Benefits of ERP: Advantages and Disadvantages of an Enterprise Resource Planning System

Deciding which technologies your businesses should and shouldn’t invest in is difficult, to say the least. On the one hand, you want to be the one responsible for innovation and growth within your company. But you also don’t want to be the one to pull the trigger on a failed project. So, is an ERP software investment worth the risk? To find out, you need to weigh the benefits of ERP, specifically how ERP system advantages and disadvantages breakdown when compared against each other.

Whether your business is large or small, there are several benefits of ERP software your company could gain. Enterprise resource planning software (ERP) is a suite of customizable applications that allow businesses to integrate and manage their most important processes. Although there are plenty of advantages, it’s not all smooth sailing; ERP has its disadvantages, too.

ERP Software Selection Myths:
Before we share the key advantages and disadvantages of ERP systems, we’d like to dispel some myths around ERP. As we’ve found in our discussions with technology buyers, selecting and implementing a new ERP solution can confound even the most experienced IT professional. It’s this confusion that leads to many of the myths and fallacies surrounding ERP software selection. Here’s a quick reality check as you embark on your ERP selection project:

1. The Cost of an ERP Should be the Biggest Factor:
ERP systems will ideally last for at least five years. Many companies use their systems for much longer. Because of this, it might be more cost-effective to buy a comprehensive system with a bigger price tag than to “save” money on less expensive software that doesn’t fit your company’s needs.

Weigh what each ERP solution can offer against the goals you have set for your company. Your return on investment (ROI) will depend on the overall value derived from your ERP over time. The best ERP system is one that meets your anticipated requirements now and in the future- and it may not be the cheapest option.

2. ERP Selection Should be Entirely Managed by the IT Department:
Your IT team will most likely spend the most time conducting research and performing the implementation, but your entire company will reap the benefits of an ERP system. It’s imperative that your ERP selection team includes stakeholders from your key business operations in addition to your IT department. For example, you’ll want to get feedback from those in charge of your company’s most important functions. They’ll have the insight into how the software should support and enhance current operations.

In addition, make sure to speak to the personnel who will be using the software on a daily basis. Their needs and wants should be a top concern, as their ability to use the system will ultimately decide if it’s a success or a failure.

3. ERP Selection Should be Entirely Managed by Consultants:
While many people believe ERP implementation can be managed solely by their IT staff, there might be just as many who don’t consider their input at all. Some companies hesitate to incorporate their IT team, as they’re already taxed to the limit managing day-to-day operations. But that doesn’t mean consultants are a replacement for your internal teams who work with your existing systems on a daily basis.

A consultant will likely have a better understanding of the software and even your industry, but your own IT team plays a critical role by applying their knowledge of your company to ensure a successful ERP selection project. Your IT team will have a better idea of what kind of system is needed in order to provide the security and scalability required by your business. They’ll also have first hand experience managing any systems you already use and wish to integrate into your ERP.

4. The More ERP Functionality, the Better:
To understand why going for the most ERP features might not be your best selection strategy, you want to consider two important factors: what makes an ERP software vendor successful and what drives success for your company. A software company can thrive by making software that meets the needs of their target market without overwhelming them with unneeded functionality.

Likewise, many organizations can become more successful by simply streamlining operations. The takeaway is not to be dazzled by software that has countless capabilities. Instead, focus on the solution that addresses each of your business’s actual needs. Choosing software that can do a lot of what you don’t need is never the right solution.

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