It is difficult to decide which technologies to integrate into a business and which to ignore. There can be a fine line between injecting innovation and growth into a business and causing heavy losses and failing projects.
This is the line of thinking when it comes to asking the question “is ERP software investment worth it?”
To reach an answer, along the way you will have to weigh up the strengths and weaknesses of implementing an enterprise resource planning system.
And fortunately for you, today we’re going to be highlighting some of these to hopefully put you in a better position to decide.
So without further ado, let us begin with some of the strengths of ERPs.
Strengths of ERPs
Total visibility. One of the biggest benefits of ERP is that it allows total access to important processes in a business. This is done by making data from every department simply to access for members of staff and senior management
As one example, you are able to monitor inventory levels on a daily basis using an ERP, including future consignments that are not yet received with the inventory in transit. If you know exactly where you stand as a company regarding inventory levels, then you’re able to control working capital on a more precise level.
Also, all of this data is centralized, easing collaboration between different groups and streamlining tasks. This wholistic approach gives more coherence to workflows and makes processes more easily tracked.
Enhanced reporting. Alongside better visibility is enhanced reporting capabilities. Using an ERP across departments means that the company has a single, unified reporting system for each and every process.
With a single source of data, ERPs can generate insightful analytics and corresponding reports. The data can give you the ability to compare functions across different departments – and can be done without the hassle of multiple and separate spreadsheets and emails.
Enhanced reporting. The benefits of ERP systems stretch to clients, too. That’s because client information is also streamlined and centralized, giving your sales team the ability to build better customer relationships rather than the burden of maintaining spreadsheets.
The ultimate goal of any business is to increase customer acquisition and retention. And through end-to-end tracking and insight provided through ERPs, you can offer better customer interaction through marketing automation until late-phase customer service.
Data security. One of the biggest advantages of using an ERP system is data security. And think about it, at the heart of ERP is data. It is shared across silos from all departments, from customer service and sales to business development and marketing. With an ERP, collaboration is enhanced. But this increases the importance of data security.
Controlling who has access to specific data and who can edit it is fundamental. Within an ERP there are built-in controls to strengthen the security of data. Whether it’s an on-premise ERP system or a cloud-based ERP system, your organization’s data receives a higher degree of security.
Better supply chain management. For those companies that deal with the physical moving of goods, an enterprise resource planning system strengthens supply chain management, and it strengthens it in multiple ways.
Ways such as shorter lead times and more on-time deliveries as well as the general improvement of the overall operation and success of the company. Via ERP platforms, supply chains are capable of becoming more and more responsive thanks to enhanced forecasting, procurement, and inventory management – even during these somewhat crazy and uncertain times.
Now, let’s move onto some of the weaknesses of ERPs.
Weaknesses of ERPs
Before you think there can be too much of a good thing, it’s just as important to consider the downsides and drawbacks of ERP systems. So let’s look at some of the weaknesses that are often associated with these systems.
The upfront cost. Many of the best and leading enterprise resource planning platforms are, as expected, quite expensive. Traditional systems such as SAP Business One, for example, is likely to set a company back five figures for a license.
Depending on the budget of the company, the cost is often cited as the largest disadvantage to acquiring an ERP system. Yet the chances are that if you’re a small to medium-sized business, the costs could be quite prohibitive.
Yet it’s not all doom and gloom, because there are alternatives, such as cloud-based solutions that typically run on a monthly subscription model.
The implementation & maintenance cost. Keep your wallet out because ERPs need regular care, love, and attention. And this costs money. In fact, the implementation process can cost up to four times as much as the upfront, licensing cost.
But these costs are simply part of the recognition that your company is either moving on up in the business world or that your strengthening your position in your industry.
This may also mean that your organization would need to hire additional staff or augment their team with specialists to get the best out of the tech.
Complexity. Because enterprise resource planning systems can achieve a lot of good and greatly benefit an organization, it can require complexity to provide the best capabilities. Having such a powerful system requires work to fulfil its potential.
Some businesses may find themselves with a system that is too big and complicated for their processes, leading in poor ROIs. This is why it’s important to ensure that those who are going to use it are trained and comfortable in its usage.
Customization. Despite being one of the best parts of enterprise resource planning systems, the customization process is comprehensive and thus can take quite a while to figure out. It takes time to customize a platform, but once it’s done and in place, the benefits are clear.
So keep in mind that the customization process is not something to overlook or be considered a second thought. It needs serious consideration and consensus among those who are going to be using it. The alternatives to this include going over budget, taking too much time, or simply ending up with an unfinished customized platform – and that would be a waste!
There you have it. The good and the bad of enterprise resource planning systems. Yet really, two of its weaknesses – the complexity and customization – are tied to its strengths is applied properly. After all, it is the complexity of ERPs that make them so effective, with the customization capabilities enhancing the user experience and navigability of the platform.