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Pros and Cons of Using an ERP

erp pros and cons

The cornerstone of a modern financial practice is easy access to data from sources including general ledger (GL), payroll and accounts payable and receivable. Automating as many financial and operational processes as possible eases audits and minimizes human error and fraud.

Depending on the business, you may also want deep inventory, order and supply chain insights and help with procurement, production, distribution and fulfillment.

So how do you get all this real-time insight mojo? ERP.

What is Enterprise Resource Planning (ERP)?

An ERP system is software that gathers, analyzes and shares information from different departments in a single database. ERP connects the dots on vital business processes, such as accounting, operations, manufacturing and sales, adding efficiencies through automation and data analysis. Dig deeper into exactly what comprises ERP.

Companies with highly distributed teams may say, “That’s great, but my controller is in Chicago while the head of sales is working the phones from Buffalo. How can they stay in sync?”

The answer is, with cloud-based software.

What is cloud ERP?

Cloud ERP is Software-as-a-Service (SaaS) technology that collects real-time data from critical business processes and makes it available via the Internet. Your controller, finance staff, executives, partners and anyone else your company wishes can get accurate information, on whatever device they’re using, wherever and whenever they’re working.

The difference between traditional on-premises ERP and cloud ERP is that all data, software and systems are hosted online rather than using on-premises hardware in a server room.

Cloud ERP offers frequent systems updates, fewer startup costs, less need for IT intervention and better security, making it ideal for distributed enterprises as well as small and midsize businesses looking to grow.

Why do I need an ERP system?

The business case for ERP is compelling. By breaking down data silos, finance and other business leaders can be better stewards of company resources and empower the business to deliver excellent customer service and gain competitive advantages.

Think about these business benefits:

Eliminate stacks of paper —or their standalone spreadsheet equivalents. Now, procurement orders, timesheets, expense reports, invoices and other data is stored safely in the cloud and accessible from anywhere.

Real-time reports, where finance and business users draw data from multiple sources, yield insights into the activity and health of the organization as a whole and help identify trends, best practices and areas where there’s room for improvement.

More income, lower overhead. With improved access to information, sales teams can identify leads, access the most up-to-date pricing and availability data and quickly issue contracts with fewer errors. Meanwhile, when using cloud ERP, companies can redirect IT’s efforts away from maintaining servers and performing software updates and toward supporting newly remote employees.

Pros of an ERP System

The world’s most successful companies consider ERP essential technology. In 2020, changes to the business environment are making all-size firms understand why.

Let’s look at six areas that build on those business benefits we discussed.

General: ERP systems provide a big-picture look at financial reality in near real time. Specifically, a modern ERP system:

Accounting and finance: ERP systems support accounting and finance professionals by:

Manufacturing: If there’s one lesson from 2020 for manufacturers, it’s that supply chain visibility is king. ERP systems can also:

Sales and marketing: Again, with the right modules, ERP systems connect the activities of sales, marketing and customer service teams, producing powerful, personalized customer experiences and enhanced customer relationship management, in addition to:

Human resources: Expanded ERP systems provide the human resource department with tools and methods to support and retain a company’s greatest asset—its people—by:

Team collaboration: ERP platforms increase communication and collaboration across every facet of an organization, particularly important when employees aren’t gathering in an office and must perform processes, like monthly closes, remotely. Key functions include the ability to:

Cons of an ERP System

There are several challenges a company must overcome to get full value from an ERP system.

Cost: A substantial deterrent to ERP is the upfront integration and ongoing subscription and licensing costs associated with the technology.

Implementation challenges: It takes time, money and resources to get an ERP system up and running, even with a thorough implementation checklist .

Even if you do decide to purchase ERP, keep these cons in mind. Incomplete data migration and employee resistance in particular will make it challenging to achieve a positive return on investment (ROI).

#1 Cloud ERP Software

Choosing an ERP System

Once you decide to make the investment, it’s time to select the right ERP system for your company.. The steps below will help you choose software that fits your business’ needs now and for many years to come.

By choosing wisely, you’ll put your company on the path to success in 2020 and whatever the “new normal” holds.

ERP Features

12 Core ERP Features: Benefits and FAQ

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Enterprise Resource Planning (ERP)

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Enterprise Resource Planning (ERP): Meaning, Components, and Examples

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What Is Enterprise Resource Planning (ERP)?

Enterprise resource planning (ERP) is a platform companies use to manage and integrate the essential parts of their businesses. Many ERP software applications are critical to companies because they help them implement resource planning by integrating all the processes needed to run their companies with a single system.

An ERP software system can also integrate planning, purchasing inventory, sales, marketing, finance, human resources, and more.

Key Takeaways

Understanding Enterprise Resource Planning (ERP)

You can think of an enterprise resource planning system as the glue that binds together the different computer systems for a large organization. Without an ERP application, each department would have its system optimized for its specific tasks. With ERP software, each department still has its system, but all of the systems can be accessed through one application with one interface.

What Does ERP Do?

ERP applications also allow the different departments to communicate and share information more easily with the rest of the company. It collects information about the activity and state of different divisions, making this information available to other parts, where it can be used productively.

ERP applications can help a corporation become more self-aware by linking information about production, finance, distribution, and human resources together. Because it connects different technologies used by each part of a business, an ERP application can eliminate costly duplicates and incompatible technology. The process often integrates accounts payable, stock control systems, order-monitoring systems, and customer databases into one system.

How Does It Work?

ERP has evolved over the years from traditional software models that made use of physical client servers and manual entry systems to cloud-based software with remote, web-based access. The platform is generally maintained by the company that created it, with client companies renting services provided by the platform.

Businesses select the applications they want to use. Then, the hosting company loads the applications onto the server the client is renting, and both parties begin working to integrate the client's processes and data into the platform.

Once all departments are tied into the system, all data is collected on the server and becomes instantly available to those with permission to use it. Reports can be generated with metrics, graphs, or other visuals and aids a client might need to determine how the business and its departments are performing.

A company could experience cost overruns if its ERP system is not implemented carefully.

Benefits of Enterprise Resource Planning

Businesses employ enterprise resource planning (ERP) for various reasons, such as expanding, reducing costs, and improving operations. The benefits sought and realized between companies may differ; however, some are worth noting.

Improves Accuracy and Productivity

Integrating and automating business processes eliminates redundancies and improves accuracy and productivity. In addition, departments with interconnected processes can synchronize work to achieve faster and better outcomes.

Improves Reporting

Some businesses benefit from enhanced real-time data reporting from a single source system. Accurate and complete reporting help companies adequately plan, budget, forecast, and communicate the state of operations to the organization and interested parties, such as shareholders.

Increases Efficiency

ERPs allow businesses to quickly access needed information for clients, vendors, and business partners. This contributes to improved customer and employee satisfaction, quicker response rates, and increased accuracy rates. In addition, associated costs often decrease as the company operates more efficiently.

ERP software also provides total visibility, allowing management to access real-time data for decision-making.

Increases Collaboration

Departments are better able to collaborate and share knowledge; a newly synergized workforce can improve productivity and employee satisfaction as employees are better able to see how each functional group contributes to the mission and vision of the company. Also, menial and manual tasks are eliminated, allowing employees to allocate their time to more meaningful work.

ERP Weaknesses

An ERP system doesn't always eliminate inefficiencies within a business or improve everything. The company might need to rethink how it's organized or risk ending up with incompatible technology.

ERP systems usually fail to achieve the objectives that influenced their installation because of a company's reluctance to abandon old working processes. Some companies may also be reluctant to let go of old software that worked well in the past. The key is to prevent ERP projects from being split into smaller projects, which can result in cost overruns.

Employing change management principles throughout the ERP life cycle can prevent or reduce failures that compromise full implementation.

Some familiar names are leaders in ERP software. Oracle Corp. ( ORCL ) originally supplied a relational database that integrated with ERP software developed by SAP ( SAP ) before entering the broader enterprise market in a big way in the early 2000s. Microsoft ( MSFT ) has long been an industry leader, with many customers using multiple software applications from the company.

As cloud-based solutions have grown in popularity in recent years, the traditional ERP industry leaders have seen challenges from upstarts such as Bizowie and Workwise.

ERP Examples

Fulton & roark.

Men's grooming product maker Fulton & Roark successfully implemented enterprise resource planning to better track inventory and financial data. Like many other businesses, the North Carolina company used spreadsheets to track inventory and accounting software to record financial data.

As the company grew, its processes lagged. Their antiquated inventory tracking system did not account for changing costs, and the accounting software could not record the metrics needed for key financial statements. These breakdowns created manual processes, which further compromised time and resources.

To eliminate unnecessary processes and centralize work, they chose the Oracle NetSuite ERP system. Immediately, Fulton & Rourk was better able to identify accounting errors related to inventory, eliminate costs from employing third parties to evaluate their financial records, and better report financial positions.

Cadbury, a global confectioner and maker of the popular chocolate Cadbury egg, also successfully implemented an ERP system. The company had thousands of systems but could not keep pace with its rapid growth and used ineffective warehouse management systems.

It implemented a system that integrated its thousands of applications, standardized processes, and restructured warehouse management systems—breaking down silos for seamless, integrated coordination of work.

What Is the Importance of Enterprise Resource Planning?

Enterprise resource planning software offers single-system solutions that integrate processes across the business. These applications allow users to interact within a single interface, share information, and enable cross-functional collaboration. They increase productivity, collaboration, and efficiency.

What Are the 5 Components of ERP?

The components of an ERP system depend on the organization's needs. However, there are key features that each ERP should include. Generally, packages include finance, human resource, logistics and manufacturing, supply chain management, and customer relationship management.

What Are the Types of ERP?

Generally there are three deployment options for ERP systems; Cloud-based, on-premise, and a hybrid of the two. Within these options, a business can choose from hundreds of types such as finance, supply chain management, and human resource management.

What Are the 2 Main ERP Applications?

Which ones are the main applications depends on the business and the industry it operates in. Most companies can benefit from supply chain management, logistics, and financial applications to help them streamline their operations and expenses.

Enterprise resource planning (ERP) manages and integrates business processes through a single system. With a better line of sight, companies can better plan and allocate resources. Without ERP, companies tend to operate in silos, with each department using its own disconnected system.

ERP systems promote the free flow of communication and sharing of knowledge across an organization, the integration of systems for improved productivity and efficiencies, and increased synergies across teams and departments. However, moving to an ERP system will be counterproductive if the company's culture does not adjust to the change and the company does not review how the structure of its organization can support it.

Oracle. “ Oracle for SAP Technology Update ,” Page 42.

Microsoft. “ Annual Report 2021 .”

Workwise. “ About Us .”

Bizowie. “ A Different Kind of Enterprise Software Company .”

Oracle NetSuite. “ Fulton & Roark .”

Oracle NetSuite. “ 3 Successful ERP Implementation Case Studies .”

Microsoft. “ Mondelēz International Moves to Microsoft Azure for Great SAP Performance and AI Innovation .”

SAP. “ How Does Support From a Dedicated Engagement Team Accelerate Digital Transformation? ,” Page 3.

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Benefits of ERP: Explore ERP Advantages & Disadvantages

benefits of ERP, ERP, cloud ERP, ERP benefits, enterprise resource planning

What is ERP, and Why is it Important?

For many companies, Enterprise Resource Planning (ERP) systems are a critical element of their success. ERP refers to software and systems that are used to plan and manage all core supply chain, manufacturing, services, financial and other processes of an organization. ERP can considerably streamline an organization’s operations, automating functions such as accounting, procurement, project management, customer relationship management, risk management, compliance and supply chain operations.

While a business can utilize an individual ERP application, a complete ERP application suite brings processes together across a business, connecting every aspect of the enterprise and allowing for improved communication and data gathering. Today’s ERP systems extend processes by providing collaboration and digital solutions to effectively connect with partners outside the organization including, customers, suppliers, carriers, financial institutions and others.

What are the Benefits of ERP?

The benefits of ERP are many. ERP system benefits range from optimizing processes to helping different departments better collaborate to improving the relationship between a business and its customers. The following are several of the most valued benefits to utilizing ERP.

Increased Efficiency

One of the primary advantages of ERP is that it allows companies to automate manual and routine functions. This frees up employees to focus on more revenue-driving tasks, as well as standardize common business processes. The increased efficiency leads to improved demand forecasting, reduced production bottlenecks, shorter lead times, and a more transparent and responsive supply chain, not to mention business growth and the ability to stay ahead of competitors.

Improved Collaboration

ERP systems also connect teams, improving communication and employee engagement. With an ERP system, every approved employee has on-demand access to operational data, allowing them to understand all of the company’s moving parts and the role they play. Reduced silos and real-time project updates further aid the efficiency that leads to smoother workflows and cost savings. Collaboration capabilities also extend outside the four walls of an organization to connect with key trading partners and further progress business benefits.

Real-time Data & Enhanced Reporting

One of the biggest benefits of ERP is that it’s a powerful data hub. An ERP system allows you to collect, store, and analyze data across your operations in one centralized location, providing a single source of truth and the visibility to act more strategically. That centralized data enables a business to access real-time information and generate more useful reports. One can compare functions across departments without multiple spreadsheets or data sources, as well as monitor business aspects like inventory levels on a daily basis to control capital more precisely. Data is the new gold and advances in technology are combining data with smart AI systems for augmented analytics reporting , potentially providing insights on demand with voice commands. 

Built-in Compliance

Other benefits don’t amount to much if your business doesn’t maintain regulatory compliance. A powerful advantage of ERP systems that often gets overlooked is that they’re designed to help keep track of industry regulations and compliance changes. This allows businesses to stay on top of and in compliance with relevant laws, guidelines and specifications. 

Cloud Accessibility

Though ERP systems are available as on-premise solutions, cloud ERP software has become more popular in recent years. The major benefits of cloud ERP include a reduced burden on IT staff, dedicated data security and mobility. Using a cloud-hosted ERP solution means that the system can be accessed anywhere, anytime on mobile devices as long as there’s an internet connection. This allows for quicker action without the need for team members to be together.

Better Customer Service

A portion of the data ERP provides a central hub for is customer information. With centralized customer data, multiple departments can easily access and collaborate on customer needs for faster response times and improved delivery and order accuracy. Sales representatives can focus on building customer relationships instead of maintaining spreadsheets and marketers can create customer-focused campaigns.


One thing many users like about today’s ERP systems is their modularity. A modular makeup means that applications can be used singularly or together as a full suite. A company can pick and choose which applications best suit their business needs without having to purchase what it doesn’t need. This flexibility helps businesses move away from the clunky systems they’ve been using.

What are the Disadvantages of ERP?

Though the advantages of an ERP system far outweigh the disadvantages, there are a few to consider to make sure moving forward with ERP is right for your business at a given time.

Upfront Costs

There are initial costs to keep in mind when considering an ERP system, particularly an on-premise system, such as the cost of implementation, maintenance, training and potential third-party software add-ins. The cost is easier to manage if you opt for a cloud-hosted ERP solution, however. Cloud ERP solutions typically operate on a monthly subscription, so you’ll be billed over time. Either way, the counter to this disadvantage is the long-term cost savings having an ERP system provides.

To get the most out of ERP software, proper training is a must. Training should cover all of the ERP system’s features, with sessions in line with business processes. IT staff should also be trained to manage the technical aspects of the system. To prevent knowledge loss when trained employees leave the company, an organization would be wise to invest the time to create ERP training plans , manuals and other resources for new team members to quickly become acquainted with the system.

Making company changes is always time-consuming and requires back and forth between stakeholders. This is especially the case when adopting new technology. This process usually requires getting approval and support from the top down, which can be challenging if those you seek buy-in from don’t understand the value of ERP. Once implemented, it may also be difficult to get some employees on board with utilizing the system and learning how to best use its features.


To fully realize ERP benefits, a system should be fine-tuned to a company’s needs. When it’s a ready-to-use system or custom-made, adjusting it to fit business needs and practices is critical to success. Each business must be prepared to take the time to ensure an ERP system has all the features it needs and none it doesn’t. Otherwise, ERP is not a sound investment.

Fortunately, QAD’s adaptive ERP solutions negate or minimize common disadvantages, providing benefits and ROI opportunities that make getting an organization on board less of a challenge.

What Industries Benefit the Most from ERP?

The versatility of ERP allows almost any industry to benefit from ERP efficiencies. A few top industry examples include:

Any organization involved in manufacturing in particular will reap the benefits of ERP. Manufacturing ERP can drastically streamline operations to maximize resources, save time, cut costs, and drive measurable business growth. 

Would My Organization Benefit from Implementing (or Upgrading) ERP?

The ERP options on the market today have enough benefits to make for a strong business case. If you’re on the fence about whether to make the investment, consider the following questions to help determine if an ERP upgrade or implementation would be valuable for your company.

How Does QAD Adaptive ERP Provide a Competitive Advantage?

Maintaining a competitive advantage is what keeps business owners up at night. A critical and often overlooked piece of the success puzzle, however, is regularly evaluating enterprise systems.

