School of Information Systems

ERP – Should You Implement It? An Article about Advantages and Disadvantages of ERP

            As you all know, there are lots of things that we can do to support our businesses. One of them is implementing ERP. Enterprise Resource Planning (ERP) is a process whereby a company, often a manufacturer, manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance and human resources. It is actually designed to be used in giant enterprises on the lookout for full integration of their systems. An important level in most ERPs is the unified database which is able to store all of the crucial data for each of the system’s modules. There are many vendors in market which are providing traditional ERP solutions or Cloud based ERP solutions. Though implementation platforms or technologies are different, there are common & basic modules of ERP which can be found in any ERP System. Modules can be found in any ERP system are Human Resource, Inventory, Sales & Marketing, Purchase, Finance & Accounting, Customer Relationship Management(CRM), Engineering/ Production, and Supply Chain Management (SCM).

There are two principal elements which might be required for any successful ERP system. The primary is the common, unified database. This allows the ERP system to have access to every part of information as well as all the knowledge that’s required to make each a part of the enterprise run as a whole unit. The second key part to a profitable ERP system is a modular software design. This primarily means that an ERP uses software program that can be added or eliminated as wanted so as to maximize the efficiency and usefulness of the system as a whole.

            The benefit of an ERP system is that information is easily transferred from one place to another. Also, many ERP techniques can also enhance the security of an enterprise because of its in-built safeguards. Other positives components embody low operational prices, better customer service, and improved productiveness of employees.  Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities, that can give overall insights on business processes and identify potential areas of problems/improvements. ERP systems provide better company-wide visibility and hence enable better/faster collaboration across all the departments.

            The drawback of an ERP system is the cost. Many ERP methods are extraordinarily costly to design and implement. Furthermore, despite their modular nature, the software customization choices are limited and might be difficult to adapt to sure businesses. 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. 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.

            So, if you want to implement ERP into your business, first you must think if ERP is the right tool to enhance your business process. You need to think if your business process will be suitable for ERP program to set, and you must think of the cost too.



Melvin Laurel Puka