ERP - Benifits and Disadvantages

Benefits of ERP 

 

•         Help reduce operating costs

ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system. The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business. The immediate benefit from implementing ERP systems is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs. 

•         Facilitate Day-to-Day Management

Implementing ERP systems facilitate day-to-day management. The implementations of ERP systems nurture the establishment of backbone data warehouses. ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision making and managerial control. ERP software helps track the actual costs of activities and perform activity-based costing.

·         Support Strategic Planning

Part of ERP software systems is designed to support the resource planning portion of strategic planning. In reality, resource planning has been the weakest link in ERP practice due to the complexity of strategic planning and lack of adequate integration with Decision Support Systems.

  Disadvantages of ERP

•         Customization is problematic.

•         Re-engineering business processes to fit the ERP system may damage competitiveness and/or divert focus from other critical activities

•         ERP can cost more than less integrated and/or less comprehensive solutions.

•         Overcoming resistance to sharing sensitive information between departments can divert management attention.

•         Integration of truly independent businesses can create unnecessary dependencies.

•         Extensive training requirements take resources from daily operations.