The Pros & Cons Of ERP: What You Should Know Before Investing In It
It is not always easy to stand out from competitors, but investing in a new enterprise resource planning software can help you. The best ERP solutions usually provide multiple functions, including traceability, quality control, and formulas management. However, due to the high cost, the chaotic selection process, the risk of failure, and the difficulty when implementation, enterprises of any size are afraid to put ERP software into operation.
In this article, we will tell you exactly what the pros and cons of purchasing an ERP solution are so that you’ll be able to make confident decisions. Without further ado, let’s jump right in!
The simple definition of ERP
You may have heard of ERP several times, but do you know what it is and how it works?
ERP software is a tool that is developed to centralize and simplify the companies’ database. Considering the convenience of customers when designing, ERP makes daily tasks simpler and improves business processes to a new level.
Because the ERP solution optimizes operations, it frees up employees’ time and allows them to focus on other critical business tasks. Consequently, the profit margins have increased while the communication of all corners in the company is also improving.
Although there are various solutions to consider, ERP is different from others because it involves many business aspects, including analysis, accounting, customer relationship management, reporting, inventory management, production, human resources, etc.
ERP technology has brought a new storm to the world. Small and medium-sized enterprises are turning to ERP software due to the benefits it brings.
Businesses can concentrate IT costs on a single system
One of the benefits of investing in an ERP solution is that it allows you to focus all IT costs in one system while increasing business efficiency. When implementing multiple systems, you’ll have to spend resources on infrastructure, dedicated staff, support teams, and other resources. However, when investing in an ERP system, you only have to concentrate these costs on one solution.
Using solely ERP can also minimize training requirements, especially for the end-users, since they don’t have to learn and interact with other applications.
All data is easily accessible
In the past, it was difficult to get access to information in companies. But the table is turning now; buying an ERP solution can make a big difference. In particular, data migration will be more convenient than ever. Besides, critical data can be accessed at any time.
For example, managing inventory can be done regularly. You can also quickly check future shipments and current inventory that’s in transit without any problem.
Effective reporting and planning.
In addition to concentrating costs on one ERP system, you will also have a unified reporting system that can generate accurate reports and analyses when needed. Steadily, this allows your business to analyze and compare the function in different departments while avoiding the inconvenience of multiple emails.
The ERP module is very flexible, and most vendors provide various applications, and organizations can deploy them together as needed. Although some applications have been adjusted to stand alone, others allow you to integrate them with larger suites. These applications’ deployment is another advantage of ERP. There are two types of deployment: through the cloud or on-premise. It is critical to buy and install your choice’s physical software on every server and computer on-premise. In contrast, in a cloud-based system, the provider will process the software package outside the website.
Good Level efficiency
ERP is a popular tool that can help reduce the time and effort required by a business's department to deal with any issue. If appropriately implemented, ERP extends the manual process and reduces any redundant work in the long run by helping users steer through complex processes, avoid re-entering data, streamline the processes throughout.
Like any other system, ERP solutions also have some disadvantages that we think you should be aware of. Let’s have a look.
It costs money
Even though you can focus the IT cost on one solution, ERP is not cheap. Purchasing an SAP Business One and another standard system license, for example, will cost you a fortune. However, this problem can be solved by looking for open source ERP software.
Maintenance requires additional costs.
Besides expensive licenses, you’ll have to pay for the maintenance service, usually included in vendors’ packages. Successful implementation always includes hiring IT staff, training specialists, consultants, and skilled professionals. You shouldn’t ignore the importance of investing in extra hardware to support your software. New servers and other equipment are smart investments.
Complex customization process
We all know customizing software isn’t an easy task. It requires professional knowledge, financial resources, and of course, time.
For many companies, underestimating the number of resources required to complete the customization process is also a big mistake. Before starting the ERP system, plan out everything you need first. When you are ready, you can start customizing the solution without taking too much risk.
ERP may not be suitable for beginners.
Although ERP software offers many possibilities, we cannot deny that it is difficult to use, especially for beginners. The implementation phase is undoubtedly the most challenging stage, and correct training cannot be ignored. Role-based user training, a set of learning activities focused around the practical application of learned skills, is a decision you’ll never regret.
Data migration is challenging.
Aside from customization, data migration is another challenge for businesses. But this issue can be tackled by professionals whom you can depend on. Although the service may require additional costs, they are still worth it.