Why? Data accumulation.

Regardless of company size, having the right software that allows your business to collect and use the right data can provide a tremendous advantage. Being able to easily and quickly access real-time information puts companies in a better position to manufacture more competitive products and therefore stay relevant. The advancements in cloud and encryption technology over the last several years have dramatically changed how a company can collect, analyze and secure data. Machine and data-enabled learning tools can acquire even more cloud datasets using advanced algorithms to quickly turn collected data into valuable insights.

The data-driven insights are what’s important. It’s not enough to simply collect data. You have to use it well to get ahead. To make the most informed, strategic decisions, manufacturers should utilize data to drive product development, make investment decisions, identify industry trends, and improve operational efficiency to increase productivity and decrease spending.

QAD Adaptive ERP solutions use these data insights to help companies respond quickly to change. The ability to quickly adapt contributes greatly to a company’s competitiveness. An ERP solution should be agile enough to align with a business, enable new technologies and improve a company’s opportunity for success.

To stay competitive, an adaptive ERP should:

Without agile ERP software, companies struggle to react quickly and strategically enough to inevitable business disruption. QAD Adaptive ERP is an essential ingredient in helping companies perform at their best and become profitable leaders in their industry.


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very exceptional blog. thanks for sharing this information.

Good info….. very helpful and knowledgable

You are posting a very good article. Thanks for sharing this useful article with us. keep posting.

I like that you mentioned how one of the primary advantages of ERP software is that it allows companies to automate manual and routine functions. I was listening to a business management podcast last night and one of the guests of that episode talked about ERP. It seems to be quite a convenient thing to have for businesses so I could see why they’d use it.

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What is ERP?

Enterprise resource planning (ERP) is a type of software system that helps organizations automate and manage core business processes for optimal performance. ERP software coordinates the flow of data between a company’s business processes, providing a single source of truth and streamlining operations across the enterprise. It’s capable of linking a company’s financials, supply chain, operations, commerce, reporting, manufacturing, and human resources activities on one platform.

Most companies have a finance and operational system in place, but siloed systems can’t go beyond everyday business processes or help with future business growth. As companies expand and their needs change, their systems should keep up with them. In this article, you’ll learn what ERP is and why having software in place that keeps up with your needs can help run a more agile and efficient business.

Modern ERP software systems

Historically, ERP systems were suites that worked separately and didn’t talk with other systems. Each system required expensive, complex, and customized code to meet unique business requirements which slowed—or even prevented—the adoption of new technology or process optimization.

What makes today’s ERP software different is that it brings all these different processes together in one fluid system. It doesn’t just offer data connectivity within your ERP system, but also within your productivity tools, e-commerce, and even customer engagement solutions. It enables you to connect all your data for better insights that help you to optimize your processes across your entire business.

In addition, a modern ERP solution offers flexible deployment options, improved security and privacy, sustainability, and low-code customization. But most importantly, it builds continuity and resiliency into your business and processes through insights that help you innovate at a rapid rate today while preparing your business for what’s next.

Why is ERP important for business?

While there’s no all-up solution for every business process, ERP technology is getting better and better at bringing processes together. After your processes, systems, and data are connected, you’ll get the business intelligence, acceleration, and adaptability you need to start optimizing your operations.

Here are three ways an ERP system can improve your business:

What business functions can be optimized with ERP?

An ERP system can cover many core functions across your organization—helping break down the barriers between the front office and back office while offering the ability to adapt your solution to new business priorities. Some of the key business functions include:

Today’s retailers face many challenges, and an ERP system can deliver a complete, omnichannel commerce solution that unifies back-office, in-store, and digital experiences. Customers get a more personalized and seamless shopping experience through AI recommendations, while retailers increase employee productivity, help reduce fraud, and grow their business.

Modern ERP increases profitability while driving compliance. It offers dashboards and AI-driven insights that give an overview of your finances to help you tap into the real-time information anytime and anywhere. It should also cut down on entering information manually by automating daily tasks and include tracking abilities that help with your business’s regulatory compliance.

Human resources

Modern solutions offer ways to manage company data and streamline employee management tasks like payroll, hiring, and other duties. You’ll be in a better position to help retain, recruit, and empower employees while also tracking employee performance and to help you identify HR problems before they happen.


This ERP capability improves business communication, automates daily processes through robotic process automation, and offers manufacturers the ability to fulfill customer needs and manage resources by accessing real-time data. It also optimizes project management, cost management, and production planning.

Supply chain

If your company is still entering information by hand and trying to track down inventory in your warehouse, you can save time and money by automating these processes with ERP. Modern supply chain solutions also offer dashboards, business intelligence, and even Internet of Things (IoT) technology to help you get a handle on your inventory management.

Three signs that you need ERP software

If you’re reading this and struggling with your legacy system, you might be wondering if this is the right time to make a change. Here are some signs that you need new ERP software:

TIP: If you or your staff are asking for a new system and there’s a resistance to an ERP change, schedule a demo so everyone can see what’s out there. When everyone feels like they’re included in the decision process, it’ll make implementation much easier.

Three ERP implementation challenges for businesses

Despite all the options out there, some companies are still hesitant about implementing ERP . There could be many reasons why, but where there’s a challenge, there’s a solution.

Choosing the right ERP solution.

You don’t have to find the perfect software solution to fix everything. ERP should be able to take the best of the business processes you’re using now and bring them together under one system that allows everyone in your organization to view the same information. This is why choosing the right technology partner is important.

Affording the cost of an ERP system.

A solution doesn’t have to be an all-or-nothing implementation. Software solution modules can be purchased separately according to your business needs. This will help your team ease into the implementation piece of ERP, and it’ll save you from having to invest in a major software renovation without knowing whether the functions you’re adding will pay off.

Integrating new ERP software with existing software.

As we mentioned, any ERP solution you choose should work with what you’re using now but also include features that can help in your future growth. For instance, if the software you have mostly handles the financial, supply chain, and manufacturing sides of your business, you may want to look for a solution that brings in a strong business intelligence component.

Discover what modern ERP can do for your business

Modular, end-to-end business applications that connect all your data for continuous insights can help you rapidly respond to change. Discover how Microsoft Dynamics 365 brings the best of what modern enterprise resource planning has to offer to your business.

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Enterprise resource planning—Overview

Definition of enterprise resource planning (ERP)

What’s the difference between erp and financials, erp fundamentals, the business value of erp, a brief history of erp, erp deployment models: from on-premises to the cloud, cloud erp—a new erp delivery model, 7 reasons to move to an erp cloud solution.

Enterprise resource planning (ERP) refers to a type of software that organizations use to manage day-to-day business activities such as accounting , procurement , project management , risk management and compliance , and supply chain operations . A complete ERP suite also includes enterprise performance management , software that helps plan, budget, predict, and report on an organization’s financial results.

ERP systems tie together a multitude of business processes and enable the flow of data between them. By collecting an organization’s shared transactional data from multiple sources, ERP systems eliminate data duplication and provide data integrity with a single source of truth.

Today, ERP systems are critical for managing thousands of businesses of all sizes and in all industries. To these companies, ERP is as indispensable as the electricity that keeps the lights on.

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Cloud ERP for Dummies

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What is an ERP system?

How can these solutions manage organizations day-to-day business activities, such as accounting, finance, procurement, project management, supply chain, and manufacturing.

Enterprise resource planning systems are complete, integrated platforms, either on-premises or in the cloud, managing all aspects of a production-based or distribution business. Furthermore, ERP systems support all aspects of financial management, human resources, supply chain management, and manufacturing with your core accounting function.

ERP systems will also provide transparency into your complete business process by tracking all aspects of production, logistics, and financials. These integrated systems act as a business's central hub for end-to-end workflow and data, allowing a variety of departments to access.

ERP Systems and software support multiple functions across the enterprise, mid-sized, or small businesses, including customizations for your industry.

Although the term “financials” is often used when describing ERP software, financials and ERP are not the same thing. Financials refers to a subset of modules within ERP.

Financials are the business functions relating to the finance department of an organization and includes modules for financial accounting, subledger accounting, accounting hub, payables and receivables, revenue management, billing, grants, expense management, project management, asset management, joint venture accounting, and collections.

Financials software uses reporting and analytical capabilities to comply with the reporting requirements of governing bodies, such as the International Financial Reporting Standards Foundation ( IFRS ), Financial Accounting Standards Board (FASB) for Generally Accepted Accounting Principles in the United States (GAAP), as well as for other countries (HGB in Germany and PCG in France, for example).

For public organizations, financials software has to be able to produce periodic financial statements for governing regulators, such as the US Securities and Exchange Commission ( SEC ) (with reports such as quarterly 10-Q and annual 10-K), European Securities and Markets Authority ( ESMA ), and others. For these types of financial reports, a narrative reporting tool is used. The person who is ultimately responsible for financials is the CFO.

While financials handles one area of the business, ERP encompasses a wide range of business processes—including financials. ERP software can include capabilities for procurement , supply chain management , inventory, manufacturing, maintenance, order management, project management, logistics, product lifecycle management, risk management , enterprise performance management (EPM), human resources/human capital management .

ERP also integrates with front-office applications to build holistic views of customers, including customer relationship management ( CRM ) solutions. Additionally, cloud-based ERP applications are often embedded with next-generation technologies, such as the internet of things (IoT), blockchain, AI, machine learning, and digital assistants. These advanced technologies deliver data and capabilities that not only enhance many traditional ERP functions; they create new opportunities for increased efficiencies, new services, and deeper insight across an enterprise. Since ERP systems are comprehensive across an enterprise, their management often involves a partnership with the CFO as well as the CIO, COO, and other key executive leaders.

Cloud-based ERP applications are often embedded with next-generation technologies, such as the internet of things ( IoT ), blockchain , AI, machine learning, and digital assistants.

ERP systems are designed around a single, defined data structure (schema) that typically has a common database. This helps ensure that the information used across the enterprise is normalized and based on common definitions and user experiences. These core constructs are then interconnected with business processes driven by workflows across business departments (e.g. finance, human resources, engineering, marketing, and operations), connecting systems and the people who use them. Simply put, ERP is the vehicle for integrating people, processes, and technologies across a modern enterprise.

See how industry analysts compare Oracle Cloud ERP against other financial management software providers.

For example: consider a company that builds cars by procuring parts and components from multiple suppliers. It could use an ERP system to track the requisition and purchase of these goods and ensure that each component across the entire procure-to-pay process uses uniform and clean data connected to enterprise workflows, business processes, reporting, and analytics.

When ERP is properly deployed at this automotive manufacturing company, a component, for example, “front brake pads,” is uniformly identified by part name, size, material, source, lot number, supplier part number, serial number, cost, and specification, along with a plethora of other descriptive and data-driven items.

Since data is the lifeblood of every modern company, ERP makes it easier to collect, organize, analyze, and distribute this information to every individual and system that needs it to best fulfill their role and responsibility.

ERP also ensures that these data fields and attributes roll up to the correct account in the company’s general ledger so that all costs are properly tracked and represented. If the front brake pads were called “front brakes” in one software system (or maybe a set of spreadsheets), “brake pads” in another, and “front pads” in a third, it would be tough for the automotive manufacturing company to figure out how much is spent annually on front brake pads, and whether it should switch suppliers or negotiate for better pricing.

A key ERP principle is the central collection of data for wide distribution. Instead of several standalone databases with an endless inventory of disconnected spreadsheets, ERP systems bring order to chaos so that all users—from the CEO to accounts payable clerks—can create, store, and use the same data derived through common processes. With a secure and centralized data repository, everyone in the organization can be confident that data is correct, up-to-date, and complete. Data integrity is assured for every task performed throughout the organization, from a quarterly financial statement to a single outstanding receivables report, without relying on error-prone spreadsheets.

Trending in modern finance

The ERP landscape has shifted with the rapid evolution of software as a service (SaaS) cloud applications. Because of the mobile platforms and decentralized workforce–work anywhere and anytime–ERP systems can no longer be tied to yesterday’s on-premises back-office applications. The next-generation, cloud-based, and modern ERP solutions support the new industry dynamics while providing the ability to reduce support time to enable organizations to respond quickly to volatile markets and industry trends.

It’s impossible to ignore the impact of ERP in today’s business world. As enterprise data and processes are corralled into ERP systems, businesses can align separate departments and improve workflows, resulting in significant bottom-line savings. Examples of specific business benefits include:

From paper cards to mobile devices The history of ERP goes back more than 100 years. In 1913, engineer Ford Whitman Harris developed what became known as the economic order quantity (EOQ) model, a paper-based manufacturing system for production scheduling. For decades, EOQ was the standard for manufacturing. Toolmaker Black and Decker changed the game in 1964 when it became the first company to adopt a material requirements planning (MRP) solution that combined EOQ concepts with a mainframe computer.

MRP remained the manufacturing standard until manufacturing resource planning (called MRP II) was developed in 1983. MRP II featured “modules” as a key software architectural component, and integrated core manufacturing components including purchasing, bills of materials, scheduling, and contract management. For the first time, different manufacturing tasks were integrated into a common system. MRP II also provided a compelling vision of how organizations could leverage software to share and integrate enterprise data and boost operational efficiency with better production planning, reduced inventory, and less waste (scrap). As computer technology evolved through the 1970s and 1980s, concepts similar to MRP II were developed to handle business activities beyond manufacturing, incorporating finance, customer relationship management, and human resources data. By 1990, technology analysts had a name for this new category of business management software—enterprise resource planning.

ERP's past: 1990s to the new millennium From the 1990s until the beginning of the twenty-first century, ERP adoption grew rapidly . At the same time, the costs of implementing an ERP system began to climb. The hardware required to run the software was typically on company premises, with big machines in a server room. Both the hardware and the software licenses required capital investments and depreciated over 5 to 10 years. In addition, organizations nearly always wanted to customize their ERP systems to fit their specific needs, entailing an additional expense of software consultants and training.

Meanwhile, ERP technology was evolving to embrace the internet, with new features and functionality such as embedded analytics. As time went on, many organizations discovered that their on-premises ERP systems couldn’t keep up with modern security demands or emerging technologies such as smartphones.

Software-as-a-service (SaaS) Enter the cloud—specifically, the software-as-a-service (SaaS) delivery model for ERP. When ERP software is delivered as a service in the cloud, it runs on a network of remote servers instead of inside a company’s server room. The cloud provider patches, manages, and updates the software several times a year—rather than an expensive upgrade every 5 to 10 years with an on-premises system. The cloud can reduce both operational expenses (OpEx) and capital expenses (CapEx) because it eliminates the need for companies to purchase software and hardware, or hire additional IT staff. These resources can instead be invested in new business opportunities, and the organization is always up-to-date on the most recent ERP software. Employees can shift their focus from managing IT to more value-added tasks such as innovation and growth.

For businesses of all sizes, including enterprise and small to midsize , retiring on-premises systems and moving entirely to the cloud all at once isn’t possible. Or, at the very least, it’s not something they’re comfortable doing within a short development window. Meanwhile, staying the course with an on-premises ERP, ignoring all the advantages of enterprise resource planning as a cloud solution, is no longer an ideal path, either. Why should you consider using cloud applications to replace or augment your on-premises system?

1. Readily adopt new and evolving SaaS technologies

Next-generation technologies, like artificial intelligence (AI), help cloud-based systems rapidly improve their capabilities with no need for periodic updates, unlike your legacy system. Now, with no additional or new input from the end-user, ERP systems continually become significantly easier to manage and use.

2. Extend the value of your existing ERP System

Augmenting and integrating legacy software with cloud applications can complement, enhance, and supplement important tasks. This approach can breathe new life into legacy ERP systems, giving businesses a great opportunity to start adopting cloud capabilities.

3. Access new technologies

Finding cloud applications that complement your legacy ERP software modules lets you immediately take advantage of rapidly advancing new technologies and improving user paradigms. These provide complimentary systems that deliver immediate business capabilities and value without a fundamental change in your operations.

4. Reduce third-party dependencies

Reporting and analytics for legacy systems typically require involvement from a third-party vendor to generate operational business intelligence. Using cloud applications from your legacy ERP vendor often produces the same or better intelligence without needing an additional vendor relationship.

5. Evolve your financial systems

Legacy systems were never meant to be modern reporting engines. Cloud-based technology was born in the last decade and developed, as a core principle, with an entirely different mindset and understanding of not only what was possible but what was needed to be successful for ERP platforms.

6. More robust security resources

Cloud solution service providers have large, full-time teams that are exclusively dedicated to proactively monitoring and staying current with cloud security issues and threats, 24 hours a day.

7. Attract in-demand talent

The next generation of young workers have grown up with seamless technology that is mobile, easy to use, and always-on. No company that continues to rely purely with on-premises technology will be able to recruit top talent, regardless of age.

