More and more companies worldwide are looking into implementing an ERP system. ERP is short for enterprise resource planning and refers to the integration of several business operations into a unified platform. It offers many benefits, including centralized data storage, streamlined workflows, and more effective customer service.
However, it is dangerous to view ERP implementation with rose-tinted glasses. Installing an ERP system is a demanding and time-consuming task that takes years of planning, research, and execution. Before finding an SAP business partner, it is vital to weigh the pros and cons of ERP software first and carefully consider how the new system may affect the company not only in the present but also in the future.
To help you get started, here are some of the advantages and disadvantages of integrating an ERP system in your business.
Pros of ERP Implementation
ERP software suites offer businesses a lot of perks. It is especially the case for developing companies experiencing growing pains as the number of orders and transactions exponentially grow. For a better idea of what ERP software can offer your company, here are some of the advantages of implementing it.
Integrated Business Processes on a Single Platform
One of the key perks of ERP suites is that you can access different modules—such as accounting, inventory management, and customer service—in a single platform. This feature allows you to manage and track all kinds of processes and transactions throughout the company, whether it is the number of sales or a select financial statement.
Additionally, company IT costs become focused, for you no longer need to invest in the installment and maintenance of different systems for each department.
Efficiency is the name of the game for ERP. With a centralized system, it becomes easier to access and exchange data across different company sectors, which streamlines workflows and shortens the pipeline process. Several manual processes like bookkeeping are also automated, which allows your employees to refocus their energies into other revenue-affecting tasks like data analytics and customer service.
Data Accuracy, Quality, and Security
An ERP system features centralized data storage for the whole company, which helps minimize human error from the manual re-entry of data. As a result, the quality of the data is higher, and management can feel assured that the information they are using to make decisions is accurate.
Moreover, data security is one of the priorities of ERP software, which is designed to comply with security regulations. Hence, you can feel assured that business data is safe and secure from internal and external attacks.
Improved Customer Service
According to the Aberdeen Group, a market intelligence company, modern ERP systems can increase punctual deliveries by 24 percent. This is one of the several benefits customers can enjoy when a company uses ERP. Aside from this, with several processes automated with ERP, employees can focus on fostering client relationships, which builds brand loyalty and helps increase revenue streams.
Cons of ERP Implementation
It is evident that ERP suites offer several business benefits, so you might be wondering why its implementation is not as widespread as anticipated. This is because installing such a complex program has cons that can sometimes outweigh its potential benefits to a company. To elaborate further, here are the disadvantages of installing ERP software in your business.
Implementing a high-performing system like an ERP suite does not come cheap. The upfront payment for software is already expensive, but the number rises when you consider the costs for labor, time, and customization. Hence, a lot of small-to-medium-sized businesses opt out of ERP or seek subscription-based cloud solutions, which are often more affordable compared to on-premise systems.
ERP systems are customized to cater to the needs of a specific company. Hence, while they often come with integrated modules to facilitate business processes, a lot of companies work with systems providers to customize the software and make it work more efficiently for them. However, it is possible to overdo this process and make it difficult for key programs to function or upscale down the line.
Slow Software Implementation and Data Migration
The average time it takes to implement an ERP system is two to three years. The planning process takes years before that to avoid disrupting company operations. The same goes for transferring the data from the old system to the new one; both take a lot of time and manpower to accomplish. As the implementation process drudges on, companies risk not having enough budget and stop mid-way, leading to a waste of company resources.
Complexity and Lack of User Acceptance
Not everyone is keen on adapting to changes, especially when it comes to using highly complex systems like ERP. It is crucial to conduct workshops and user training beforehand to prepare your staff for the new system. After all, no matter how well-implemented the ERP system is, it will not be fully functional without trained users.
Overall, implementing an ERP system is a big change that, for some companies, is the necessary next step in reaching their goals. Extensive research and planning are some of the main keys to a successful implementation, so it is vital to form an internal team that will work with experts and systems providers to find the right match. Make sure that the team includes people from different company sectors, especially those who will be directly using the system for daily operations.
While installing an ERP system is a lot of work, it is work that pays off in the long run. To help you find the right ERP system match, it is vital to look for a systems provider who can offer you guidance and insight into what can and may not work with your company. Do the work now, give your company the best tools, and watch your business slowly but surely grow.