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ERP or Enterprise Resource Planning is a tool used to integrate the data and processes into one single system using many components i.e hardware, software, database etc. An ERP ensures communication, efficiency and productivity by integrating and streamlining different functional areas within an organization.
Enterprise resource planning softwares are designed mainly to eliminate the complexity involved in managing the resources pertaining to the company. Though the main motive of ERP software is to increase the productivity, it also has some advantages and disadvantages in it. Let’s discuss them.
ADVANTAGES
- Initial cost for the ERP solution is normally less than the front-end loaded common ERP solutions.
- The deployment and implementation can cost less and work quicker.
- The software and hardware needed to run the ERP solution can be less both at the hosted site as well as the customer’s facility.
- Internal IT staff is not typically needed with a solution.
- Up-time can be increased with a hosted solution if the customer spends the additional money for infrastructure and support.
- It integrates with Microsoft’s tools easily to allow appropriate compatibility.
- A top down view of the organization can be easily figured out.
- A considerable amount of risk in losing important data is eliminated.
DISADVANTAGES
- Long term viability.
- Non-permanent hosted vendors. The market for ERP is new and not as stable as purchasing and running your own internal systems.
- Risk of downtime (if no arrangement for redundant server etc)
- Limited ability for system modification or ad-hoc reporting
- Cannot be counted as an asset on the balance sheet.
- Like paying rent instead of owning a house.
- Many claims it is working because of low total cost of operation and it specializes only in limited areas of ERPs.
- After implementation, migration of the system might become expensive.
- Sensitive information regarding a company can’t be shared efficiently with ERP.
ERP systems are distributed applications. They can’t be implemented all at once. There are a number of phases and steps involved in implementing an ERP system. A typical ERP implementation system requires one year and it involves around 150 consultants. This is for big and medium sized companies. But, for small scale companies which have less than 100 employees, the amount of time required for implementation is less. For these companies, planning and implementation doesn’t require more than 3-4 months. With the increase in demand for customization of the software, the time to implement will also increase.
Getting confused? The FAS Solutions is there to sort it out for you.
2 Comments
Max Ushakov
We are considering to implement an erp solution in our company. thanks for the heads up.
Belkin
I can’t wait to read more about this subject.