Advantages & Disadvantages of ERP Systems

Advantages & Disadvantages of ERP Systems

In today’s fast-paced marketplace, more business leaders are discovering the advantages of ERP systems over disparate, specialty software. However, ERP systems can also have a downside. In order to determine whether ERP is the right choice for your unique business needs, several factors must be considered.

ERP Solutions – Advantages

There are many ERP solutions in the marketplace today and they are being used by businesses of all sizes and in nearly every industry sector. The choice to use a single, integrated ERP solution—instead of multiple, disconnected systems and applications—is a game-changer for many companies. Expanded functionality and efficiencies, combined with modern cloud-based ERP affordability, enable smaller businesses to compete more effectively with even with larger competitors. Below, we discuss several notable benefits of ERP systems:

1. Time-saving integration and automation: A centralized management solution streamlines and strengthens data management. Data is easily entered, accessed and analyzed when it’s within easy reach. Workflows, electronic signatures and other audit features save time and protect the integrity of your data.
2. Business intelligence: Many ERP systems offer powerful business intelligence (BI) features ranging from role-tailored dashboards, advanced analytics, innovative reporting features, and other ways to easily highlight and visualize data.
3. Connect people, processes and data: Integrated ERP solutions deliver key performance indicators (KPIs) and metrics to leaders. Armed with reliable, real-time data, managers and business leaders can identify new ways to grow the business, improve operations, and work efficiently, improving both productivity and profitability.
4. Increase efficiencies: ERP systems offer built-in and customizable workflows to streamline common, daily tasks. These automations reduce redundant tasks, optimize labor and resource use, and improve productivity. ERP also enables mobility so employees can enter, access and use data whether working from the office or in the field.
5. Strengthen strategic decision-making: Quick access to up-to-the-minute data empowers managers and executives to uncover strategic ways to lower costs, reduce wasteful spending, and protect profit margins through changing marketplace trends and customer behaviors.
6. Improve customer experience: Centralizing data makes it easier for employees to reach when it’s needed. Sales and customer services teams can access product, inventory and customer information on the spot. Responding quickly to customer needs goes a long way toward improving customer satisfaction and their overall experience with your company.

ERP Solutions – Disadvantages

While it seems clear that ERP systems deliver powerful benefits to businesses, there can also be limitations to the technology. It’s important to understand and weigh the advantages and disadvantages of ERP systems before making big changes within your company.  

1. ERP doesn’t solve policy problems: Inefficient policies and processes can’t be solved by technology alone. Redundant processes, too many layers of managerial oversite, and bottlenecks need to be corrected before new technology is introduced.
2. Choosing the wrong ERP system: There are many different ERP solutions in the marketplace today. Each offer different features and functions, some can be customized to meet unique needs and others are already tailored for common industry sectors. Choosing too big of a system or skimping on one will cause problems in the long run. It’s important to work with a reputable and knowledgeable solutions provider to choose the right ERP system for your unique requirements.
3. User adoption is critical: Deploying ERP offers no guarantee that your people will use the system or use it properly. Training, buy-in and support from the top down will improve user acceptance and user adoption, ensuring you get the best returns from your ERP investment.

Are ERP Benefits Worth It?

ERP systems deliver many benefits, but also come with clear advantages and disadvantages. It’s important to know what is ahead of you when you before you consider making the move to a new or upgraded ERP solution—and that can vary from business to business. We encourage you to work with a trusted solutions partner early in the ERP process to explore all of your options and get answers to the tough questions.

By The Wolcott Group, providers of RealSTEEL, a ‘real world’ ERP solution for the steel and metals industry