In order to understand
computer networks better, it would be helpful to have an overview of the
applications running on the network. 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.
Advantages
of ERP (Enterprise Resource Planning) System:
1. Complete visibility into
all the important processes, across various departments of an organization
(especially for senior management personnel).
2. Automatic and coherent workflow from
one department/function to another, to ensure a smooth transition and quicker
completion of processes. This also ensures that all the interdepartmental
activities are properly tracked and none of them is ‘missed out’.
3. A unified and single reporting system
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 are 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, it's 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 in the backend to store all the information required by
the ERP system, it enables centralized storage/backup of all
enterprise data.
10. ERP systems are more secure 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 enables better/faster collaboration
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 easier for
order tracking, inventory tracking, revenue tracking, sales forecasting and
related activities.
14. ERP systems are especially
helpful for managing globally dispersed enterprise companies,
better.
Disadvantages
of ERP (Enterprise Resource Planning) Systems:
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/payback may 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 may be
additional indirect 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 in decentralized organizations with
disparate business processes and systems.
9. Once an ERP system 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.