Get started with Oracle ERP

Organizations have always struggled to balance traditional ERP’s high costs and complexity against the need for customized features and flexibility, all while meeting the demands of the business. Watch and learn how Oracle ERP Cloud delivers connected teams, unified data, and real-time insights to help you and your finance team ensure that the best business decisions are made. With ERP delivered as a service in the cloud, your organization can be future-ready and outpace change.

enterprise resource planning disadvantages

One of the benefits of the SaaS model is that the software is kept up-to-date with the latest features, functions, and best practices. Cloud ERP providers roll out updates regularly (as often as monthly, in Oracle’s case). This means that the latest new and revolutionary emerging technologies—such as AI, digital assistants, machine learning, blockchain, augmented reality, and the Internet of Things (IoT)—become available to subscribers on a regular cadence.

With access to these new technologies, organizations can quickly improve their business best practices as the ERP software evolves. They can automate processes that used to require heavy manual intervention, such as reconciling financial accounts. In addition, users gain a comprehensive, real-time understanding of enterprise business activities not only in the front office, but also in warehouses, on factory floors, and everywhere else across the enterprise. This knowledge is then readily available to every appropriate employee on their mobile devices, including smartphones and tablets.

Built for the digital age, today’s ERP cloud embraces mobile, social, analytics, and the latest emerging technologies. Anything less won’t move an organization forward.

Learn more about Oracle Cloud ERP

enterprise resource planning disadvantages


Advantages and Disadvantages of Enterprise Resource Planning (ERP)

4/9/19 10:00 AM

By PlanetTogether

Choosing the absolute best technology and software to utilize within your manufacturing operation is a common obstacle that many manufacturers come across. This is where Enterprise Resource Planning software comes into play, simply because it can easily manage/oversee your production and ensure that production is being carried out as planned.


Advantages of Enterprise Resource Planning (ERP)  

With ERP software, there are many benefits that can completely enhance your production with ease. These advantages include the following:

Disadvantages of Enterprise Resource Planning (ERP)  

The disadvantages of ERP software include the following:

A software that can be easily integrated with an enterprise resource planning software includes PlanetTogether’s Advanced Planning and Scheduling software. Advanced Planning and Scheduling Software (APS) fills in the gaps where ERP lacks and takes your production to the next level in terms of efficiency and optimization. APS has become a necessity for manufacturers around the globe and has led to drastic profit increase, waste reduction, and more.

Advanced Planning and Scheduling Software (APS)

Advanced Planning and Scheduling (APS) software has become a must for modern-day manufacturing operations due to customer demand for increased product mix and fast delivery combined with downward cost pressures. APS can be quickly integrated with a ERP/MRP software to fill gaps where these system lack planning and scheduling flexibility and accuracy. Advanced Planning and Scheduling (APS) helps planners save time while providing greater agility in updating ever-changing priorities, production schedules, and inventory plans.

Implementation of Advanced Planning and Scheduling (APS) software will take your manufacturing operations to the next level of production efficiency, taking advantage of the operational data you already have in your ERP.

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What are the Advantages and Disadvantages of ERP System

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.

Disadvantages of ERP are:

In conclusion, it is essential to analyze whether the ERP system will be implemented in your company is right for your needs and does not violate the interests of the organization.

Also, keep in mind that a bad strategy implementation can lead to failure of the same.

if I miss any Advantages and Disadvantages of the ERP systems . please let me know 

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Advantages and Disadvantages of an Enterprise Resource Planning System.


Enterprise resource planning system , or better known ERP, manages a businesses’ resources via state of the art functions and features. A manufacturing ERP software system is built to promote a more fluid, more streamlined workflow between all parties. It is a software system that strives to serve as a backbone for your whole business. Businesses who have kept the process of integration of an ERP software system in the pipeline to increase overall manufacturing productivity, knowing the advantages and disadvantages of the manufacturing ERP software system is worth considering.

Advantages of ERP System:

• Once the integration process completed, the business owner may discover the rewards for their investment and efforts in the form of decreased operating costs.

• A manufacturing ERP software system offers comprehensive visibility into all the essential aspects of business processes, throughout different departments of an organization.

• The best ERP system for the Manufacturing industry offers automatic and consistent workflow from one department/function to another, to guarantee a stable transition and faster completion of business/ manufacturing processes.

• A unified and exceptional reporting software that analyzes the status/statistic etc. in real-time, across all functions/departments.

• You don’t require a separate localize system for different locations. The best ERP system for the Manufacturing industry is designed to meet local manufacturing needs and accurately report across different locations.

• You or your employees can get rid of any manual data entry process. The software system can help in automating business data collection and enable business growth by running complex business processes without needing any extra hands.

• ERP software systems make it easier for inventory tracking, order tracking, revenue tracking, sales forecasting, and related activities.

• If you want you can implement features like the bar-code reader or other useful functions into a manufacturing ERP software system. It is a modular system, you can personalize as per your need.

Disadvantages of ERP system are:

• The integration of the best ERP system for the Manufacturing industry is costly.

• Resistance in sharing delicate internal data among departments can diminish the effectiveness of the software.

• There may be added indirect costs besides ERP integration. A manufacturing ERP software system vendor can charge extra fees for maintenance on top of the license fee as well.

• Implementations of the best ERP system for the manufacturing industry are difficult to achieve if the organization is decentralized with different business processes and systems.

• Businesses may need extra or third party API or modules for better management of particular functional areas such as the supply chain or customer relationship management.

In conclusion, it is necessary to investigate whether the ERP system will be integrated into your organization is right for your manufacturing needs and that does not violate the interests of their organization. ERP is recommended to the manufacturing industry not only because the advantages outnumber the disadvantages but also by keeping in mind the ways to overcome the disadvantages are quite easy. In order to maximize the effectiveness of a manufacturing ERP software system, a business must correctly weigh the advantages and disadvantages of ERP before purchasing them. As long as you are clear on what you want, nothing else should bother you. Need more professional advice? You can get in touch with the best manufacturing ERP software development company Crims now. Before you settle in, our professionals can offer you great insight to select the best ERP which serves you best.

CRM for Trading and Distribution in Industries.

Trade CRM software

Business who is involved in the market of trading needs the most powerful, agile and flexible industry-specific custom trade CRM software to run a successful business in a competitive market. The delivery speed is the success in the trading industry. The trading & distribution market is going through some radical changes in recent times. Demand has fluctuated, customer’s needs and behaviour is more unpredictable than ever and the government slapping tight rules and regulations quite often. This is why immediate induction of custom trade CRM is now necessary for a business that deals with business trading.

Some of the advantages of incorporating CRM in your trading & distribution business module are:

Warehouse Automation: CRM trading software generates spreadsheets that manage the physical movements of your carriers in and out of the warehouse. There are features such as barcode scanning and automatic allocation plans that further enhance the efficiency of the warehouse.

Self-examination of quality: With customized CRM software, you can effortlessly adhere to your local or even global legal regulations and can guarantee your organization not doing anything fishy! You can manage stringent incoming checkpoints, produce test certificates and can oversee your outgoing products so that you can meet the quality compliance issue of your end-user.

Nurture the customer relationship: CRM for traders & distributors helps representatives build new relationships and nourish ongoing relationships with customers. Log sales activities, collect consumer notes and promote internal collaboration for higher sales and better client service.

Ease of global shipments: Your business is dealing with international shipment? Then we are certain you are well aware of the problems you face because of the different standards and norms in business regulations internationally. CRM software can help with the automation of the process & general regulations must be abided by in different nations without your employees needing to study the rules again and again.

Smooth inventory management: Many Trading and Distribution business owners are turning to custom trade CRM software to automate & streamline their inventory management processes to decrease human errors drastically. In addition to that, these CRM eliminates time lost in manual inventory management. Trading CRM enables users to track and manage data throughout various geographies and currencies, all while giving real-time insight into present inventory in transit and stock.

Here is what our CRM offers

Please find here more details on our CRM developed for Trading and Distribution Organizations. Depending on your demands, our CRM can be personalized to satisfy your specific needs as well.

• Keep track of customer activities

• Keep track of salespeople activities/accounts/leads

• Keep track of all sales possibilities

• Contact Management

• Important Document storage

• Sales Workflow

• Price Book

• Quotation

• Sales Order

• Purchase Workflow

• Supplier Management

• Purchase Order

• Inventory Management

• Track service contracts

• Track product warranties

• Track contract expiry date

• Support ticket management

Overall, CRM software helps the business by offering automated scheduling and workflow capabilities. The trading and Distribution software also automates a variety of tasks scheduled by the users. Your employees can benefit greatly and help the business grow without any hassle.

Interested in Trading and Distribution CRM? Searching for Trading CRM development service provider in Delhi/ India. We can help. We are CRIMS, one of the best trading CRM development company in Delhi. We offer a wide range of CRM capabilities at an astonishing price. Contact us and let us know your CRM needs.

Role of Manufacturing ERP for industries.

ERP software development, manufacturing ERP software, ERP for manufacturing industry,erp software company,ERP software,ERP Software Development Company in Delhi

Manufacture, demand, and supply are the 3 most important actions of any manufacturing industry. Once the product gets manufactured, then it passed on to a predetermined address or hub, stored for further sales. Products get manufactured depending on market demand. So the market and manufacturing unit’s data must be integrated. This is the sole purpose of the ERP or Enterprise Resource Planning.

An ERP for manufacturing software brings a lot of advantages in every area. Whether it may be planning, developing, forecasting of sales or any other significant business operations, Enterprise Resource Planning assists in everything. A Manufacturing ERP software is designed in a specific way that after the integration, it offers a cross-sectional aspect of the whole operation which ultimately decreases the possibility of mistakes and contributes

Here are some of general ERP skills that can be used in the manufacturing sector:

• An ERP system can organize your cluttered business process into a regular day to day routine. For example, ERP can automatically approve any purchase orders based on predefined business policies.

• ERP can reduce human labour dramatically. Your employees don’t need to go through the manual process to match invoices based on purchase receipts it can be done electronically with the help of custom manufacturing ERP.

• With the help of ERP software , enterprises can rapidly share essential information with the other branches over long distances. The manufacturing company now stays up to date with every important thing happening in the organizations without worrying about geographical distances.

• Custom manufacturing ERP system offers crucial analysis like Market demand, sales forecasting, capturing hidden market trends through social media analysis, finding potential improvement areas and many more.

• A manufacturing company can offer more productive changes in the way people work in organizations, often allowing multiple tasks to be executed all at once.

• ERP enables a manufacturing company to do tracking of tasks, inputs, and outputs in detail.

Why are ERP systems are essential for manufacturing company?

The significance of ERP systems arises from the various advantages that these generate for the business which depends on them. As stated above, an ERP is made to optimize the effectiveness of the manufacturing company along all dimensions and especially those that link straight to the resources at hand. The advantages received cover the following –

• Increase overall manufacturing efficiency and productivity • Elimination of wastages for better management of resource • More solid financial efficiency • Enhanced workforce efficiency • Better decisional bases for the management team • Intelligent project planning • Practical budgeting • Better coordination among every department of the industry

Integration of custom manufacturing ERP can decrease the cost of managing inventory, operating cost and administrative cost. Manufacturing ERP software developed by a professional ERP development company offers information regarding all aspects of the manufacturing company, its benefits go beyond cost reductions. The system will enhance businesses’ customer service & response time when solving any customer query and solve problems among several manufacturing locations. The system accelerates manufacturing processes in every manufacturing site. It streamlines the manufacturer’s order- fulfillment process. So are you convinced to get a custom manufacturing ERP software? If yes, you need the best.

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Benefits of ERP: Advantages and Disadvantages of an Enterprise Resource Planning System

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Is ERP software worth the investment? To find out, you need to weigh the benefits of ERP, specifically how ERP system advantages and disadvantages stack up when compared against each other.

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Benefits of ERP Cover

Whether your business is large or small, there are several ERP benefits your company could gain. Enterprise resource planning (ERP) is a customizable application suite that allows businesses to integrate and manage their most important processes. Although there are plenty of advantages, it’s not all smooth sailing; ERP has its disadvantages, too.

Table of Contents

Software Selection Myths


Before we share some ERP advantages and disadvantages, we’d like to provide introductory information and dispel some myths around this program.

So, how do ERP systems work ?

In the most basic sense, ERP software is a tool that centralizes a company’s database of information, automates routine tasks and simplifies business processes. The end goal in using this tool is to optimize operations and free up employee time to work on more instinctual tasks. These objectives can lead to an increase in revenue margins and efficiencies while improving communication across the company.

ERP software is unique because it touches many or all of the different aspects of a business. It’s an end-to-end solution with features that serve the following departments:


Inventory Management

Next, we will go over some common myths surrounding ERP software selection.

Here’s a quick reality check as you embark on your ERP selection project:

Software Selection Myths

Cost Should Be the Biggest Factor

The best ERP system is one that meets your anticipated requirements now and in the future — and it may not be the cheapest option. Your return on investment (ROI) will depend on the system’s overall value over time, which can be one of the greatest advantages of ERP.

Selection Should Be Entirely Managed by the IT Department

Your ERP selection team must include stakeholders from your critical business operations in addition to your IT department. In addition, make sure to speak to the person who will use the software daily. Their needs and wants should be a top concern, as their ability to use the system will ultimately decide if it’s a success or a failure. ERP benefits more than just your IT department.

Selection Should be Entirely Managed by Consultants

Consultants aren’t a replacement for your internal teams who regularly work with your existing systems. A consultant will likely better understand the software and even your industry. Still, your employees play a critical role by applying their knowledge of your company to ensure a successful ERP selection project.

The More Functionality, the Better

Many organizations can become more successful by simply streamlining operations. The takeaway is not to be dazzled by software that has countless capabilities. Instead, focus on the solution that addresses each of your business’s actual needs.

The Research Phase Ends When You Contact a Vendor

Your ERP software choice may seem like the perfect fit on paper, but will it meet your needs in the real world? It’s always a good idea to get live demonstrations of your critical processes or a software trial before signing any long-term deal. Unfortunately, failed ERP implementations and buyer’s remorse are far too standard.

Now that we’ve covered the basics and debunked some myths, it’s time to move on to why companies worldwide implement ERP software, and the benefits of ERP system utilization.

Benefits of ERP

ERP systems are an asset for many organizations. A few ERP advantages include, running smoother business processes by unifying and protecting your information, automating processes and producing easy-to-understand reports. With these and many more capabilities, the benefits of ERP systems in an organization make your day-to-day operations and long-term planning more efficient.

Below are several of the most significant benefits of ERP system usage:

Select the Right Software with the Free Lean Selection Book

1. Reduces Costs

Depending on the solution, an ERP can cost anywhere from a few hundred bucks to $100,000. However, if you play your cards right, it’s a worthy investment and saves you money in the long run.

Instead of manually inputting data, this program permits you to input it once and carry it over to other departments in real time. You can also streamline redundant tasks like report drafting, invoice allocation, employee payroll, etc., saving you time for other high-priority responsibilities.

Machine Learning in ERP

A preview of machine learning in ERP.

Additionally, if you spend more on disparate systems than you would on a centralized ERP, you might even save on IT costs overall. Using a single system also reduces training requirements for end-users since they only need to learn one system rather than interacting with numerous individual applications.

Centralization and automation are some vital advantages of ERP.

2. Provides Total Visibility/Data Reliability

Transparent and reliable information are key benefits of ERP system utilization. These perks are also significant selling points. ERP software allows total access to every vital process in your business by making data from every department easily accessible for you and your senior management.

For example, you can monitor inventory levels daily, including future consignments that are yet to be received and inventory currently in transit. By knowing precisely where you stand regarding inventory levels, you can control your working capital on a more precise level.

In addition, the availability of all of your company’s information in a centralized location allows for increased collaboration and more streamlined completion of tasks. This complete visibility provides more coherent workflows and grants inter-departmental processes to track with maximum efficiency.

This visibility, and other ERP advantages, makes it possible to make quick decisions in confidence, as you can have no doubts that you’re seeing the entire, complete picture at any given moment.

3. Improves Reporting and Planning

Along with improved visibility, better insight is one of the significant advantages of ERP system management.

Implementing an ERP suite across departments means your organization has a single, unified reporting system for every process. By having a single source of truth, an ERP system can readily generate valuable reports and analytics at any time. This software allows you to analyze and compare functions across departments without the hassle of multiple spreadsheets and emails.

One of the most popular reports involves finances (go figure). Standard financial reports such as income and cash flow statements generally are built-in and generate custom reports without IT intervention.

Many ERP vendors also offer business intelligence services with their software. The BI functionality allows businesses to gain a deeper analytical insight into their operations. These insights aid corporate planning by identifying operational strengths and problem areas that need improvement.

Providing this detailed view into a company’s data permits users to make better-informed choices based on trends and metrics, making reporting and planning vital ERP system benefits.

4. Offers Flexible Modularity/Scalability

One of the most significant, modern ERP advantages is its modular makeup. Most ERP vendors offer several applications that can work together according to business needs. Each application stands alone or integrates with the more extensive suite. This way, your company can pick and choose which components work best and leave out what you don’t need.

