What are the Advantages and Disadvantages of ERP System
- Saudi ERP & Website Solution Blog March 30,2023
In a society where the environment is constantly changing and in a globalized world where companies are competing hard to get the Advantages and Disadvantages of ERP systems over their competitors, technology plays a key role.
Companies see a need to be constantly changing and perceive customer needs to achieve satisfaction.
The technology can significantly increase creativity, efficiency, and business productivity allowing businesses to compete in the digital economy of a global world with the ability to make decisions quickly and flexibly.
Systems Enterprise Resource Planning (ERP) information systems that integrate applications to manage all departments and functions of as production, sales, purchasing, logistics, accounting, project management, inventory control warehouses, orders, payroll, etc.
An ERP system is characterized by:
Integral because you can control the different processes of the company and understand that all departments of a company are interrelated.
Adaptable to the idiosyncrasies of the company on the grounds that any company is like another
Modular: The ERP understand that a company is a group of departments that are interrelated by the information they share and generated from their processes.
Main Advantages and Disadvantages of ERP System
The advantages presented by the ERP are:
Optimization of business processes.
Accurate and timely access to reliable information.
The ability to share information between all components of the organization.
Elimination of unnecessary operations and data.
- Reduction of time and costs of litigation
- Then, as each module of the ERP system enters the same real-time database, another advantage is that no duplicate records or playback operations, ie, redundancy is avoided.
- The performance of all work units that make up their business because better use time is increased.
- If you previously had to make reports and take them from one place to another, now the time is spent on other activities.
- To improve performance and save time, optimize the control and analysis of management decisions there in the long term, and reduced costs for the company.
- Another obvious advantage is in terms of customer service because the response time is reduced attention to them.
- When a company has an ERP system is more competitive in the environment in which it operates.
Disadvantages of ERP are:
- The installation of the ERP system is costly. ERP consultants are very expensive and take approximately 60% of the budget.
- Success depends on the skills and experience of the workforce, including education and how to make the system work properly.
- Resistance to sharing internal information between departments can reduce the efficiency of the software.
- The systems can be difficult to use.
- Change of staff, companies can employ administrators who are not trained to manage the ERP system of the employing company, proposing changes in business practices that are not synchronized with the system.
- Having an ERP system has many advantages, but does not guarantee the total success of the company.
- Organizational culture, knowing how to involve staff, and anticipating changes that will suffer the organization using this system of administration, are important elements for the completion of the implementation.
- The effectiveness of the ERP system may decrease if there is resistance to sharing information between business units or departments.
- Due to the strong changes that implementation of the ERP system brings to the culture of work, there may be poorly trained or disinterested in making use of the same staff...
- The benefits of having an ERP system are not presented immediately with the implementation of the software, they will be evident long after the system is running.
- The culmination of the implementation depends on the ability and skill of the workforce, and also involves education and training, to make the system correctly applied.
In conclusion, ERP systems offer numerous advantages, including increased efficiency, improved data accuracy, and enhanced collaboration.
They provide businesses with better control over their operations, leading to better decision-making and higher productivity.
However, implementing an ERP system can be costly and time-consuming, and it may require significant changes in the organization's processes and culture.
Moreover, ERP systems can be complex, requiring highly skilled professionals to operate and maintain them.
Therefore, businesses need to carefully consider the advantages and disadvantages of ERP systems before deciding to implement them.