Top 10 Advantages and Disadvantages of ERP: what you should know

 If you want to grow your business revenue then you have to automate your business processes and through ERP software you can easily automate your various business operations such as Financial Accounting & Reporting (FAR), Project Management, Inventory, etc. 

In this article, " Top 10 Advantages and Disadvantages of ERP " we will discuss the main things which everyone should know who wants to take the benefits of an ERP system. 

What is an ERP? 

The software that business uses to manage their day-to-day activities is known as Enterprise Resource Planning ( ERP ). For instance: Risk Management, accounting, project management, human resources, procurement, Human Capital Management (HCM), supply chain management, etc can be managed by ERP.  

Additionally, Erp helps businesses to analyze and increase their company performance through which they can reduce costs and save time. 

What are the top 10 advantages and disadvantages of ERP

The top 10 advantages of ERP are: 

1. Raise Productivity 

Erp system improves the productivity of a business by automating its tasks through which the employee doesn't have to spend their time on repetitive tasks and can focus on other tasks which will grow their business. Additionally, Erp also saves the money required to complete the tasks. 

2. Improve Accuracy 

Erp system offers processing, and storage of information on production, centralized collection, sales, etc, and all of this is managed by a single system. So the benefit is users don't have to spend their time checking the data in multiple places because the data is maintained in a single system. 

3. Return on investment ( ROI ) 

The Erp system allows for collaboration between the company's various departments. This can lead to time-saving, and improve business efficiency overall it gives you a higher return on investment the in long run. 

4. Competitive in market

Erp provides a competitive advantage to enterprises in the market by providing them with various tools to manage their supply chain, accounting, projects, etc. 

5. Cost Effectiveness

 Erp reduces a variety of business costs such as operating costs, production costs, administrative costs, etc. In a study, it is found that on average ERP systems reduce 22% administration cost, and 23% operating costs and the business that have invested in ERP can reduce up to 20% manufacturing cost.

6. Inventory management

Erp system helps to manage inventory by providing various data which is essential to manage inventory. Such as: how many goods are sold, shrinkage, turnover rates, etc through this data you can track your inventory needs and can remove or increase products according to your customer's needs. 

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7. Business Requirements

 Each ERP consists of different modules. So, you have to choose an ERP according to your business needs. 

Eg: if your business focuses on product management then you can choose an ERP software that operates in the same area. By doing this, you will save money and also gets the ERP that fits into your business requirements.

8. Flexible

Erp is a flexible system. In this, You can make changes according to current needs. for instance: when you increase your products or services, add new functions, users, etc then the ERP system will handle all these changes.

9. Access is easy 

According to the requirements, the ERP system is implemented on the web or mobile. Due to cloud technology, it can be used on laptops, smartphones, or any other portable devices at any time and at any place. 

10. Security of Data

One of the most essential factors of any business is the security of its data and in case of data safety, you can rely on an ERP system because in this your data is completely secure through standards-based security practices, attack prevention, risk management, processes for security advancement, and failover management. 

What are the top 10 Disadvantages of ERP

The top 10 disadvantages of ERP are:

 1. High Development cost 

Erp solutions are complex due to which their development becomes difficult. So, building an erp according to the customer's specifications requires an experienced team due to which the cost to develop an ERP becomes high. 

2. Employees Training

To use the ERP you have to train your employees and training employees may require much time and effort and also it can be costly. 

3. Data migration

When you are using an ERP system for the first time then in this case, you have to enter your stored or existing data into a New format, and depending upon the types of your industry the process of data migration may become lengthy.

4. Late Results

The various process of ERP implementation took time such as data input, system customization, training of staff, etc. Due to this reason, ERP systems require patience to generate ROI ( Return on investment ).

5. Effectiveness

When there will be resistance to transferring the data between business departments or units then, in that case, the effectiveness of the ERP may be reduced. 

6. Workforce

The ERP system depends upon the workers acting on it. If the workers are more skilled then the output will be also more and if the workers are less skilled then you may face financial losses. 

7. Company culture

Erp implementation may feel company workers more pressurized. Because in ERP implementation the company workers have to work more for long hours,  and with few breaks. 

8. Technical cost

In an ERP system, the installation and maintenance cost is low compared to technical costs. For instance: development costs, vendor costs, training costs, customization charges, etc come in a technical cost. 

9. Decentralization organizations

Erp is difficult to implement in Decentralized organizations. Because these types of organizations usually have different business rules, decision centers, data semantics, and authorization hierarchies.

10. Customization

If there is less customization in the ERP system then the system may not fulfill the project requirements and when there is more customization in the Erp system then the project may slow down. 

Related Searches: 

how does ERP differ from other business management software

ERP differs from other business management software because it offers a wide range of services such as planning, tracking, and other business operations. Additionally, this system can also be customized and integrated with other systems. 

What is an example of an ERP system?

Enterprise Resource Planning ( ERP ) are integrated management software that helps companies in managing various tasks in real time. Some examples of ERP systems are Supply Chain Management (SCM), Manufacturing Execution Systems (MES), Customer Relationship Management (CRM), Warehouse Management, Human Capital Management (HCM), Financial Accounting & Reporting (FAR), Project Management, Inventory, etc.

How important is ERP in business

Erp is very important in business because it provides a business with a wide range of facilities such as: increasing customer response, consolidating data, saving time and increasing money, eliminating repetitive tasks, better decision-making, etc

Conclusion: 

The Erp system has various advantages, it increases business productivity, accuracy,  flexibility, security, Return on investment (ROI ), etc.  Additionally, due to its cloud technology, it can be used on Mobile, laptops, or other portable devices. 

But erp also has disadvantages, it increases technical, training, and development cost plus the process of implementation is lengthy due to this it shows late results. 

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