Another aspect involves software installation. The two main deployments are on-premise and through the cloud. With an on-premise system, physical software must be purchased and installed on all company computers and servers. This system is handled completely off-site by an ERP provider.

One of many ERP trends , cloud software has been rising in recent years and can become even more popular. Allied Market Research predicts the global ERP market will reach $117.09 billion by 2030.

To ensure the ongoing success of your business, you have to keep an eye on the future. Companies often fail to plan appropriately and experience growing pains that pose severe roadblocks to whatever progress they’re enjoying. Having a system in place that can elegantly and efficiently accommodate your company’s growth is of the utmost importance, and the right ERP system makes it easy.

EPR Benefits Oracle JD Edwards

An example of Oracle JD Edwards.

Whether you’re expanding your customer base, entering new markets, rolling out new processes, departments or products, or are otherwise growing your business, adding new functionality to an ERP platform is easy with the right software vendor, making modularity vital in ERP system benefits.

Just make sure that when you’re speaking to vendors, they understand your intentions for growth in the future.

5. Boosts Efficiency

There are numerous ERP advantages and disadvantages across the market. Thankfully, reducing time and effort in daily activities is one of several ERP advantages. Properly implemented, an ERP solution can significantly reduce or eliminate repetitive manual processes, thus freeing up team members to focus on revenue-affecting tasks.

Likewise, the system can aid in the adoption and enforcement of industry best-practice processes, aligning all actions across the enterprise.

Cutting-edge technologies such as artificial intelligence (AI), machine learning , robotic process automation (RPA) and others support the automation and intelligent suggestion capabilities you see in many ERP software applications. The advanced functionality can manage business activities such as demand forecasting, purchase order creation and product tracking from manufacturing to delivery.

6. Strengthens Customer Service

Your company’s clients also receive ERP system benefits, even if they don’t know it. Because client information is centralized and streamlined, your sales team will build and maintain customer relationships instead of keeping spreadsheets. The number one thing a business should be concerned about is customer acquisition and retention.

Through the end-to-end tracking and insight offered by an ERP system, you can provide better customer interaction from marketing automation (MA) through late-phase customer service.

Most up-to-date ERP suites also support e-commerce platform integration. This merge means your business will be better able to handle web-based order processing and client interactions.

7. Utilizes Data Security and Quality

One of the most significant advantages of ERP system leveraging is data security. After all, at the heart of the ERP concept is data. Sharing data across functional silos such as customer service, sales, marketing and business development enhances collaboration throughout a company.

The other side to widespread data access is controlling who can see and edit the information. ERP solutions have intrinsic controls to ensure the security of your data.

Both on-premise and cloud-based ERP systems offer your organization a higher degree of security. The ERP system’s database enables centralized backups of your critical and sensitive data. Despite what many people think, cloud-based ERP systems offer an extra layer of security.

Acumatica Dashboard Screenshot

A preview of Acumatica, a cloud-based solution.

Many vendors employ round-the-clock security experts to ensure their servers are protected when managing your data through the cloud. This reliability makes it far more difficult for hackers to test attacks like they would on a private server, making data security and quality vital ERP advantages.

8. Expands Collaboration and Workflows

Collaboration is an essential part of a thriving business. But more often than not, companies find their teams working in silos simply because collaboration in the workplace requires more time and effort.

Collaboration, one of many vital advantages of ERP, is a piece of cake for this solution. An ERP platform streamlines collaborating with others by providing employees with access to the data they need when they need it. They offer an interdepartmental database, where information funnels through departments into one centralized location.

This allocation allows for real-time project updates and better communication across the company. With an ERP system in place, every employee has on-demand access to the entire company’s wealth of data, which allows them to see the big picture. In turn, this gives your employees the tools they need to make proactive decisions while making them feel more valued.

The net effect on your business is increased efficiency and reduced operational costs associated with manual data tracking, as well as higher employee engagement.

9. Standardizes Business Processes

Most ERP developers create programs according to an industry’s best practices. These tried-and-true processes bring prominent perks to the table for businesses of all sizes. It also allows companies to standardize their processes and systems, enhancing productivity and efficiency.

These processes deliver consistent results that improve how you operate your organization. And because many processes are automated, errors and costs are significantly reduced. As a result, there’s less friction and improved synergy between departments. Of all the ERP advantages and disadvantages, standardization is the best perk.

10. Facilitates Regulatory Compliance

One of the most difficult ongoing tasks for businesses is meeting compliance requirements. Maintaining perfect accuracy within your financial records isn’t easy. ERPs aid in regulatory compliance under secure and validated data, combined with built-in reports, making compliance critical among ERP advantages.

You may automate these reports to reduce the cost of continual audits. Additionally, many ERP vendors take specific regulations into account, such as the Sarbanes–Oxley Act (SOX) and the Federal Information Security Modernization Act (FISMA) .

11. Modifies Supply Chain Management

For companies that deal with the moving of physical inventory and production, an ERP system bolsters supply chain management(SCM) in a multiple ways. This improvement results in shorter lead times, more on-time deliveries and many other benefits that enhance your organization’s overall operation and success of your business.

Through a well-designed ERP platform, your supply chain can become better and more responsive via improved demand forecasting, inventory management, procurement and more. A streamlined supply chain also facilitates manufacturing innovations, which can help you reduce costs and develop exciting new products that give your business the competitive edge it needs to stay ahead.

SCM Platform

An example of an SCM platform.

Also, an ERP system can dramatically improve profitability and reduce overages involving inventory and production. Unified insight into sales, production and delivery schedules permits stock levels to be optimized rather than relying on “best guess” estimates for upcoming volumes. Monitoring SCM, especially in these times, should be a high priority in the benefits of ERP system rosters.

12. Garners a Competitive Advantage

Owning this program gives you relevancy among your competitors. When you boost productivity, implement automation, obtain real-time data on finances and other KPIs and remove bottlenecks from your workflows, you’ll gain more revenue and recognition among clients, stakeholders, colleagues and partners. Your business will run like a well-oiled machine and help you make more informed business decisions.


With so many benefits of ERP systems, you might be ready to start comparing systems. But some people also ask, what is an erp disadvantage? It’s important to understand the drawbacks and risks of this type of software to make sure ERP is the right system for your business, which is why we discuss ERP advantages and disadvantages.

The following are the main ERP disadvantages buyers might experience when implementing a new platform:

ERP Disadvantages

1. The Cost

If you choose to invest in a traditional ERP system, for example, SAP Business One , could quickly spend five figures for a single license. Pricing is by far the most significant disadvantage of ERP software.

The upfront cost of the software alone can be prohibitively high, especially for small-to-medium-sized businesses. SMBs can avoid the upfront costs with a cloud solution thanks to monthly subscription fees. If you’re looking for even more cost savings and feel prepared for a project, consider an alternative: open-source ERP software .

2. The Customization Process

Customization is one of the best aspects of ERP software, but it can easily and quickly get out of hand. Customizing your software takes a lot of time, effort, expertise and money. But too often, businesses underestimate how many resources are needed and either don’t finish their customization or go way over budget. Customization can diminish the best practices built into the system and make it more difficult to upgrade in the future.

3. The Complexity/Needs Training

ERP software solutions provide numerous capabilities, which means the software can be complex and challenging to use. It’s not unheard of for companies to get swept up in all the potential of an ERP solution but fail to plan appropriately for its implementation.

Some businesses may find systems too large and complicated for their processes, leading to a poor ROI. This disadvantage is especially true if you can’t convince your team to adopt the software due to the complexity.

To prevent falling victim to the complexity of ERP software, invest in role-based user training and avoid systems with more functionality than you need.

4. Slow Implementation

A new ERP system implementation is a time-consuming process, especially if you’re using obsolete hardware. It can take as long as two years for ERP software installation. Given that fact, if you want to invest in ERP software, you should plan to avoid any disruption in business processes. Although cloud-based deployment can be faster, it can still be cumbersome to implement.

The organization should allocate time to learn the new ERP system post-implementation. Even the tech experts need time to understand the system thoroughly. Some may learn faster than others, but a steep learning curve can be detrimental to the transition process.

5. No Immediate Results

You know the saying: All things come to those who wait. This principle applies to ERP too. Implementations, training and getting used to the new solution are time-consuming and require patience. After all, Romans didn’t build Rome in a day, and you can’t expect to see results until you’ve run the system for a while (ideally a few months, but it all depends on the vendor or reseller you choose).

ERP installation is like buying a home. You won’t see a massive return on investment (ROI) until you’ve learned the system’s ins and outs and how to execute them accordingly. The ideal solution that aligns with your business needs will help your company thrive in time. There are no shortcuts here.

When deciding which platform is right for your business, it’s vital to consider the pros and cons of ERP software. But you shouldn’t let the potential downfalls scare you away from the tools that could take your business to the next level. If you need some help getting started on product research, check out our ERP requirements template or ERP research and reports .

For most companies, the benefits of ERP systems often outweigh the disadvantages. The potential for totally streamlined business functions and boosts in productivity over the long term makes the benefits of implementing ERP systems a worthwhile investment of time and resources.

Which ERP advantages and disadvantages did we forget to mention? Please let us know by leaving a comment below!


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Eli Bradley - June 20, 2022 reply

It’s awesome that you elaborate on how ERP software can help your business’s employees work more efficiently. I want to start a company this month, so I’m considering buying some ERP software for it. I’m going to search for a reputable business that sells ERP software.

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Khaleel Hayes - June 20, 2022 reply

Thanks for reading, Eli! Glad you found this article helpful. SelectHub can help you find that ideal ERP too. Sales and General Enquiries: 877.692.2896 Advisory Assistance: 855.850.3850

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Sophia - June 18, 2022 reply

Nobody needs to go anywhere for ERP knowledge. A beginner can come here and get the complete theory about ERP. Really well explained Adv and disadv about ERP.

Thanks for reading, Sophia!

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Patrick Amihere - May 20, 2022 reply

This is great information. Thank you for sharing.

Khaleel Hayes - May 23, 2022 reply

Thanks for reading, Patrick!

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Charlie Bradford - March 24, 2022 reply

Great read! Thanks for this, I’ve been thinking for a while now if I should go ahead and invest in this software which is a produce ERP and after reading about the pros and cons of an enterprise resource planning system here, I’m convinced that the advantages definitely outweigh the drawbacks. I read a lot of good feedback about the software that I’m planning to get anyway so I think that it would be really helpful.

Khaleel Hayes - March 25, 2022 reply

Thanks for reading, Charlie. Glad you found this article helpful.

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Mario Olson - February 25, 2022 reply

Helpful blog. You convinced us why one should opt for cloud-based ERP Software in any business organization.

Khaleel Hayes - February 28, 2022 reply

Thanks for reading, and glad it helps, Mario.

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Mandira Shah - December 29, 2021 reply

Very informative article, thanks for sharing.

There are so many benefits of using an ERP system in your organization such as; Automation of complete activities Technology advances Customization and personalization Better Communication

Regards, Mandira

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Audintel - December 28, 2021 reply

Good article on erp and enterprise planning for small business.

Khaleel Hayes - January 4, 2022 reply

Thanks for reading!

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Mas Technology - December 21, 2021 reply

Nice blog!!!

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Van Awning - November 26, 2021 reply

After going over a few of the articles on your web site, I seriously appreciate your way of blogging. I bookmarked it to my bookmark website list and will be checking back soon.

Khaleel Hayes - November 29, 2021 reply

Mas technology - november 25, 2021 reply.

Thanks for the great article

Mas Technology - November 18, 2021 reply

Nice article!!!! it is useful

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Turbo ERP - November 18, 2021 reply

Very informative blog and i will definitely read all your future posts.

Khaleel Hayes - November 18, 2021 reply

Thanks for sharing such amazing content with us.

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Divine IT Limited - October 16, 2021 reply

I enjoyed reading the article. This is a very valuable and informative post. I was researching the financial advantages of ERP software deployment. However, you go into great information regarding this subject. Now I have a better understanding of the subject.

Khaleel Hayes - October 18, 2021 reply

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Jonas Meyer - July 22, 2021 reply

As a marketing analyst for a SaaS company, I have to admit that ERP is very beneficial for many companies. Thanks for sharing.

Khaleel Hayes - July 23, 2021 reply

Thanks for reading, Jonas!

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Ethan Stormes - July 5, 2021 reply

Thanks, this is a great blog!

Khaleel Hayes - July 6, 2021 reply

Thanks for reading, Ethan.

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Knowledge Sourcing - June 9, 2021 reply

Thanks for sharing valuable content.

Khaleel Hayes - June 10, 2021 reply

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Ardas Kaur - June 1, 2021 reply

It’s great that you developed the advantages of having ERP softwaret for your business. I think that with technology, you can make your job simpler. And with an ERP system, your efficiency will grow, plus it’ll make reports and analytics at any time. If I were to have a company, I’ll use a program like this. So again, thanks for the information about how an ERP system protects your information, automates the process, and provides easy-to-understand reports.

Khaleel Hayes - June 2, 2021 reply

Thanks for reading! Glad you found this article helpful!

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Shayur Maharaj - May 4, 2021 reply

Enterprise resource planning systems may seem complicated but you have simplified it and showed the benefit which are extremely important. I think many companies will be implementing it soon.

Khaleel Hayes - May 24, 2021 reply

Thanks, Shayur!

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Dai software - May 3, 2021 reply

Thanks, you and I admire you to have the courage to talk about this, This was a very meaningful post for me. Thank you.

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Jitender Kumar - April 15, 2021 reply

Valuable post! Find the benefits useful. Thanks for sharing

Khaleel Hayes - April 19, 2021 reply

Thanks for reading, Jitender. Glad you found this article helpful.

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Willim Smith - March 31, 2021 reply

Really enjoyable article

Khaleel Hayes - April 2, 2021 reply

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Appsian - March 25, 2021 reply

Really enjoyed your article as its highly informative

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Jude Mills - March 9, 2021 reply

When I read, I tend to let my thoughts wander, but this article kept me focused. That’s a real feat. You did a good job.

Khaleel Hayes - March 9, 2021 reply

Thanks for reading, Jude!

Dai Software - March 4, 2021 reply

Pleasant post, Thank you for sharing profitable data. I appreciated perusing this post. The entire blog is extremely pleasant discovered some well done. Thanks for sharing.

Khaleel Hayes - March 4, 2021 reply

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Bahar Karanlık - February 9, 2021 reply

I liked your job very much.

Khaleel Hayes - March 1, 2021 reply

Thanks, Bahar.

Dai Software - January 12, 2021 reply

Thanks you and I admire you to have the courage the talk about this,This was a very meaningful post for me. Thank you. on demand home service app development

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Eli Richardson - December 24, 2020 reply

It’s great that you elaborated on the advantages of having ERP software for your business. I think that with technology, you can make your job easier. And with an ERP system, your efficiency will improve, plus it’ll generate reports and analytics at any time. If I were to have a company, I’ll definitely use a program like this. Thanks for the information about how an ERP system protects your information, automates the process and produces easy-to-understand reports.

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Madeline Reinbolt - January 25, 2021 reply

Thanks for leaving us a comment, Eli!

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Bob Newton - December 3, 2020 reply

It’s fascinating that you point out that ERP software can help your business run more smoothly. I’m thinking about starting a food and beverage business this year, so I should probably purchase some ERP software for it. I’m going to search for a reputable company that can help set me up with an ERP system for a food and beverage business.

Thanks for reading, Bob. Why not visit our guide on food and beverage ERP to help you get started: https://www.selecthub.com/enterprise-resource-planning/erp-food-beverage-industry/

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JJ Chua - November 25, 2020 reply

This blog is very interesting.

Thanks for reading, JJ!

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powerseo - November 13, 2020 reply

Very useful post, I’ve also watched the same guide before when I just started wordpress, this is very helpful for those who are starting.

Madeline Reinbolt - November 18, 2020 reply

Thanks for leaving us a comment!

Appsian - November 3, 2020 reply

Very nice ensemble of the most interesting blogs mentioned .Here are very well explained and really helpful. Thanks for sharing.

Hi Appsian, thanks for reading!

Appsian - October 30, 2020 reply

great article. was searching for something as informative article as this

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John Lee - October 27, 2020 reply

NetSuite is the world’s most customizable Software-as-a-Service (SaaS) solution. Just click and not code and configure all the modular implementations and start your business. The advanced customization are simple, industry standard tools will allow you to tailor the business practices and the processes to meet your company centric requirements.

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Mweempe - October 13, 2020 reply

Easy article to understand and very helpful indeed ..thumbs up!

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RONEY STARK STARK - October 7, 2020 reply

Very useful Blog! Thanks for sharing such a great information.

Madeline Reinbolt - October 12, 2020 reply

We’re glad this article was helpful to you, Roney!

John Lee - September 29, 2020 reply

ERP software helps make reporting and quoting much easier and more customizable. With improved reporting capabilities, your company can respond to complex data requests more easily and users can even run their own reports without relying on help from IT.

