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An ERP system is the integration of the different processes that take place in a company. Before purchasing a platform like this, you should consider the advantages and disadvantages.
The main advantage is to increase the productivity of the company and that this system has access to information in a simple and time invested in analyzing situations and seek solutions quickly.
The benefits of an ERP system are:• Increased productivity• business decisions better and faster• Strong stability• Cost control• Inventory reduction• Increased revenue by customer response time.• Store information for all processes, for later analysis.• Customer follow from acceptance to complete satisfaction.
The major disadvantage of an ERP system is its high cost and installation complexity.
The disadvantages of an ERP system:• They are complex systems and some companies do not know how to adjust to them.• The cost of implementation is high.• Employees must be able to control the system.• When setting up the system, the changes are very costly in time and money.• If not made a communication plan and implementation will not be completed to implement, getting a waste of money.
To successfully implement an ERP has to have good communication and implementation plan. Any change of system within a company which has been working in a way is a big change. If this change does not adequately informing staff to understand the benefits it will bring to the company system and them, which leads to poor workers see how this change and reluctant to put it.To avoid this you have to work in parallel with good monitoring strategy, placing a group responsible for implementation with milestones that are controlled by the area director of the company.If this is not met, a year the system will be installed and there will be a lost opportunity cost of the money invested.You have to keep in mind that if you follow a good plan and milestones are met all the system control will bring great benefits to the company. It would all areas of the company communicated in real time thus achieving increasing revenues and decreasing the time in making decisions.
ERP or Enterprise Resource Planning is an important enterprise application that integrates all the individual department functions into a single software application.
ERP Systems make it easier to track the workflow across various departments. They reduce the operational costs involved in manually tracking and (perhaps) duplicating data using individual & disparate systems. In this article, let us have a look at the advantages and dis-advantages of implementing ERP (Enterprise Resource Management) Software Systems.
1. Complete visibility into all the important processes, across various departments of an organization (especially for senior management personnel).
2. Automatic and coherentworkflow from one department/function to another, to ensure a smooth transition and quicker completion of processes. This also ensures that all the inter-departmental activities are properly tracked and none of them is ‘missed out’.
3. A unified and single reportingsystem to analyze the statistics/status etc. in real-time, across all functions/departments.
4. Since same (ERP) software is now used across all departments, individual departments having to buy and maintain their own software systems is no longer necessary.
5. Certain ERP vendors can extend their ERP systems to provide Business Intelligencefunctionalities, that can give overall insights on business processes and identify potential areas of problems/improvements.
6. Advanced e-commerce integration is possible with ERP systems – most of them can handle web-based order tracking/ processing.
7. There are various modules in an ERP system like Finance/Accounts, Human Resource Management, Manufacturing, Marketing/Sales, Supply Chain/Warehouse Management, CRM, Project Management, etc.
8. Since ERP is a modular software system, its possible to implement either a few modules (or) many modules based on the requirements of an organization. If more modules implemented, the integration between various departments may be better.
9. Since a Database system is implemented on the backend to store all the information required by the ERP system, it enablescentralized storage/back-up of all enterprise data.
10. ERP systems are moresecure as centralized security policies can be applied to them. All the transactions happening via the ERP systems can be tracked.
11. ERP systems provide better company-wide visibility and hence enable better/fastercollaboration across all the departments.
12. It is possible to integrate other systems (like bar-code reader, for example) to the ERP system through an API(Application Programing Interface).
13. ERP systems make it easierfor order tracking, inventory tracking, revenue tracking, sales forecasting and related activities.
14. ERP systems are especially helpful for managing globally dispersed enterprise companies, better.
1. The cost of ERP Software, planning, customization, configuration, testing, implementation, etc. is too high.
2. ERP deployments are highly time-consuming – projects may take 1-3 years (or more) to get completed and fully functional.
3. Too little customization may not integrate the ERP system with the business process & too much customization may slow down the project and make it difficult to upgrade.
4. The cost savings/paybackmay not be realized immediately after the ERP implementation & it is quite difficult to measure the same.
5. The participation of users is very important for successful implementation of ERP projects – hence, exhaustive user training and simple user interface might be critical. But ERP systems are generally difficult to learn (and use).
6. There maybe additionalindirect costs due to ERP implementation – like new IT infrastructure, upgrading the WAN links, etc.
7. Migration of existing data to the new ERP systems is difficult (or impossible) to achieve. Integrating ERP systems with other stand alone software systems is equally difficult (if possible). These activities may consume a lot of time, money & resources, if attempted.
8. ERP implementations are difficult to achieve indecentralized organizations with disparate business processes and systems.
9. Once an ERP systems is implemented it becomes a single vendor lock-in for further upgrades, customizations etc. Companies are at the discretion of a single vendor and may not be able to negotiate effectively for their services.
10. Evaluation prior to implementation of ERP system is critical. If this step is not done properly and experienced technical/business resources are not available while evaluating, ERP implementations can (and have) become a failure
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