because traditional measurement methods centered around cost reduction are not effective in measuring the true value of ERM solutions."

According to META Group, the impact of intangible benefits is difficult to isolate and quantify, but must be taken into account to accurately justify the time and expense requirements of ERM. Overall, ERM applications remain an appropriate choice for enterprises that must integrate key operational functions, but META Group recommends considering and measuring a broader range of criteria when evaluating ERM solutions.

About Application Delivery Strategies (ADS)

META Group's ADS helps clients rejuvenate their enterprise application portfolio to meet 21st century mandates for corporate agility and innovation. Major ADS research and analysis themes include two pivotal business and technology initiatives -- customer relationship management and information supply chain integration -- in addition to key research in enterprise business applications, data warehousing, and enterprise application development.

About META Group

META Group helps companies make better information technology (IT) decisions by providing research and unlimited analyst consultation relevant to their specific business needs. Offering advisory services, consulting/benchmarking, and publications that span the full spectrum of IT, META Group addresses the latest technologies, industry trends, and business challenges. With more than 1,750 client companies worldwide, META Group differentiates itself from other information providers through its commitment to highly personal service (enabling "analysis in context"), bottom-line answers, and objectivity. To support this promise, META Group maintains a client-to-analyst ratio of 50:1 -- the lowest in the industry -- and reinvests almost 50% of its revenue back into research and client services. For details, connect with www.metagroup.com.

(a) ERP/ERM: "Enterprise resource management" (ERM) is META Group's

preferred term for this application solution, based on the fact

that "ERP" understates the operational content (e.g., financials,

order management) of the enterprise-focused applications that

track, report, and predict the resource needs of the enterprise.

Therefore, ERM = enterprise resource operations enterprise

resource planning.

Note to Editors: To obtain a copy of META Group's study, "ERM Solutions and Their Value," please contact Michelle Rutledge or Brandi Wright at Edelman Worldwide at 214/520-3555 or via e-mail at michelle_rutledge@edelman.com or brandi_wright@edelman.com.