Hi John, thanks for your feedback. Customizable reporting and quoting capabilities certainly provide flexibility for users.

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Kristofer Van Wagner - August 25, 2020 reply

You make a valid point that for any businesses, the owners are always looking for a cost reduction. Assuming that I own a business, I would definitely would want to reduce my cost, especially during these troubling times, but without compromising my efficiency. I will definitely keep ERP consulting in mind for future purposes.

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Levi Armstrong - August 14, 2020 reply

I’m trying to convince my boss that we should get ERP software for the company because of its various benefits. It’s great that you mentioned that businesses who fail to properly plan would have a hard time growing because of the various systematic roadblocks. Tomorrow morning I’m meeting my boss again, so I’ll mention what you said in a last-ditch effort to convince her. Thanks for this, Madeline!

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BONGIWE L MOYO NETWORKS ASSIGNMENT 145602 - August 7, 2020 reply

It was interesting to learn about how a demand forecasting, inventory management, and procurement can make a supply chain can allow the supply chain to be more responsive. I can understand how it could be really useful for a business to make sure that they can manage themselves better and have a better system.

Madeline Reinbolt - September 2, 2020 reply

We’re glad this article was helpful to you, Bongiwe!

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Adam Golightly - July 21, 2020 reply

It was interesting to learn about how a demand forecasting, inventory management, and procurement can make a supply chain can allow the supply chain to be more responsive. I can understand how it could be really useful for a business to make sure that they can manage themselves better and have a better system. It could be really useful for them to get an ERP system that will be safer.

Madeline Reinbolt - July 22, 2020 reply

Thanks for reading, Adam!

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Franklin White - July 21, 2020 reply

I like how you specified that data security is such a big part of ERP systems. There are a lot of hackers in the world and data security is key in this day and age. I hope that more companies work with ERP systems to keep their data secure.

Thanks for your comment, I’m glad you enjoyed the article.

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Rebecca Gardner - July 17, 2020 reply

It stood out to me when you explained that the right ERP system makes it easy to scale a company’s systems to accommodate growth in the future. My brother mentioned that he was looking into his options to improve the order fulfillment processes for his local retail business. I’ll pass along this info now that know about some of the additional benefits and ERP system could provide for his company!

Madeline Reinbolt - July 21, 2020 reply

I’m glad this information was helpful, Rebecca!

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M.Karthikeyen - June 28, 2020 reply

Hi, I have gone through your blog with my 100% attention and it is excellent guidance to one who wants to implement an ERP system to their business enhance for productivity, efficiency etc. Keep on writing more on the same which will be helpful to many people.

Madeline Reinbolt - July 1, 2020 reply

Thanks for reading our blog, M. Karthikeyen.

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Akash Patel - April 29, 2020 reply

Very useful Blog! Thanks for sharing such a great information. This blog clear all my doubt and providing me the best data related to Enterprise Resource Planning

Payal Tikait

Payal Tikait - January 18, 2021 reply

Glad to know this blog was helpful to you Akash!

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Singh - April 1, 2020 reply

Thanks for sharing the information enterprise resource planning ERP advantage and disadvantages. I think your blog very helpful for more people.

Madeline Reinbolt - April 21, 2020 reply

Thanks for the comment, Singh!

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Payal - March 31, 2020 reply

Benefits of ERP: Advantages and Disadvantages of an Enterprise Resource Planning System Isn’t the title name says it all? Yes it is So the blog has covered all the points, Very much Informative. Thank you @writer…fabulous work by sharing this knowledge with us. Looking forward to all such more blogs.

I’m so glad this article was helpful to you!

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ankit - February 25, 2020 reply

Hi I read your blog about the Benefits of ERP, Advantages, and Disadvantages of an Enterprise Resource Planning System. ERP is very important in today’s busy life as all parent’s do not have time because of jobs, It is very easy for them to see all the activities of their student’s on mobile. Keep writing a blog like this, Thanks

Madeline Reinbolt - February 26, 2020 reply

Thanks for reading, Ankit. We’ll keep posts like this coming!

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Bioconus - February 12, 2020 reply

ERP software helps make reporting easier and more customizable, fit to meet all of your needs. With improved reporting capabilities, your company can respond to complex data requests more easily. This improves productivity, completes process faster and helps to close out projects without large wait times in between. Users can also run their own reports without relying on help from IT, saving your users time to use toward other projects.

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Jordan - February 5, 2020 reply

Such a great article, very informative, i’m a regular learner from your blog, @writer did amazing job by writing this, an over all ERP Guide is amazing looking forward for more such blog by you, Definitely subscribing your blogs.

Thank you for reading Jordan, we will come up with more such posts!

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manish - January 12, 2020 reply

very good article kim , i think u tried to pass all essential details in this article

Glad you liked it Manish!

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vishal aand - December 17, 2019 reply

Great Article. thanks for sharing the info.

Thank you for reading it Vishal!

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Emila Hales - December 11, 2019 reply

First off all, congratulations on this post. This i really awesome but that’s what you always crank out my friend. Great posts that we can sink our teeth into and really go to work.

Promise Great share and thanks for the mention here,

Madeline Reinbolt - December 12, 2019 reply

Thanks for reading, Emilia!

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Washington Chikonzo - November 7, 2019 reply

Thumbs up to this information, it’s precise making it easy to understand. I really enjoyed reading it…

I am glad to know you enjoyed reading it, Washington!

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Brett Beaubouef - October 26, 2019 reply

Great article Kim. Selecting an ERP solution key enabler to business value realization. Implementing a ERP solution does not guarantee business value, regardless of the Cloud ERP provider (vendor). There are countless examples of customers that have not experienced the expected business value articulated in the sales cycle. Why is this? It all has to do with your approach.

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Kim O'Shaughnessy - October 28, 2019 reply

Hi Brett, thanks for reading. The article you linked also highlights some important points on business value realization, especially when it comes to vendor responsibility. Have a great day!

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bhavik shah - August 23, 2019 reply

Thanks for this useful content. It’s always a pleasure to read your great posts filled with tips really!

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MiniBigTech - July 25, 2019 reply

The implementation of ERP software can help small businesses manage these processes and streamline operations. Businesses also use ERP software to reduce inventory and overhead costs. Additionally, ERP software is useful for businesses that wish to standardize their human resources data. Integration of data across the enterprise ensures that you have greater visibility in all areas of your business, from daily operations to a strategic decision level. Insight into production, inventory and data makes it easy to identify opportunities for cost savings and improvements. Check it out click on Manufacturing enterprise resource planning software . Please contact us at any time

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Mike Nangosya - August 2, 2019 reply

The piece of reading provides meticulous insights on innovative ways of managing real-time data for managerial decisions. Am up to checking it out for our organization.

MiniBigTech - July 24, 2019 reply

Enterprise Resource Planning (ERP) is an information system that manages, through integration, all aspects of a business including production, planning, purchasing, manufacturing, sales, distribution, accounting, and customer service. Small business use ERP software for several reasons. The main reason for the solution is to improve communication across departments and optimize business processes by providing users with easy visibility of all operations. Another reason why businesses use ERP software is it enables the integration of the business’ information. Check it out click on Enterprise resource planning modules . Please contact us at any time.

Mini ERP is a small system to use the business. Through this system, small businesses can eliminate the need for storing multiple copies of data such as spreadsheets, databases, and order forms. The automation also reduces the need for manual tasks which helps speed up critical processes such as order management. Easy retrieval of data and information will also expedite planning and decision making. Check it out click on Mini erp system for small businesses. Please contact us at any time.

MiniBigTech - July 22, 2019 reply

In an organization, ERP helps to manage business processes of various departments & functions through the centralized application. Check it out click on Manufacturing erp modules. Please contact us at any time.

MiniBigTech - July 18, 2019 reply

ERP is a cross-functional software that supports all the business processes within the organization. In an organization, ERP helps to manage business processes of various departments & functions through the centralized application. We can make all the major decisions by screening the information provided by ERP. Check it out click on erp modules.

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Roadmap ERP - July 11, 2019 reply

Nice article, interesting to read, clearly explains about the advantages and disadvantages of ERP

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Jack - March 22, 2019 reply

Why no date line on your article?

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Bergen Adair - March 25, 2019 reply

We are constantly updating information on our posts, so almost all of our articles have no single published date.

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Marfo - March 17, 2019 reply

i think the evolution of ERPs is gradually reducing customization since most of them are built according to business needs.

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Ranjeet Kumar - January 8, 2019 reply

True, there are many advantages of ERP System but I feel the cost of the software is a way to high. Especially if the software is SAP based. There are a lot of small software development companies who offer cost-effective or even cheap software that provides similar functionalities.

Kim O'Shaughnessy - January 8, 2019 reply

Hi Ranjeet, thanks for giving this article a read! ERP definitely isn’t going to be the right system for every business, especially when something simpler like a project management solution or a professional services system would work just as well. However, for businesses that do need a fully equipped ERP, cloud-based software and monthly pricing plans have made this type of software a lot more accessible than it was in the past.

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software testing - December 12, 2018 reply

As a Software tester I feel software testing is important because it gives assurance whether the software will work or not. It may have its advantages and disadvantages but it helps to solve the bugs

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Amelia Belle - December 5, 2018 reply

Most ERP vendors offer several applications that can be implemented together according to business needs.

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pramod singh - November 21, 2018 reply

Endeavor asset arranging programming, or ERP, is a suite of adaptable applications that enable organizations to incorporate and deal with their most imperative procedures. In spite of the fact that there are a lot of points of interest, it’s not all 100% smooth cruising and so forth.

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Olivia Pearson - October 30, 2018 reply

I like how you said that ERP is a suite of customizable applications that allow businesses to integrate and manage their most important processes. I think it’s so important to have a planning and organizational software tool at work because you’ll be able to deliver reports and make action plans much easier, due to the fact that you have one system to rely on. My friend just started his own business, and is still trying to figure out how to have all of his data and resources in one place. I’ll have to recommend that he find an ERP implementation strategy business that can help him decide which ERP solution would be right to increase productivity in his business.

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kingston - September 22, 2018 reply

structured and well detailed

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jyoti sharma - September 7, 2018 reply

Enterprise resource planning software, or ERP, is a suite of customizable applications that allow businesses to integrate and manage their most important processes. Although there are plenty of advantages, it’s not all 100% smooth sailing etc.

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Fekara - July 31, 2018 reply

Playing out an ERP software execution without a reasonable comprehension of the advantages as far as dollars and pennies can bring about huge issues as the advance.

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Kundan Ray - May 12, 2018 reply

Nice article, it helped me a lot.

Thank you for reading Kundan, glad to know this was helpful to you!

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Qasim Mushtaq - August 23, 2017 reply

Nice and helpful article.

Thank you for reading Qasim, glad you liked it!

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enterprise resource planning disadvantages

Advantages and Disadvantages of an ERP (Enterprise Resource Planning System)

Enterprise Resource Planning (ERP) system is a software solution to support and integrate the functional area of business processes that includes production planning, manufacturing, logistics and warehousing, procurement of goods and services, management, finance, accounting as well as human resource.  In this blog, we are discuss the advantages and disadvantages of ERP systems.

ERP is built to cater for each organization based on their size and strength regardless of the type of industries. ERP system focuses on business process integration that allows:

However, after years of practices, we have encountered many advantages and disadvantages of an ERP system. Here, in this blog, we will discuss some of them.

What is ERP System?

ERP system is a type of business management software that helps businesses manage and automate their core business processes. ERP systems are typically used to track and manage data related to financials, inventory, manufacturing, human resources, and supply chain management.

An ERP system can be a valuable asset for any business, but it’s important to choose the right system for your specific needs. Not all ERP systems are created equal, and some may be better suited for certain businesses than others. When considering an ERP system, it’s important to keep in mind your specific business goals and objectives. You should also consider the size of your business and your budget. Once you have a good understanding of your needs, you can begin evaluating different ERP systems to find the best fit for your business.

Main Advantages and Disadvantages of ERP systems

Following are advantages and disadvantages of ERP systems below as –

Advantages of ERP System

There are many benefits of  ERP (enterprise resource planning) System –

1. Integrated Information Among All Department

In old ways, the company used to store information in each department database. Thus, the information would only be shared within the particular department. If the other department wish to get the data/ information, they have to inquire with the respective department manager in order to access the information.

By using the ERP system, the system can store all the information across all the departments in a single database which means all the employee from the different department can use the information from the database without other department approval.

2. More Efficient for the Business Process

Before the implementation of the ERP system, all the information is stored in a different database. This information may be duplicated and there is a high risk that the information may not be the latest version. Hence, decision made based on this information may not be accurate.

After the implementation of the ERP system, all the information stored in a single database which means everyone can access and update the information from various department to reflect the latest information in the system. This reduces the risk of a duplicate file because all the information will be updated in a single database. Thus, the decision made would be more accurate and reliable.

3. Total Visibility

Another benefits of ERP , It allows total access to every important or major process in the business by allowing data accessible from every department to the management. Through this, management is able to control inventory level on a daily, weekly or monthly basis including future consignments which are yet to be received.

By knowing precisely where the company stand regarding inventory level, it helps management to control working capital in a more précised way.

Moreover, the availability of all company’s information in a centralized location allows for increased collaboration and more streamlined completion of complex tasks. This complete visibility provides better workflows and allows inter-departmental processes to be easily tracked with maximum efficiency.

4. Improved Reporting & Planning

Implementing an ERP software across all department, it means that the organization has a single unified reporting system for every process. By having a single source of truth, an ERP system are able to readily generate useful analytics and reports at any time.

ERP system provides management to have ability to compare and analyze functions across departments and divisions without the bias of multiple emails and spreadsheets.

One of the most popular and important reports involves finance. Standard financial reports such as cash flow and income statements generally are in-built. ERP system allows management to produce their own custom reports and they can be quickly generated without relying on the help of IT.

Disadvantages of an ERP system

There are many drawbacks of enterprise resource planning System –

1. Cost of ERP Software

The upfront cost of the software alone can be very high, especially for small and medium companies. Even though this cost can be avoided using a cloud solution with a monthly basis payment but that too has its own disadvantages, users can only continue to access the data if they continue paying. This would make the cloud-based system slightly more expensive over a product’s lifetime.

2. Customization Process

Another disadvantage of an ERP, This process takes a lot of time, effort, money and expertise. Businesses often completely underestimate how many resources are needed and either don’t finish their customization or end up going way over the budget.

Many companies may also lean on customization when their chosen system does not really fulfil their business needs. This could lead to diminishing the best practices built into the system and make it more difficult to upgrade in the future.

3. Users Participation Is Must

For a successful implementation of an ERP system, there is a must that every employee in the organization should participate in using the system. To use the system efficiently it requires training and learning sessions for the employees in order to understand the system and work. However, it may be hard for a certain group especially the older generation to learn the whole process in the ERP system.

Lack of participation from the employees in handling the system can lead to failure of implementation and operation.

4. Decrease In Effectiveness While Completing Task

Last one disadvantage of ERP, A company should understand that implementing the system requires a long time. This is because it takes time to do a migration of data, organize the training courses for employees and other tasks. This can bring a huge amount of loss to the company in terms of time and cost. The process of implementation can take up from a month to years. If the company did not handle properly on the possible risks, they likely cannot recover from the loss.

Pros and Cons ERP System

Pros and Cons ERP System

benefits of ERP

The above points will be able to give you an idea about the advantage and disadvantage of of an ERP system. However, if you take my recommendation, I would say one should always keep the possibilities under consideration but success come with self-belief and team work. ERP is a powerful tool and can help your business to grow drastically upon using it effectively.


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Advantages & Disadvantages of ERP (Enterprise Resource Planning) Systems

In order to understand computer networks better, it would be helpful to have an overview of the applications running on the network. ERP or Enterprise Resource Planning is an important enterprise application that integrates all the individual department functions into a single software application.

ERP Systems make it easier to track the workflow across various departments. They reduce the operational costs involved in manually tracking and (perhaps) duplicating data using individual & disparate systems. In this article, let us have a look at the advantages and dis-advantages of implementing ERP (Enterprise Resource Management) Software Systems.

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 workflow from one department/function to another, to ensure a smooth transition and quicker completion of processes. This also ensures that all the inter-departmental activities are properly tracked and none of them is ‘missed out’.

3. A unified and single reporting system to analyze the statistics/status etc. in real-time, across all functions/departments.

4. Since same (ERP) software is now used across all departments, individual departments having to buy and maintain their own software systems is no longer necessary.

5. Certain ERP vendors can extend their ERP systems to provide Business Intelligence functionalities, that can give overall insights on business processes and identify potential areas of problems/improvements.

6. Advanced e-commerce integration is possible with ERP systems – most of them 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 may be better.

9. Since a Database system is implemented on the backend to store all the information required by the ERP system, it enables centralized storage/back-up of all enterprise data.

