ERP Outsourcing on the Rise: Report


Sourcing advisory firm EquaTerra says demand for outsourcing serves dropped 5 percent in the fourth quarter of 2008 versus the third quarter. But their poll shows an expected increase in the first three months of 2009.

One area where the firm is seeing an uptick, though, is in ERP outsourcing. Businesses began farming out ERP work in the mid-1990s and continued outsourcing as they made upgrades and improvements. A second wave is just underway, EquaTerra says, particularly among government and public sector organizations.

"Too often ERP systems have proved to be financial sink holes, but, with the help of experienced service providers, they can be tailored to cut operations costs and support new business strategies," says Stan Lepeak, the firm's managing director of global research. (In the full report, EquaTerra notes that it began an ERP outsourcing advisory practice last year.)

In my years covering project management for Baseline, ERP systems were probably the biggest migraine-inducing projects IT managers cited. They're massive, costly, time-consuming projects, and they often experience anywhere from minor to catastrophic delays or even failures. It's not a huge surprise that businesses would look to dish this stuff off, but I wonder how big this second wave will actually be (EquaTerra doesn't provide much in the way of hard numbers on the matter).

So we'll leave it to you, IT managers: is your company farming out ERP project work? Have you done it before? What sorts of results have you seen?