Enterprise resource planning (ERP) is business process
management software that allows an organization to use a system of integrated
applications to manage the business and automate back office functions. ERP
software integrates all facets of an operation, including product planning,
development, manufacturing processes, sales and marketing.
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 work-flow from one
department / function to another to ensure smooth transition/ completion of
processes.
3. A unified and single reporting system to
analyze the statistics/ numbers/ status etc in real-time, across all the
functions / departments.
4. Since same software is used across all
departments – this can avoid individual departments having to buy and maintain
their own software systems.
5. Certain ERP vendors can extend their ERP
systems to provide Business Intelligence functionalities as well.
6. Advanced e-commerce integration is
possible with ERP systems that 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,
its 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 might be better.
9. Single Database is implemented on the
back-end to store all the information required by the ERP system and that
enables centralized storage / back-up of all enterprise data.
10. ERP systems are more secure as
centralized security policies can be applied to them and all the transactions
happening via the ERP systems can be tracked.
11. ERP systems provide visibility and hence
enable 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 a boon for managing
globally dispersed enterprise companies.
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 take 1-3 years 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 – So, exhaustive user
training and simple user interface might be critical. But ERP systems are
generally difficult to use (and learn).
6. There maybe additional indirect costs like
new IT infrastructure, upgrading the WAN links, etc.
7. Migration of existing data to the new ERP
systems is always difficult to achieve as with integrating ERP systems with
other stand alone software systems.
8. ERP implementations are difficult to
achieve in decentralized organizations with disparate business processes and
systems.
9. Once an ERP systems is implemented it
becomes a single vendor lock-in for further upgrades, customizations etc.