10. ERP systems are more secure as centralized security policies can be applied to them. All the transactions happening via the ERP systems can be tracked.

11. ERP systems provide better company-wide 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 especially helpful for managing globally dispersed enterprise companies, better.

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 are highly time-consuming – projects may take 1-3 years  (or more) 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 – hence, exhaustive user training and simple user interface might be critical. But ERP systems are generally difficult to learn (and use).

6. There maybe additional indirect costs  due to ERP implementation – like new IT infrastructure, upgrading the WAN links, etc.

7. Migration of existing data to the new ERP systems is difficult (or impossible) to achieve.  Integrating ERP systems with other stand alone software systems is equally difficult (if possible). These activities may consume a lot of time, money & resources, if attempted.

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. Companies are at the discretion of a single vendor and may not be able to negotiate effectively for their services.

10. Evaluation prior to implementation of ERP system is critical. If this step is not done properly and experienced technical/business resources are not available while evaluating, ERP implementations can (and have) become a failure.


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89 thoughts on “ Advantages & Disadvantages of ERP (Enterprise Resource Planning) Systems ”

AnuRag Negi

Thanx its helpful for my exam.


This is the best site to learn from.

Ekkachai Thanavaleekul

New member want to learn more anything


it has really helped me in completing my term paper!


this is wonderful.Am using it to revise 4 my exam

P Mahaboob Basha

Given to the information of ERP


prepared for the exam


Thank you so much for advantages & disadvantages of ERP System



Euclid munkombwe

Erp is not too clear.the question is what is erp not erp systems

gil prince

can we use ERP system as a geological, petroleum or environmental engineer?


you guys erp is an business system that the company implements to enhance its business and manufacturing and so erp and erp system there are one and the same thing

Surajit Das

Helpfull. Thank You.

Eric Ogola

wow its wonderful piece of info.


this has been brief and on point i love it as l learn about ERP. Good for students like me.

Ayoma Quentin

Erp systems seem to be uneasy to implement but once done, there are many advantages to enjoy.

Resource Planning Software

Nice article thanks for sharing it.


What are the 3 types of enterprise system implementation methods? What’s the advantage and disadvantage among them?

Helpful. understandable….. simple sentence.. used for my seminar…

Kartik Rawal

ERP has its own advantages and disadvantages. It may cost more and might have to face some difficulties but it can really help overall to workflow and business growth. very well explained article .

Comments are closed.


Benefits of ERP: Advantages, Disadvantages & Selecting an Enterprise Resource Planning System

Benefits of ERP

Advantages and Benefits of ERP Software Solutions

Read time: 5.5 min.

Organizations from a variety of industries benefit from Enterprise Resource Planning (ERP) software, but, there are certain types of businesses that see more benefits of ERP.

Here, we will talk to some key trends that suggest when it’s time for a business to implement or upgrade their ERP system, which include:

While many factors indicate the need for implementing an ERP system, companies in certain industries stand to gain the most from making the move.

Benefits Of ERP

What are the key business benefits of ERP software?

Cons of ERP – Important Factors & Disadvantages

ERP projects are an investment of time and money and the most successful ERP software implementations require:

ERP software is like any business technology – the tool on its own doesn’t cause failure or success. The business environment, leadership, and end-users determine the ROI of an ERP system – along with the project planning, methodology, and implementation.

What can cause an ERP implementation failure?


Will an ERP System Work For Your Business Needs?

New research shows that ERP projects today are much more successful than in the past. Coupled with the fact that cloud ERP software options available on the market today are easier to implement, and keeping in mind the benefits listed above, there’s a real business case for ERP. Timing is also an important aspect to consider. In addition to the trends we mentioned at the beginning of this article, you can start by reviewing the five questions below to see if it’s time to start considering ERP software for your business.

What types of businesses that benefit the most from ERP software?

The versatile nature of ERP software allows companies in a variety of industries implement solutions based on their business needs. Major industries that use ERP include:

One manufacturing executive we’ve worked with said implementing ERP (in their case, Oracle JD Edwards) gave the company a “robust platform” to manage and control their manufacturing processes. “The tools and information available in the system will allow us to better manage our distribution and manufacturing businesses.”

Professional services is another industry where ERP is often used and see copious benefits of ERP software . The needs of these organizations differ from manufacturing and distribution. Businesses in this industry are often project-based and need tools for project planning and execution, managing project costs, strong customer relationship management and more.

The CIO of a project-based company we recently worked with to implement a cloud ERP system commented: “By moving our project management process to the cloud, we can keep up with our business growth and continue to serve our clients to the best of our ability.”

How does ERP software improve business processes?

ERP systems solve many problems you may be facing, including a need for:

Next Steps for ERP software selection

ERP selection and implementation processes are not for the faint of heart. Choosing the right Enterprise Resource Planning system can be complicated, and often there is a lot at stake. You want to make the best possible choice for your business. But there are ways to make it easier on yourself and your team. There are many factors to consider, below are some of the top factors recommended for anyone thinking about a new ERP.

Learn more about specific Oracle ERP systems:

Fusion Cloud

Other Resources

Top 10 ERP Selection Criteria

How to Win at Implementing ERP

Best Practices for an ERP Implementation

Read Next: Top 10 ERP Selection Criteria

erp selection criteria

Wondering how to select an ERP system? Check out our list of top 10 ERP selection criteria to consider as you begin an ERP implementation project.

Enterprise Resource Planning system

Advantages and Disadvantages of implementing Enterprise Resource Planning System

An Enterprise Resource Planning system can be used to control all major business processes with a single software architecture in real-time.  It is composed of a set of applications that automate routine operations such as Financial Management, Stock Control, Supply Chain Management, Human Resource processes – Goal Setting, Time Recording, Payroll etc.  And it’s success relies on the premise that organisations change their workflow processes to fit with the selected ES ‘best practice’ rather than to customise the solution to fit current processes.

Advantages of Enterprise Resource Planning System

Davenport , Gattier and Goodhue state that Enterprise Resource Planning system essentially revolve around the ability to integrate business information across an organisation.  Which can potentially help to:

Other potential advantages of Enterprise Resource Planning System:

–        ERP enables the coordination and collaboration of data across business units.

–        Boost productivity, cut cost, make smarter decisions, manage growth and meet a competitive advantage

–        streamline business processes, proactively managing performance and providing real-time reporting for decision-making

–        Business intelligence proactively manage business process with real-time analytics, reports, alerts and KPIs, snapshot of cash flow, inventory, customer insight and profitability

–        Integrated CRM, customer data at your fingerprints, attract and retain customers, improve customer relationships and discover new revenue operations

–        Mobility- your mobile executives and employees demand access to corporate systems from their smartphones and systems, modern ERPs deliver mobility and eliminate redundant data entry

–        Collaboration – improve productivity and responsiveness with open lines of communication, connect everyone through the organisation common information supporting collaboration and accuracy through sharing documents, data, online notes, attachments, social media feeds across your company and with customers

–        Global – no longer need localised solutions for each country. Single system to meet local management needs and accurately report across locations and borders

–        Compliance – can simplify governance, risk and compliance management, can automatically enforce financial management standards and deliver audit trails and compliance reporting

–        High ROI and low TCO – deliver a high return on investment and a low TCO, advanced architecture and web interfaces save time and money by making Enterprise Resource Planning system easy to install, implement, integrate, maintain and upgrade

–        Can provide an opportunity to learn more about our customers, so that we can provide them with a better service and products more tailored to their needs

Disadvantages of Enterprise Resource Planning System:

–        Could lead to the breakdown of communications.  Once the Enterprise Resource Planning system has fully implemented the need to directly contact other departments or lines of business is dissolved.  This can lead to process or business changes not being communicated to the necessary teams.

–        No longer provides a competitive edge.  As Porter (2001) points out ES systems have become a commodity and so lose the competitive edge they once gave an organisation.

–        Costs – there are significant investment costs such as hardware, software and consultancy expenses.

–        Difficult to measure the intangible benefits.  Although there are clearly opportunities and benefits to ERP solutions in streamlining processes and reducing duplication of data, it is difficult to estimate the cost benefit of this until the system has been implemented.

–        Data cleansing may be more time-consuming than anticipated, untrained or resistant staff could result in duplication of data.

–        Modifying ‘out of the box’ systems can cause greater harm than good, can result in higher cost and more system bugs and user issues.

–        Requires continual improvement – It’s not realistic to expect a linear implementation of a large ES project, i.e. Selection-Design-Implementation-use, and most organisation make customizations before and after implementation, continual revision and improvement may be required

–        ES is a socio-technical system which relies on people changing their work practices in order to ‘do things differently’.

–        Newell and David (2006) present the following problems pertaining to Critical Success Factors:

–        Project Factors – changing team/champions over a project that takes years to implement

–        Technical Factors – initially data cleaning may take more time than anticipated due to inaccuracy of entries

–        Organisational Factors – lack of assigned resources to support organisational change, as focus goes to technical support

–        Wagner and Newell (2006) outline the challenges faced with obtaining user participation

–        Legacy thinking, difficult for users to think of the future new process when it is still at conceptual phase

–        ‘Vanilla’ implementation, if users come up with suggestions that don’t fit the vanilla option they may feel discouraged,

–        Motivation, users may not be motivated to engage in a project that is so far away from implementation.

Wagner and Newell (2006) conducted an ES survey that found that only 28% of organisations had fully deployed their ES.   This should not discourage the consideration of implementing an ERP solution, as 64.5% of the organisations surveyed had in fact partially implemented an ERP system.  The key learning points from other organisations failures and the key theorists referenced are to consider the human factors of the implementation.  When changing processes it is essential to engage your resources to get their commitment to the change, by involving resources in the iterative approach to the change it is possible to find valuable improvements to the solution.

Steps to Improve Enterprise Resource Planning System

Newell et al., 2002

Key organisational structures

Newell outline 5 key organisational structures:

Decentralised way of operating

Flatter organisational hierarchy

Inter-organisational networking

Cross functional teams

Globalisation of operation

Key organisational structures are


Is achieved through the creation of semi-autonomous business units.  This allows each business unit to focus on a particular market niche and so respond more flexibly and adaptive to the needs of the particular niche.

Example AIB, BOI, call centres.  Irish Life, decentralize its business into Retail, Corporate Business, Irish Life Investment Management and Irish Progressive Services International, all functions are run relatively independently sharing support services such as IT and HR.

Flatter Organisational Hierarchy

Achieved through removing layers of middle managers

With fewer managers, close supervision and control are less possible, so that power is devolved down the hierarchy giving the people more autonomy in their work. This open door approach enables collaboration among different departments and resources of all levels encouraging a team atmosphere.  However the fewer layers in an organisation can mean fewer opportunities to progress and this may lead to a poor retention of staff.

Example Facebook, Google.  These companies represent a modern collaborative and creative environment, however, this can often lead to a culture where there is and expectancy of resources working late, weekends and unsociable hours.

Cross-Functional Project Teams

Rather than have each function work relatively independently and pass things to the next function in the process, people are brought together to work in cross-functional teams

The aim is to encourage a faster response rate so that lead times, for example on new product developments, are considerably reduced.  This can cause issues as resources are effectively reporting into two managers, so there can be a conflict of interests when prioritising work.

Example Harley-Davidson (example in book but most 20 th or 21st-century companies adopt this approach)

Inter-Organisational Networking

Instead of attempting to integrate new required skills and competencies into the org. hierarchy, organisations are increasingly working in collaborative alliances and partnerships with other organisations or using outsourcing arrangements to service particular internal requirements

This enables organisations to be more efficient as well as the opportunity to innovate more quickly since they can use knowledge and ability that are not held internally

Example Ikea and its suppliers, apple and Belkin, McDonald’s and Toys’R’Us, Energie and Chopped

Globalisation of Business

Organisations are increasingly geographically distributed, working on a global and not on a national basis.  This is achieved through acquisitions of businesses in other countries, through partnership arrangements or through internal international growth.  This allows them to capitalise on global market opportunities and so potentially grow and profitability.

Example – Kingspan, Miscrosoft, Amazon, Google etc. Great West Lifeco recently expanded its presence in Ireland through its acquisition via its subsidiary Canada Life of Irish Life, placing it as Irelands leading pensions’ provider.

Structured Systems Analysis and Design Method

UK government’s standard method for carrying out the system analysis and design stages of an IT development project is Structured Systems Analysis and Design Method . Central Computing and Telecommunications Agency commissioned it in a bid to standardise the IT projects being developed across government departments. Structured Systems Analysis and Design Method could be described as an updated version of the waterfall model, inheriting the design and coding phases from the waterfall life-cycle. It is similar to the principles of Systems Development Life Cycle .

Structured Systems Analysis and Design Method is a structured method used mostly in the analysis and design stages of system development. It is not directly concerned with the project construction, testing and implementation of software. It is a data-driven concept which concentrates on data modelling.Before subsequent phase can begin, a definite set of activities and deliverables that must be accomplished.

Structured Systems Analysis and Design Method(SSADM) adopts the Waterfall model of systems development, where each completed phase is signed off before next phases can begin .

The main aim is to produce systems that satisfy user requirements and delivered on time. Some business benefits must be provided along with the flexibility to adapt to change is the business environment. It revolves around the use of three key modules:

Each of these three system models provides a different viewpoint of the same system, and each required viewpoint forms a complete model of the system being designed. The three techniques are cross-referenced against each other to make sure the completeness and accuracy of the application.

Modelling techniques are extremely useful in tackling the complexity found when attempting to analyse and understand a system. Models are also extremely useful communication tools. The data flow shows what processing is done, when, how, where and by whom.

All these captured ideas and concepts are shown to users and clients for clarification and feedback.

SSADM consists of five core modules , which are further broken down into seven stages which are in turn broken down into steps and tasks. The five core modules are

Dynamic Systems Development Model

In mid-1990’s U.K. developed The Dynamic Systems Development Model as rapid application development (RAD) practices evolved .  The Dynamic Systems Development Model stresses on continuous user involvement in an iterative development and incremental approach,

Compared to SSADM, The Dynamic Systems Development Model is a culture change.

User stories instead of requirements are used to work out tough technical problems.

Despite the requirements changes, time for the life of project and resources are fixed. Therefore,the development of software system satisfies the business requirements on time and on the budget. D.J & I.J. Tudor (2002) assert that DSDM carries out the concept of 80/20 rules and follow the fundamental assumption of “Nothing is built perfectly the first time”.

The Dynamic Systems Development Model

consists of five phases:

DSDM projects are limited by time and resources . To meet business needs,Dynamic Systems Development Model consists of nine principles:

Ignoring one of The nine principles break with the frameworks philosophy and significantly increase project risks D.J & I.J. Tudor, (2002).   Many of the 9 principles are encompassed in the following characteristics :

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Benefits of ERP

The Benefits of ERP: Advantages and Disadvantages of Enterprise Resource Planning

Jun 18, 2019

Woman looking to the side while holding her cellphone.

Deciding whether or not your business should take on ERP software  can be an overwhelming decision, especially if it is your first time implementing major software.

You may think that operating without ERP can be done—and you'd be right. It can be. But that doesn't mean that it should be. Operating without an ERP in today's dynamic marketplace will put you two steps behind the competition and limit your potential success.

If you want to see a positive change in your business and experience continued growth, ERP software is your answer. So, if you're wondering if investing and implementing ERP software worth your time? We say yes. But, don't take our word for it, the benefits of ERP software speak for themselves.

From improved productivity, increased efficiency, reduced costs and streamlined processes, let’s take a look at 15 of the most common benefits of enterprise resource planning systems that companies have reported after implementation.

15 Benefits of ERP Software - Why Is ERP Important?

The importance of ERP revolves around what it can do for your business. ERP manages a number of business functions through streamlining and automating daily business operations. The software creates a leaner and more accurate operation and provides a complete, 360 view into the ins and outs of your business. With ERP software , you're able to improve both user efficiency and productivity, becoming more agile and improving customer service as a result.

Let's dive into the primary ERP benefits when implementing a robust system.

1. Competitive Advantage

It’s true that ERP software requires a major investment, but the cost of not investing could be even greater. While some businesses choose to stick to the tried and true methods of the past, others seek technology solutions. With so many enterprise resource planning advantages the software provides, users can see improvements within multiple departments. Implementing ERP software helps to keep you ahead of the competition because you no longer run the risk of making costly business mistakes, which could place you behind the pack instead of ahead. In today's competitive marketplace, you cannot afford to put off an ERP implementation while your competition invests in ERP and starts reaping the many benefits we’ll touch on below.

2. Improved Process Efficiency

An ERP platform eliminates repetitive processes and greatly reduces the need to manually enter information, which not only improves user productivity, but eliminates the possibility of inaccurate data which could lead to making costly business mistakes. The benefits of implementing an ERP system in an organization will also improve daily business activities by streamlining business processes, which makes it easier and more efficient for companies to collect data, no matter what department they’re working in. Think of ERP as an extra hand and brain, designed to keep businesses on track, noticing every detail and making work life easier and more efficient, from software users down to its customers.

