ERP promises to improve efficiency, revenue and customer service. What business doesn’t need and want these benefits? It might be tempting to think that cost is the only thing standing between a company and an ERP solution, but the fact is that ERP implementation is a complex endeavor with many pros and cons.
ERP is all about enabling businesses to efficiently and effectively manage daily operations. If a company is doing that now, without an ERP, then they don’t need one. However, those struggling to manage and coalesce information from different departments and databases, and those finding that these processes are getting in the way of key business functions, will likely benefit from an ERP system.
ERP systems require proper planning, selection, implementation and training to achieve benefits and ROI, which is why they are not ideal for every business. Here are the primary Pros and Cons of ERPs.
All these Cons can be overcome by better understanding a company’s strengths and weaknesses, but if a company will struggle with these issues, additional considerations need to be taken before launching an ERP solution.
Change Management -- Workplace culture can make or break ERP implementation and demands can seem steep in firms with legacy mindsets where change is seen as negative.
Time Consumption -- A company-wide deployment represents a major investment in time, effort and capital. Deployment also can lead to production disruption as employees go through a learning process to adjust to the new system.
Flexibility Required -- No software solution, that is not entirely customized, is going to be 100% ideal. There are times where process may have to be modified slightly to meet the software. Engineers and managers need to acknowledge and accept this reality. The organization itself requires flexibility as well. In companies where every department is a stand-alone silo -- with separate missions, resources, and chain of command -- ERP systems require integration that may be significantly challenging.
Non-Instant ROI -- Companies with difficult cash flow issues must understand that the full benefits of a company-wide system, especially ROI benefits, will not be instantaneous. In fact, performance can sometimes temporarily decline after the initial implementation as a result of employees adjusting to the new system.
Most companies considering ERP see that the benefits far outweigh the challenges. Plus, having the right consultant and software provider as a partner means having support through every step.
Coming Together -- Yes. The culture must shift and flexibility is required. The good news: successful ERP implementation will help the culture shift and departments become more flexible. ERP gets everyone on the same page and working together for the benefit of operations as a whole and this means better efficiency, lower cost and better customer service. So while ERP is often a catalyst for difficult change, it also makes necessary change happen when it’s most needed.
Efficiency for All -- Duplication is eliminated, processes are streamlined and employees are ultimately freed up for better use of their skills and time. This also leads to decreased inventory, reduced costs and increased productivity and response time. Everyone wins when they work more efficiently -- employees, owners and customers.
Better Information & Better Access -- Consistent information, in one place, streamlines process, but also makes for better decisions company wide. Debates about the validity of projects can be argued from data points instead of intuition or poor estimates. This increases growth and stability at a firm, which lets the company develop and reach new objectives.
ROI = Profits -- Better teamwork, streamlined efficient processes and access to accurate data will all ensure higher profits . . . IF the ERP is optimized and challenges are faced head on. Optimizing ROI depends on two key factors: effective implementation and accurate measurement of objective metrics. If risk analysis is done and a business process model is created, most ERP initiatives will generate very positive operational and financial results.
Considering the Pros and Cons of ERP for your business? Give us a call at (440) 498-9920. Our Accounting Software division represents multiple ERP Software Solutions allowing us to assess your software needs and match the "right" software to your business. Being a full service solutions provider offers you peace of mind, knowing that every aspect of your investment will meet your expectations. Our team will implement, train and support your company every step of the way.
Mary Jo O'Neill