Benefits And Challenges Of Enterprise Resource Planning

erp

The benefits of implementing Enterprise Resource Planning (ERP) software in an organization’s business operations outweigh the challenges. ERP is a suite of software technologies designed to automate routine business tasks, unify interactions between departments, simplify business processes, and centralize data access. Both on-premise and cloud-based ERP systems are available. ERP systems can be a Software as a Service (SaaS). This is a suite of cloud-based applications with a centralized database.

Benefits Of Enterprise Resource Planning

Smart Business Operations

Although Implementing an ERP system in an organization can be costly at first, it will produce significant advantages with the improvements of procedural efficiency and cost savings. It will unify disparate business operations and centralize data access that will make the business smarter, increasing both revenue and employee satisfaction.

Total Data Accessibility

Centralizing the business data will make it completely visible and easily accessible by all departments and the senior management.

Easy Department Transactions

ERP systems are a single source of data easily generating reports and data analytics. Departments can easily review data and compare reports without the office barriers of transmitted spreadsheets and email communication.

Modular Capabilities

Because of its modular design, ERP systems can be implemented according to business needs. A company can deploy only what components work best while omitting the remainder.

Reduced Operational Costs

When properly implemented, ERP systems can eliminate the routine business operations and repetitive manual functions. By doing so, ERP systems can reduce operational costs by 23% and overall administrative costs by 22%. Those are significant savings over time.

Improved Customer Satisfaction

A Priority of any business should be to gain and retain customers. With the efficiency of ERP centralized databases and streamlined processes, employees are freed up to give better attention to the customers. In the end, customer satisfaction is ensured.

Easy Collaboration

With the key advantage of centralized databases, coworkers can easily collaborate. The silos of disparate departments are eliminated. ERP provides on-demand access to the entire organization’s data and real-time updates and reports.

Optimum Operations

Best practices guide the development of most ERP systems. Combined further with a company’s own best practices, smart, standardized, and consistent business results will follow.

Scalability

Successful companies need to be scalable to keep up with growth. Growth can be an increased customer base, new products and services, or new procedures. Having the right ERP system in place accommodates a smooth scalability.

Challenges Of Enterprise Resource Planning

Expensive Purchase Costs

Small to medium businesses especially will find the price and the licensing high. Other solutions might be to obtain a cloud ERP system as a SaaS, or an open source ERP software.

Deployment And Maintenance Costs

Additionally, there will an additional a cost for manpower to help deploy the ERP system and to help maintain the system.

Inept Customization

ERP systems are customizable but complex. Without adequate expertise, time, and money, there will be usage deficiencies. Either not all capabilities are leveraged, or the system is not fully deployed. Best practices results will suffer.

Conclusion

Both small and large businesses can gain significant time and costs savings with the improved efficiencies deriving from the right ERP system. Both on-prem and cloud-based ERP solutions can prove effective. There are challenges, and the risks should be weighed. But the main in-house objectives of eliminating manual routine tasks, improving communication between departments, and centralizing the data store will be catalysts for growth and revenue increase.

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