3. Accurate Forecasting

Enterprise resource planning software gives your users, and especially managers, the tools they need to create more accurate forecasts. This helps software users, and businesses as a whole, think ahead and properly plan what they need from inventory and sales down to financials and customer service. With stronger forecasting, businesses can effectively decrease business costs, which saves money as well as become an more overall proactive unit. Since the information within ERP is as accurate as possible, updating in real time, businesses can make realistic estimates and more effective forecasts.

4. Department Collaboration

Nobody wants to run a siloed business with each department functioning separate from the other. Collaboration between departments is a crucial and often necessary part of the business, especially because business projects often involve more than just one department. With the data entered into your ERP tool being centralized and consistent, there’s no reason why departments can’t work together, sharing information and collaborating whenever it is needed. The software also touches on almost every aspect of a business, thus naturally encouraging collaborative, interdepartmental efforts. The beauty of ERP software is that it updates in real time, so no matter if you are using ERP software in the morning, afternoon or from a remote location, the opportunity to communicate, share information and use data is always available and accurate.

5. Scalable Resource

Did you know? Structured ERP systems allow the addition of new users and functions to grow the initially implemented solution over time. No matter how big or small your business is ERP grows with it, being able to occupancy new users and new rounds of data whenever your business is ready to expand. There is no worry about whether you will need a brand new system once a new user or two needs to be added, simply make sure that the enterprise solution that you choose is able to grow with your business because ERP should be able to facilitate that growth.

6. Integrated Information

Enterprise resource planning software acts as a central hub for all of the important information that your business and the departments within it need to maintain daily business practices and operations. No more issues with data spread across separate databases; all information will be housed in a single location. This means you can integrate platforms like your CRM software with your ERP software, keeping data consistent, accurate, and unique. Know your customer, their orders, and your inventory, all in one place. There is also no need to worry about whether the information that you are using from the system is accurate, since it is updated in real time across the board. This improves your data accuracy, which eliminates making potential business mistakes with false data and analytics.

7. Cost Savings

With every business, you want to be smart with your financials and avoid making costly mistakes that could hurt your business in the end. With one source of accurate, real-time information, enterprise resource planning software reduces administrative and operations costs, allows businesses to utilize money in other, much needed areas. It allows manufacturers to proactively manage operations, prevents disruptions and delays, breaks up information logjams and helps users make decisions more quickly. If you’ve chosen the right solution for your business, and the right vendor who meets your needs, you’re bound to see a powerful ROI. ERP software is available to help you become smarter about saving and spending when necessary.

8. Streamlined Processes

As manufacturers grow, their operations become more and more complex, which unfortunately increases the opportunity for costly mistakes to be made. Manufacturing software automates business operations cross-departmentally, providing accurate, real-time information to everyone utilizing the solution, all while eliminating manual duty, which often has the potential to lead to errors. ERP increases efficiency and productivity by helping users navigate complex processes, preventing data re-entry, and improving functions such as production, order completion and delivery. Streamlined, efficient processes throughout.

9. Mobility

An enterprise resource planning advantage is the software’s ability to make users the center of its attention, providing deployment styles that will give on the road sales reps the same opportunities as in-office users to use ERP whenever and wherever they need. With With ERP software from Aptean, users have access to a centralized database from anywhere you work and from different devices including your laptop, tablet or cell phone. The adaptability of a ERP software is crucial, as it increases productivity and makes information accessible no matter where you are. Do you often have time sensitive projects that have hard deadlines? Use ERP at home, in the office, wherever, through our mobile-friendly solution and application.

10. Customized Reporting

ERP software helps make reporting easier and more customizable, fit to meet all of your needs. With improved reporting capabilities, your company can respond to complex data requests more easily. This improves productivity, completes process faster and helps to close out projects without large wait times in between. Users can also run their own reports without relying on help from IT, saving your users time to use toward other projects.

11. Increased Productivity

Save time and increase productivity levels. Sound too good to be true? It’s not with ERP software’s automation and streamlining capabilities. Often times, when tedious tasks take up much needed business time, there can be a delay in production, which can effect your business and even the customer service experience. By having redundant processes automated, users have more time to work on other time sensitive, pressing projects and tasks that may truly require more of your attention and time. Users will also be able to work easier since the solution was designed for ease-of-use. ERP was designed with ease of use in mind, as well as giving business a break from long winded tasks, allowing you to shift your focus toward other matters.

12. Regulatory Compliance

A benefit of ERP software, which often times goes unnoticed, is how it ties well into regulatory compliance within the manufacturing industry. Powerful ERP platforms are designed to keep track of regulations within the industry and monitor changes in compliance. This allows users, and businesses at large, to stay abreast with laws, regulations, guidelines and specifications as it relates to business processes.

13. Flexible Systems

Modern ERP software platforms are robust, flexible, and configurable. They are not a one-size-fits-all proposition but can be tailored to the unique needs of a business. ERP software can adapt to the ever-changing needs of a growing business, ensuring you won’t have to buy a new solution once your needs change or your business grows. When implementing the ERP software of your choice, it is important to make sure that you can customize applications and suits, so that your system has every function needed in order to assist with daily business operations. Make sure that your ERP system can grow as your business grows, allowing you to add new users when and if needed. ERP’s flexibility also goes into how it is implementing, which can be done in either your choice of the cloud or on-premise.

14. Customer Service

It’s easier to provide high-quality customer service using an enterprise solution, especially when you’re using one as well-equipped as Aptean Industrial Manufacturing ERP WorkWise Edition . Sales and customer service people can interact with customers better and improve relationships with them through faster, more accurate access to customers’ information and history. You’ll also have access to  marketing automation  and  contact center software , ensuring your customers are being interacted with consistently. Additional features including lead scoring, which helps with searching for leads to move through the sales pipeline, social media monitoring and email campaigning, which allows users to track the status of their campaigns. Aptean Industrial Manufacturing ERP WorkWise Edition also integrates with CRM , which is designed to strengthen the relationship between a business and its customers.

15. Data Reliability

ERP provides reliable data that can be accessed from different locations (if implemented in the cloud) and through multiple devices including tablets and smartphones. With the ability to update in real time, ERP improves data accuracy and consistency. With this, users can ensure that all data and analytics are safe to use, without running the risk of errors. ERP user data can also have additional security through firewalls and built-in protection resources. Improved security removes the risk of important business information getting into the hands of the wrong person.

The 4 Disadvantages of ERP Software

When detailing the benefits of ERP software, we often hear businesses discuss about the "disadvantages". But the way we see it, when implemented and used correctly, there really are only advantages to choosing ERP for your business. There are however, some barriers to success that you should be aware of before you embark on this journey. Understanding these challenges will help you plan and account for them in your project.

1. The Cost of ERP

Depending on how much your business can spend budget-wise, a disadvantage of ERP can be the pricing. With most ERP solutions, there are multiple fees that are applied, which can lead to higher costs. From licenses to upfront cost, implementation and recurring potential monthly fees, some ERP solutions may be too expensive. Researching ERP solutions within your price point can help spare you from spending more money than originally anticipated.

Having said that, make sure not to become too focused on choosing the cheapest solution. Instead, select the solution that best fits your needs. Doing so will help you achieve maximum benefit and speedy ROI—saving you time and money in the long-term.

2. ERP Success Depending on Software Experience

If you choose to forgo the training process or if your chosen ERP vendor does not offer ERP software training, that can put your entire workforce in a vulnerable position. Not knowing exactly how the software works means there is a greater risk of making costly mistakes and spending long lengths of time trying to make the software work for you. Not only does this reduce productivity, but it can also damage the ROI you get from your new system. Finding a vendor that offers ERP training will ultimately make the software easier to use and helps to build a knowledgeable workforce.

3. Not Purchasing a Customizable System

It is important to purchase an ERP solution that is developed specifically for your industry and has all of the suites, modules and applications that will help your business with its daily activities and processes. Spending money on a system that does not have all of the bells and whistles that your business needs is essentially a bad investment. You'll also want to make sure that your ERP software doesn’t include more than what you need, so that applications aren’t sitting idle by with no use to your business—that is a potential waste of company money. Instead, look for a solution that can scale with your growth, from a provider that knows your industry needs inside out.

4. ERP Resistance

It may take some time for employees to get used to a new ERP software, which can lead to it not being used to its full extent. Other members of the workforce may also struggle with placing information into the software, which makes it hard for ERP software to truly serve all departments that make up a business.

To counter this, ensure you have staff buy-in from the very start of the process. You may want to consider setting up an internal implementation team, with stakeholders from different levels and departments of your business so that everyone's needs and concerns are addressed throughout the process. In addition, as we mentioned above, securing the right training package can help ensure quick staff adoption once the system is in place.

Why You Should Invest in ERP Software

Ultimately, even with these potential barriers, ERP software is still a key ingredient in building a successful business. The benefits of implementing an ERP system in your organization speak for themselves and deliver a competitive and financial boost to your company while improving productivity, collaboration and communication. With thorough research, your business can avoid the potential challenges and instead beginning reaping the many rewards.

Ready to learn more? Our ERP solution experts are ready and willing to answer all your questions and help you get started on selecting the right solution for your business.

Or, you can take a look at Aptean's range of specialized, industry-specific ERP solutions that are designed to help you be Ready for What's Next, Now ® .

Aptean Staff Writer

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Enterprise resource planning (ERP)

Enterprise Resource Planning (ERP): [PDF Included] Types, Advantages, Disadvantages, Modules, Features

The simplest way to define Enterprise Resource Planning (ERP) is to think about all the core business operations required to run a company. Core business Operations are basically finance, human resource, manufacturing, supply chain, procurement, services, etc. ERP helps to manage all these operations in an integrated system effectively.

It also provides transparency into your complete business process by tracking all logistics, financials, and production aspects. It also provides customizations for your specific industry.

 Most of the world’s renowned and successful companies have learned and applied ERP for the last quarter century. Now, this software can be designed and priced to fulfil the needs of all-size businesses.

What you are going to learn?

Definition of Enterprise Resource Planning

Enterprise Resource Planning (ERP) is a software-based process used by companies to manage and integrate core operations like finance, HR, supply chain, procurement, supply chain, services, manufacturing, etc.

ERP stands for Enterprise Resource Planning and refers to the software and systems used to prepare and manage all the core supply chain, production, services, financial and other operations of a business. ERP software can be operated to automate and simplify particular activities across a business, such as procurement and accounting, project management, consumer relationship management, risk management, observation, and supply chain management. 

How does ERP Works?

Enterprise Resource Planning (ERP) system is made up of integrated modules or business applications that communicate with each other and share a common database.

Every ERP module typically focuses on one business area, but they work together using the same data to meet the company’s needs. There are many components such as finance, HR, accounting, procurement, sales, logistics, and supply chain, companies can choose the module they want and can add on and scale as required.

Then real-time data is woven into business operations and workflows across departments. Managers can see if one location is doing remarkably better at bypassing spoilage than a sister site a few towns over and work to identify why, while operations can confirm staffing levels align with traffic patterns. It delivers the most significance when a company has modules for each primary business function and provides timely, correct data entry.

When an enterprise uses business systems from multiple dealers, integrations are possible to make data automatically flow into the ERP system. This real-time data can then be operated throughout the ERP model to benefit any process.

Various Types of ERP

There are mainly 3 types of ERP systems that function in different deployment environments;

1. On-Premise ERP:

It is hosted on the company’s own computer and maintained onsite in physical office space within an organization. In this type, the company is fully responsible for security, maintenance, upgrades, and other fixes. Nowadays the popularity of this model has decreased.

2. Cloud-Based:

It is a cloud-based ERP system that runs on remote servers and is managed by a third party. Users access the cloud ERP through a secure web browser. It will provide great flexibility to access information and reports from anywhere with just an internet connection. There are multiple deployment options for cloud-based ERP, that are single-tenant and multi-tenant.

Hybrid ERP merges characteristics of on-premises and cloud deployments. The hybrid system is a two-tier ERP, where a business maintains its on-premises ERP in place at headquarters but avails cloud systems for associates or regional offices. These cloud systems are then combined with the on-premises system. It gives the flexibility to turn to cloud systems for certain business requirements while sticking with their on-premises systems for other functions.

4. Open Source:

It is like other inexpensive or sometimes free open source solution that are suitable for some small-scale businesses. Various open-source ERP providers allow businesses to download their software for free. They will then be charged a minimal annual fee for cloud access. For this, you need a person with deep knowledge of how to configure and develop the software.

Types of ERP Systems by Business Size

If we consider the size of the business then we can find three types of ERP systems.

1. Small Business ERP:

Small-size businesses should identify their requirements before starting to search for software of those specific specifications. This will keep costs down and reduce the training required for employees. That’s why cloud ERP is probably the best choice for small businesses. This module has the ability to scale up and support new features over time as well as a straightforward implementation technique. It provides the scalability to fulfil the business’s necessities as it expands.

2. Midsize Business ERP:

Medium-size companies demand a platform that can support almost all the functionalities that ERP has and is capable of scaling further to meet future demands. Mid-size businesses need customizations at any time.

As mid-size businesses lack a prominent IT team, so, cloud and open source ERP software are very effective for this type of business.

3. Enterprise ERP:

Enterprise opts for software that supports all components of their business. They require a system that can capture, process, and interpret a huge amount of data and deal with the various business demands.

Hybrid and on-premises ERP fits perfectly with enterprises as some of the enterprises adopted ERP before the cloud was introduced so they can take initiatives to move ERP from on-premises to Hybrid.

ERP modules and Their Features

An ERP comprises 13 different types of modules. Here’s a quick guide to all 13 mostly used ERP modules.

1. Finance:

The finance module is the foundation of every ERP system. It manages the enterprise’s all financial activities such as tracking of transactions, accounts payable, accounts receivable, reconciliations, and other financial activities.

2. Procurement:

This module deals with purchasing, whether raw materials or finished goods. It can minimize overbuying and underbuying when linked to demand planning. Procurement also can automate requests for quotes and purchase orders.

3. Manufacturing:

The manufacturing process is complicated but the manufacturing module of the ERP system can ensure is in line with demand and monitor the number of in-progress and finished items.

4: Inventory Management :

This module of the ERP system shows current inventory levels to the SKU level and updates those numbers in real-time. It also measures key inventory-related matrices and optimizes stock based on current and forecast demand.

5. Order management:

The order management module observes and prioritizes customer orders from all channels as they come in and tracks their progress through delivery. It can improve the customer experience by speeding up fulfilment and reducing delivery time.

6. Warehouse Management:

It executes warehouse activities like picking, receiving, packing, and shipping. It saves the cost and time for the warehouse by identifying more efficient ways to execute these tasks.

7. Supply Chain Management:

SCM or Supply Chain Management module of ERP deals with the flow of goods and services and includes all processes that turn raw materials into final products.

8. Customer Relationship Management:

CRM or Customer Relationship Management is also a very popular module of ERP that tracks all communications with clients, assists with lead management, and can boost sales by enhancing customer service.

9. Professional Services Automation:

PSA module plans and tracks projects, including the time and resources spent on them. It encourages collaboration among the staff members and simplifies client billing.

10. Workforce Management:

WFM module of ERP system keeps track of all work roles with attendance and hours worked. This also records the productivity of individual employees, teams, and departments.

11. Human Resource Management:

The HRM module of the ERP system keeps employees’ records with detailed information like performance reviews, and available PTO. It also can tease out workforce trends in every department.

12. Ecommerce:

This module allows retailers and brands to manage and marketing of their online stores. With this, they can change the site’s look and feel and add and edit product pages of their stores.

13. Marketing Automation:

The marketing Automation module deals with marketing efforts via the web, email, social media, and other digital channels. It enables enterprises to optimize and personalize their message. It can enhance sales, and leads, and boost customer loyalty.

Implementation of ERP Process

ERP implementation is very important. Without proper implementation, it can consume a lot of money and time. Here are some important stages of ERP implementation:

1. Planning :

Before looking for an ERP system, a company should form a cross-functional team to determine what they need from an ERP system. They should also identify the inefficient process and other obstacles to business growth.

2. Evaluation:

After determining the requirements, the team should evaluate leading offerings and select the platform that can best fix the existing problems, satisfy all department’s requirements and boost the company’s growth.

At this phase, the team decides whether the system can support existing workflows and which techniques may need to change. This is also the time to specify any needed customizations.

4. Development:

  After the designing phase, internal or external technical experts configure the software to fulfil your specified needs and begin relocating the company’s data to the new system. Then time is to decide how you will introduce employees to the system and begin scheduling sessions and producing required training materials.

5. Testing:

This is a must-needed step in implementing an ERP system. It is very essential to make sure everything is working as expected and fix related problems.

6. Deployment:

After testing it’s time to deploy the system in the enterprise. The company must prioritize employee training to mitigate resistance to change. Some businesses opt for a phased rollout, while other businesses make all modules live at once.

