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November 23, 2010

UK councils spending £1.2m a year just to keep ERP going

UK councils are spending an average of £1.2m a year on maintaining their 'big ERP' systems, according to new research

By Cbr Rolling Blog

The figures come from a Unit4, a Dutch provider of ERP and accountancy software. Its flagship ERP suite for mid-sized businesses is called Agresso Business World and the company has a strong presence in the public sector space here in the UK, hence the research.

What's the cost of ERP to your business?

While it avoided naming names when it came to what it calls "big ERP" systems, it’s safe to assume the likes of Oracle, SAP, Microsoft, Infor and Sage were in its sights. The company told CBR it defined "big ERP" as: "Monolithic enterprise-wide systems which lock customers into a vendor-specific technology stack, and so are characterised by multi-year, multi-million pound implementations and the constant need for external expertise whenever system change is required."

Spending a huge amount of money every year just keeping the ERP lights on is obviously not ideal in this time of massive public spending cut backs. The survey, which canvassed 20 UK councils, also found that on average 11 full time employees were needed to support the ERP infrastructure and 15 of the 20 were reliant on expensive outsourcing contracts of between 3 years and 15 years in length.

"The new local government landscape is dictating that councils reduce spend while adapting to considerable change," said Anwen Robinson, MD, UNIT4 Business Software. "Many are struggling to meet their objectives because they are committed to huge projects that are unlikely to ever meet the original objectives. From our conversations with these organisations, it is clear that they require flexible systems that are easy to change without being tied to the rigid and costly implementations that come with big ERP."

Vendor-sponsored surveys do of course tend to have an ulterior motive and this one is no different. Unit4 believes that, "every council would save money in the long term by reviewing their current systems and replacing them where they are not delivering value across the organisation. We could provide more flexible and scalable business systems, while reducing annual costs considerably," according to Robinson.

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Herefordshire Council and health bodies recently purchased Unit4’s local government platform and now expects to save over £2.7m annually. It is said to be the first time back office services will be shared in the UK across local government and health, the company says.

Unit4 is said to be a top six mid-market ERP software player and the second largest European ERP supplier. It has offices in 17 countries around Europe and seven more across North America, Asia Pacific and Africa. Its most recent financial performance saw a 10% climb in quarterly revenue to €99.1m.


Calculator image courtesy of Horia Varlan on Flickr, CC licence.

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