What are the main challenges that cause companies to consider ERP solutions?

agreed with asim and my bro arinjay,,,,

1) Globalisation

2) Business Process Integration

To get in synchronized all the activities of the company with updated results and tasks to be performed.

To analyze the company data

To maintain an unbroken flow of work assignments and work assessments.

To work in systematic way

There are plenty of challanges that forces a company to consider an ERP.

1. Flow of Information : Information moves at snails pace .

2. Redundancy of data maintenance.

3. High employee turnover.

4. Competitive business environment, high demands of customers.

5. Better services.

6. Aid to decision making.

7. Same data across the company to discuss and work with.

8. Best business practices which comes as a package deal with ERP.

9.Transperancy .

10. Online transaction process/approvals.

11. Access to data from any location, data security, data integrity etc.

From my invollvement in ERP initiatives/projects and related tpics including Business Process Reengineering (BPR), Business Process Management (BPM), Corporate Performance Management (CPM) ,,,  I can summarize the main challenges that cause organizations to consider ERP solutions a follows 

1. Organizational fragmentation leading to the SILO syndrome where every department/function/unit tends  to live by itself and build its own empire, resulting in small and scattered isolated islands here and there
2. Cross-department/Cross-functional lack of harmony/smooth communications and interactions
3. Company transformation from vertical hierarchical model to horizontal transaction/service oriented model
4. Company wishes to re-model/ren-engineer  their business processes for higher efficiency/effectiveness , add high-value processes and retire low (or no) value processes
5. Company's realization their need to intergate/interface/interoperate  their departmental/functional applications to support the cross-functional/cross-department service transaction flow

This is is in a nutshell what I see as main reasons/challenges/justifications why companies go for ERP solutions

Companies are sometimes forced to go for ERP and sometimes they take the step under temp occasion while in fact they are undersize the project.

For taking the right step of implementing an ERP there are several reasons classified under two categories:

- Management reporting

- Transaction integration

Business complexity drives decision maker to seek deeper and more comprehensive data, the time factor and accuracy are immense and traditional accounting software or spreadsheets will not fill the gap.

On operational level there are many challenges employee has to solve to keep the transaction integrated and free of errors, which in some line of business is near to immpossible without integrated solution.

Agree with Mr. Mohammed Asim

ERP: Enterprise Resource Planning

It is a very important solution for companies which require digital control for operations.

OPM: Oracle Process Manufacturing is controlling in and out subinventories in all stages of the process.

It is amazing system which has a systemic control for multiple operations at the same time.

Many companies implement enterprise resource planning (ERP) systems. An EPR system is an integrated system that can manage both internal and external resources in a business. The specific reasons companies invest in this technology vary, but typically, cost reductions and productivity enhancements top the list. A wide variety of ERP offerings exist in the marketplace. Most offer the same basic functionality, while features and specific operations differ. The small business owner owes it to himself to perform vigilant due diligence before investing in an ERP system.

Because ERP systems integrate all aspects of a company’s operations, they decrease the order-to-cash cycle. The speed of the order-to-cash cycle determines how quickly a company gets paid for its good or services after the sale. Typically, companies with fast order-to-cash cycles experience increased cash flow. Non-integrated software systems often require multiple data extracts to various spreadsheet programs, or they require uploads from one system to another. These gaps in data flow slow the response time from the time the order gets received to the time payment gets received from the customer. The longer it takes for the customer to pay, the more cash a company has as outstanding. This results in decreased cash flow.

One of the key components of an ERP system is its integrated system architecture. This integration allows a company to use the same system across multiple geographies. A company that runs an ERP system can have a customer service center in Dallas, a warehouse in Baltimore and a main office in Houston. All of these locations use and see the same data regardless of their physical geography. In this case, the ERP system eliminates the need for storing redundant data in multiple physical locations. It also eliminates the requirement for each location to upload or extract data to and from the central data storage site.

Related Reading: Goals for an ERP Project for a Manufacturing Company

ERP systems increase productivity. Because an ERP system integrates data and processes across multiple departments and locations, it allows a company to move product faster, process orders quicker, invoice customers more rapidly and reconcile shipments sooner.

ERP systems give companies access to a multitude of company information. Previously, this information was either unavailable or difficult to obtain with other systems. Also, the information tends to have more accuracy and relevancy because it all comes from one source, not multiple sources. Because most ERP systems provide companies with various reporting tools. they make generating time-sensitive, up-to-date information more user friendly.

Simply implementing an ERP system does not provide a company with immediate benefits. As a result of implementing an ERP system, most companies re-think and re-engineer their current business processes and methodologies. An ERP system seeks to streamline business operations by integrating the data and refining the processes required to operate an organization. Many companies that implement an ERP system discover their company has many functional silos. In other words, very little integration exists from one department to the next.

The main challenges that cause companies to consider ERP solutions are:

A desire to grow the business

Many businesses want to grow either through acquisition or organically. However, existing processes or business applications may be unable to adequately manage a larger enterprise. For example, existing accounting software may be unable to support new subsidiaries or offices in multiple countries. Acquired companies might have their own business applications; the company may need a common software application to standardize business processes across the organization. The company might need a new business system to handle growing numbers of users and transactions. Or it might need more advanced functionality, such as sophisticated reporting and business analytics, CRM, or payroll capabilities.

Inefficient Business Processes

Many organizations perform business processes in a time-consuming, inefficient, error-prone manual fashion. For example, employees may manually extract information from spreadsheets to create reports, re-enter customer information into multiple silo-ed applications, as well as consolidate data from multiple companies by hand or enter data from paper timecards.

A Need to Reduce Costs

During difficult or uncertain economic conditions, many organizations look to reduce their operating costs to shore up profit margins. They might wish to implement an ERP to automate manual business processes and allow staff to focus on exceptions. Many organizations also seek to reduce distribution and transportation costs by bringing their operations closer to the customer. These organizations need standardized processes for managing geographically distributed operations while allowing the company to consolidate financial information.

Obsolete Systems

Many organizations considering a new ERP have obsolete systems that are no longer supported. They need to move to a new system to obtain modern functionality, ongoing upgrades and support.

Compliance

Company's need to comply with new business regulating laws such as sarban oxely or vertical regulations such as FDA's, force companies to adopt ERP solutions to ensure compliance. Other source of compliance might be enforced through partnership agreements with other businesses either formally through contracts or informally through globalization playing its rules.

Challenges are  -

1. Expert ERP Develop farm considering resources & experience

2. An effective business requirement based on current practice & standard policy.

3. Extra Investment / Cost

4. People Development

5. Extra human resources for IT management

6. Bad practice in Business

7. Hurry in both parties (Vendor & customer)