Now assure your employees have everything they need to take benefit of the new system. With the help of specialized consultants, you can include additional configurations to this system.

Advantages of Enterprise Resource Management

ERP boosts your business performance with these great advantages:

1. Workflow Visibility:

Before ERP systems were introduced, communication between multiple workplaces took a lot of time and effort. If you need updates on an exact part of your business, you had to call or visit the place in person. Large companies with national and international sites also had to work around time zones. And if there was a problem with one of your production associates abroad, it could postpone your whole business while you made constant phone calls and site visiting.

But now, fortunately, ERP systems introduced better workflow visibility. With an ERP system, when you’re in your office headquarters, you can open a shared database from your ERP suite to get real-time details and data about what’s occurring at your manufacturing plants and distribution centres anywhere.

2. Business Intelligence:

ERP systems can access real-time data from across the company, so with these systems, you can uncover effective trends and deliver extensive business insights. This leads to more promising decision-making by corporate leaders who now have easy access to all relevant data.

3. Easy Scheduling:

Scheduling is very essential for any business. In an ERP system, scheduling tools are a highly customizable part. With this system, you can supervise when employees come in for shifts, when inventory is supplied, and when your plants require maintenance. After that coordinate each program into a single calendar so all your units and supply chain associates stay on the same page.

4. Improved Efficiency And Productivity:

 With improved planning, the ERP system delivers a huge increase in the efficiency of day-to-day and routine transactions such as order completion, on-time shipment, seller performance, quality management , invoice reconciliation, sales completion, and asset management . Cycle time is also decreased for sales to cash and procurement to pay sequences.

5: Cross-Department Collaboration:

The more divisions your enterprise has, the more critical it is to manage internal communication techniques to avoid errors. And if your enterprise has branches all over the world, you must need a strategy for everyone to stay in touch across time zones and language barriers. Sometimes a miscommunication between your raw material supplier and distribution center can lead to expensive inventory blunders. But with ERP communication tools, you can manage scanned documents, files, emails, texts, and phone call recordings.

6. Risk Management:

Protecting your company from fraud is very necessary for this digital age. If you are operating your business online, then you can be at risk at any time. ERP system provides real-time risk management tools that provide your business additional security by conducting automated audits and fraud monitoring.

7. Data Security:

Your company deals with a lot of sensitive data. An ERP system provides security by keeping all your important and secret documents and communications in one place. Cloud ERPs use cutting-edge security protocols to assure your company doesn’t fall victim to harmful attacks.

8. Customization:

ERP software or suits also include customization features. It allows the integrator to write code that adds a specific feature. But before going to the custom route, take a closer look at your operations.

Disadvantages of Enterprise Resource Planning

Besides the values that ERP brings, there are some challenges too. It is important to be aware of those obstacles or disadvantages before adopting a preferred system.

Here are some major disadvantages:

1. Time and Cost Sufficient:

ERP systems were very costly before so only large companies can afford those. But thanks to the SaaS system, which charges a small amount and more solutions designed for small and medium-sized businesses.

2. Complexity and Risks of Failure

Sometimes, ERP projects do not successful because business processes and data requirements are found to be too complex during the requirements gathering method and because employees are forced to take part in change management. Because of a long deployment method, the ERP system might not keep speed with modifications that the business needs to make in a dynamic environment of intense competition. This can make an IT project unsuccessful.

3. Costly License, and Infrastructure:

Setting up an on-premise ERP system requires a huge investment in hardware, software, and its teams. Not only that company must pay for a software license as well. The company also has to pay for those modules which are not actually required.

Traditional on-premise and hybrid ERP requires on-site servers and networking infrastructure in the data center of the company. Not only that, servers must be powerful enough to handle huge amounts of data. Companies also need a strong and effective security system to protect every data.

4. Long Deployment Period:

The process of deployment of any ERP system requires a long period of time as it involves many functions, departments, and changes. Employees also take time to get comfortable with this system. When you start using an ERP system, you’ll have to input existing data into a new system. If you have a large business then it will take a huge time to complete the data transferring process.

ERP Software

There is a range of software that help to implement ERP systems within your organization.


The original  MRP  was a more premature computer-based process of enhancing productivity within an industry. The system solely relies on collecting specific sets of data and analyzing them.

MRP II, the successor of MRP I, holds the same core scheduling tools and inventory management but adds functionalities like- forecast demand, managing capacity, increasing quality, accounting, financial planning, etc.

Ultimately, Here is ERP, a system that includes all features that MRP II also has additional 7 features that MRP II doesn’t have. ERP_ is a very modern and advanced successor of MRP II.

Here is a table that compares the features of MRP, MRP II, and ERP:

ERP PDF Download

Click here to download ERP PDF>>>

Related Topics

Material requirement planning (mrp i).

Material Requirements Planning (MRP) is a basic digitally driven supply planning technique to help manage inventory. An MRP system enriches production process efficiency through proper analysis of needed materials and just-in-time delivery. Read More>>>

Manufacturing Resource Planning (MRP II)

Manufacturing Resource Planning (MRP II) is a practice for the effectual planning of all manufacturing resources of an enterprise. It allows manufacturers to invent a detailed production schedule for the future that minimizes expenses and maximizes the utilization of available resources. Read more>>>

Inventory Management

Inventory  Management  can be described as a systematic process of ordering, storing, and utilizing a company’s inventory. In business terms, inventory management represents the right stock, at the right levels, in the right place, at the right moment, and at the right price. Read more>>>

Supply Chain Management

Supply chain  management  is actually “Design, planning, implementation, managing, and monitoring of supply chain actions to create net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and estimating performance globally“. Read More>>>

Human Resource Management

Human resource management is the administrative function that handles all the issues related to the people in an organization. That contains but is not limited to compensation, recruitment, and hiring, operation management, organization growth, safety, wellness, benefits, employee motivation, communication, policy administration, and training. Read More>>>

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Benefits of ERP: 10 Advantages and 5 Disadvantages of Enterprise Resource Planning

Alexander Roznovsky/Technical Writer

Running an effective enterprise requires experience, skills, and business acumen, but most of all – wise management of business processes, and use of advantages of enterprise resource planning. The competitive nature of modern markets forces entrepreneurs to seize every available opportunity, including technological advances, to maximize efficiency and stay ahead of the rivals.

ERP systems have long since established their dominance in the field of software solutions for business. This article will summarize the reason for this phenomenon by detailing the ERP benefits as well as answering the reasonable question “ what are the disadvantages of erp? ”

Advantages of ERP

Diagram showing the advantages of ERP

1. Higher management performance

ERP solutions serve as a data center that establishes links between all aspects of enterprise activities that require management, including human resources, production, sales, customer support, inventory, and supply. With the help of computer technologies, ERP software enables automatic data handling in the fastest and most effective way.

As a primary advantage, enterprise resource planning solutions greatly reduce the paperwork and the need for manual data input. This benefit results in a significantly smaller chance of human errors that can disrupt the production flow. In addition, there is no need to convert data stored on paper into a digital format, which allows to direct respective human resources elsewhere.

2. Better accuracy and availability of information

This is the core perk that, one way or another, influences on all the rest of enterprise resource planning advantages presented in this list. Advanced ERP systems enable effective and centralized collection, processing, and storage of information on production, sales, supplies or customers, for example. Thus, a single data system is used and maintained instead of a number of separate databases that need regular checks and synchronization to remove obsolete or duplicate records.

The increased quality of all kinds of internal data, combined with its easy availability to the staff in any relevant department, is an invaluable feat that leads to further performance optimization on all levels of the enterprise. Particularly, supply chain and inventory management is the activity that benefits the most from ERP implementation .

3. Improved coordination

The unified system that contains all business-related data improves cooperation between enterprise branches or departments. ERP software reduces the communication delays across the whole company, enhancing its efficiency. This is especially beneficial if a company has a distributed network of affiliates in several states or even on different continents.

4. Precise planning

The convenient access to the bulk of business information greatly facilitates its analysis in order to plan a further development course. The company’s management staff and business analysts can use the aggregated data more effectively to devise new strategies or suggest improvements to the existing one.

5. Enhanced reports

As a result of reduced paperwork and improved communication among departments, ERP software offers the convenient environment for quick and easy submitting all kinds of reports: from financial to inventory, from customer behavior to technical maintenance, etc.

6. Scalability and flexibility

Another inherent benefit of ERP software is determined by its modular structure that allows adjusting its scale according to current needs and conditions. Thanks to this feature, a resource planning system easily adapts to expansion or reduction of the company on every level.

Even the most trivial changes in the company structure and operation, such as the appearance of new products, workers, production facilities, suppliers, departments, etc. demand high flexibility of ERP solutions. Whether the growth involves production increase, inventory extension, addition of new functions, services or users, ERP systems can handle all these changes and much more.

7. Cost-effectiveness

As a result of reduced paperwork and optimization of daily routines, most of all – decrease of repetitive tasks, ERP systems allow cutting costs on administrative needs. Besides, resource planning solutions greatly speed up business operations that involve various information requests and approvals, such as logistics, stock and supply management, and others.

8. Easier access to management systems

According to specific needs in the context of resource planning, ERP systems may be implemented as web or mobile applications enhanced with cloud technologies. This way, they can run on smartphones, laptops, or other portable devices and can be accessed anytime and from almost any location.

9. Improved customer service

Another practical benefit of modern ERP software is the optimization of customer relationship management . A centralized data storage accumulates all necessary information on sales and clientele, which makes it easier for sale managers and customer support staff to communicate with clients and reduces the delay before reacting to customers’ requests.

Faster access to customer histories with enhanced accuracy also adds to other benefits listed here. For example, accurately collected and analyzed data on customer behavior patterns may lead to strategy optimizations, or more precise predictions of demand that must be satisfied accordingly and in proper time.

10. Better competitiveness on the market

This last benefit is in fact the summary of all the aforementioned advantages relayed in the perspective of business profits. The point is that ERP systems give the most needed competitive advantage to the enterprise, an extra device to outperform the rivals. While some companies stick to time-proven methods or simply cannot afford ERP solutions, others enhance their businesses with technological advances and reap the profits.

Disadvantages of ERP

The benefits of ERP solutions are undeniable; yet, there are several drawbacks that must be examined before trying to implement such enterprise resource planning systems in a particular business company. If a business owner fails to overcome and negate these disadvantages, an ERP solution would lack efficiency or even would be unfeasible or meaningless.

Disadvantages of ERP diagram

1. Large cost of licensing and development

ERP solutions are very complex, and their development is a difficult and accordingly pricy process. Building a resource planning system according to customer’s specifications requires an experienced and numerous team with a high level of expertise. High skills demand high wages per hour, so the resulting price of a custom-made solution may be quite hefty.

Ready-made ERP systems are faster options, though the licensing costs are also rather steep. The lower prices of ready solutions also involve worse flexibility, longer customization periods, possible maintenance and security risks, or even incompatibility with the company processes and business needs.

2. High costs to deploy and maintain

If you think that the prices of ERP systems are too high, there are some bad news for you. The implementation and maintenance of such solutions involve even larger expenditures and require hiring additional tech staff. As for ready-made solutions, they need regular updates that may involve additional expenses. However, remember that these investments will eventually pay off thanks to improved efficiency of the whole enterprise.

3. Requires training and practice

The complexity of ERP software brings additional requirements to the staff who use it. Learning at least the basics of a resource planning system may take considerable time and effort, and requires significantly more to master all its functionality.

Another related drawback is that when experienced users of an ERP system leave the company, the newcomers who fill their positions must spend a varied amount of time to learn it from scratch instead of starting work right away. However, you may facilitate the learning process by providing a sufficient amount of manuals and training programs beforehand.

4. Requires tweaking

Successful implementation of ERP software requires thorough and precise adjustment, from extensive customization to fine-tuning. Both ready-to-use solutions and custom-made systems need to be adjusted to the structure of a particular enterprise on all levels of management.

5. It takes time to realize its full potential

As you can see from the previous drawbacks, EPR systems require quite some time to be used with maximum effectiveness. In addition to the lengthy development process, there are stages of deployment, system customization, initial data input, staff training and getting accustomed, each involving a certain delay.

As you can see from the article and accompanying infographics, ERP systems are not all-purpose solutions that guarantee 100% success. Instead, they have a number of advantages and disadvantages that must be taken into account while considering the necessity and profitability of employing such systems.

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Shayur Maharaj

As a marketing analyst for an SaaS company I have to admit that ERP are very beneficial for many companies. Thanks for sharing

Kate Valihura

Thank you for the comment, Shayur! Check our latest articles for another portion of the content you may find valuable. And if you ever think of a topic you'd like to read more about, don't hesitate to drop us a line!

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Advantages of Enterprise Resource Planning

Choosing whether or not your business should take Advantages of Enterprise Resource Planning (ERP) software can be a daunting decision. If the useful program’s implementation is for the first time ever, it will be a challenging task. One may think it is possible to operate without ERP software. But if someone wants to see a good change in business and experience overall growth, it is essential to implement it.

ERP software is one of the software systems that incorporate customer relationship management, accounting, and core HR, and supply chain management capabilities in one software package. Because of the sophistication and number of features available through the ERP software, large companies have generally implemented it.

Advantages of Enterprise Resource Planning importance revolves around what they can do for any company. ERP handles multiple corporate processes by streamlining and automating day-to-day business activities. The program enables a leaner and more efficient operation and offers a full, 360 view into its ins and outs. Companies can increase user efficiency and productivity with the apps, being agile, which improves customer service.

Let’s look at the advantages of enterprise resource planning identified by companies after implementation.

Competitive advantage.

It is relevant that ERP software needs a significant investment, but there is also an even higher cost. While some industries choose to adhere to the tried and tested pasts practices, others are finding innovations in technology. Users can see changes across multiple departments, with so many advantages that ERP offers. Manufacturers can’t afford to delay an ERP implementation as their competitors invest in ERP and start reaping the benefits.

Enhanced System Effectiveness

The ERP program removes unnecessary procedures and significantly decreases the need to enter information manually. It not only increases user efficiency but also reduces the risk of incorrect data that could result in costly business errors. Implementing an ERP program would also boost day-to-day business operations by streamlining business processes. It is one of the most significant advantages of enterprise resource planning.

Specific Forecasting

ERP software offers the customers and managers; in particular, the information they need to make more accurate forecasts. This helps tech users, and companies as a whole, think ahead and prepare appropriately. With better forecasting, companies can efficiently reduce operating costs, save resources, and be a more productive organization overall.

Collaboration with Department

No one wants to run a siloed company with each department operating separately from each other. Departmental collaboration is a critical and often necessary part of the business, especially since business projects often involve more than just one department. With the data entered in the ERP platform being structured and reliable, there is no reason why teams can’t work together whenever appropriate. The software also focuses on almost every aspect of a company, thus naturally promoting interdepartmental, collaborative efforts. The advantages of enterprise resource planning are that it updates real-time, reliability to connect, exchange information, and use it.

[Also read: Enterprise Mobility ]

Scalable Resource

Structured ERP systems allow the introduction of new users and functions to expand the initially implemented solution over time. If a company is large or small, ERP raises with it, being able to absorb new users and new rounds of data once your company is ready to expand.

Interconnected Information

ERP software serves as a central center for all the essential details that the organizations need to manage daily operating processes. No more data-spreading problems through different databases; all information will be processed in a single location. Know your customers in one place, their orders, and your inventory.

Cost Savings

Everyone wants to be careful about their finances for any company and avoid making expensive mistakes that could potentially damage the company. ERP software lowers administrative and operating costs with one source of reliable and real-time information. It enables companies to spend resources in other and much-needed areas.

Streamlined Processes

As companies expand their operations to become more complex, which inevitably increases the potential to make expensive mistakes? ERP improves performance and productivity by allowing users to manage complex systems, eliminating re-entry of data, and boost functions such as production, order fulfillment, and distribution.

The advantages of enterprise resource planning include concentrating on customers and offering delivery models that can provide the same incentives. The ERP software’s adaptability is essential, as it improves efficiency and makes knowledge available wherever you are.

Customized Reporting

ERP software helps make reporting faster and more tailor-made, suited for all the needs. With improved reporting capabilities, the company can more effectively respond to complex data requests. This improves productivity, completes processes faster, and helps to close projects without intermittent long wait times.

Enhanced Productivity

Through automating repetitive procedures, users get more flexibility to focus on other time-sensitive projects and activities that may require more attention and time. Also, because the solution has been developed for ease of use, users should function more efficiently.

Regulatory Compliance

One benefit of ERP software, which sometimes goes unnoticed, is how it fits well with industry regulatory enforcement. Powerful ERP systems are building to keep track of the industry regulations and control enforcement changes.

Flexible Systems

Modern systems like ERP applications are robust, versatile, and configurable. They’re not a one-size-fits-all solution but can be custom-made to a business’s particular needs. ERP software will adapt to a growing business’ ever-changing needs, meaning you don’t have to buy a new solution as your needs change or your company expands.

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