ERP Systems: Advantages and Disadvantages

This assignment delves into the realm of Enterprise Resource Planning (ERP) systems, examining both their advantages and disadvantages. It explores the multifaceted impacts of ERP implementation on businesses, highlighting the potential benefits such as improved efficiency, streamlined processes, and enhanced data visibility. Conversely, it also sheds light on the challenges associated with ERP adoption, including high implementation costs, complex integration processes, and potential resistance from employees. The analysis aims to provide a balanced perspective on the complexities of ERP systems, enabling readers to make informed decisions regarding their implementation.

Running Head: Enterprise Resource Planning
Enterprise Resource Planning

Enterprise Resource Planning 1
Enterprise Resource Planning
ERP (Enterprise Resource Planning) is a process through which the company manages and
integrates the important parts of its business. In other words, it can be said that ERP helps the
company to combine the business activities with the software (Leon, 2014). The ERP works as a
central nervous system of the business, ERP module consists of the planning, inventory,
distribution, control, finance, HR, and accounting. Nowadays, some of the medium and large
organizations use ERP so that they can fulfill their Information system requirements. To
implement the ERP there is set format that is used by the organization. These implementations of
the process lead to the success or the failure of the process (pitfalls of switching to ERP) (Beal,
2017). The companies who are implementing the process they might find the advantages and the
disadvantages of the ERP system in their organization.
The ERP software assembles the information about the business activity and various divisions of
the business and then makes the information available to the other parts of the business where the
information can be effectively used by the company. The ERP is not only used by the local
companies but it is also used by the international companies because there are various benefits of
implementing the ERP system in the companies (Ganore, 2013). These companies make use of
different ERP software such as Orcale+NetSuite, Dynamics, SAP, SAP ERP and much other
software. Oracle+ NetSuite ERP provides the effective solution for the organizations. This
Oracle ERP is used by the company Oracle Company and the company acquires the NetSuite
officially (Oracle+ NetSuite, 2017).
The Microsoft Company is making use of the Dynamics ERP which helps the business to form
the decisions with the confidence. This ERP helps the Microsoft for the business processes; the

Enterprise Resource Planning 2
ERP product is ranging from Dynamics GP for SMBs to Dynamics 365. The SAP software is
used by the business to manage the sales, Finance Accounting and the CRM. The SAP software
of the ERP is used by the company UNEECOPS, this ERP helps the company to make the huge
profit (Seethamraju, 2015). There is software SAP ERP which is designed for the middle and the
large organization. The SAP ERP provides the support for the financial, human resources,
operations and the corporate service. These are the some of the examples of the companies who
are making use of the ERP in the business. Small companies like IOCL, GACL, IPCL, Reliance
and many other companies are using the ERP software in their business (Magal, & Word, 2013).
The successful implementation of the ERP solution is must for the company to avoid the pitfalls.
To implement the ERP in the business company follows different steps such as:-
 Identification of the problems- The ERP software provides the resolution to many issues
faced by the company. The key performance indicators will help the company to analyze
the need for the ERP software in the company.
 Define scope/team- There are many objectives to bring the ERP, the cost of the ERP vary
from the objective. According to the panorama study, 61.1% of the ERP implementation
takes longer than expected and approximately 74.1% of ERP project exceed budget.
Depending on budget and core necessity, the demand for the ERP list is formed which
helps the company in achieving a smooth and hurdle less ERP implementation
(Schniederjans, & Yadav, 2013).
 Brainstorm/ Evaluate the options- Evaluation of the ERP options is very important for the
company, the company will evaluate which ERP software is best for the company
considering the needs of the company. The needs include the current as well as the future
needs of the company. The company needs to brainstorm the ERP vendors or the

Enterprise Resource Planning 3
consultants so that they can bring the best system in the company (Panayiotou, Gayialis,
Evangelopoulos, & Katimertzoglou, 2015).
 Data migration- Once the company identifies the ERP that the company is going to
implement in the company. The next step for the company is identifying the important
data which company is looking to transfer in the software. The company makes sure that
they can retrieve the data whenever they need the data.
 Check infrastructure- After the brainstorming among the management and the vendor, the
requisite infrastructure is installed. The infrastructure on which the company is going to
run the software should have the scope of scalability and the options to update the
software.
 Customization- ERP software is going to be designed according to the needs of the
company. Implementing the ERP solution in the company is a big investment which
involves the pooling of the resources (Nwankpa, & Roumani, 2014). The company
continuously maintain the tabs on the ERP software.
 Change management- The ERP software can bring the changes in the working style and
also affects the operations of the company. Once the changes are accepted by the
employees in the organization, the employee's work will be easier because ERP can
provide the best result.
 Technology and knowledge transfer- The ERP implementation fail sometimes, this
occurs because there is lack of customization for non-optimal software utilization. In the
implementation of the ERP software, there is a need for the training. The information
technology management of the company should ensure that the proper vendor detailing is

Enterprise Resource Planning 4
done (Nwankpa, & Roumani, 2014). These all aspects are responsible for the successful
implementation of the ERP system in the company.
 Project management and testing- After evaluating all the options, selecting the best-suited
options and providing training to employees is the final aspect of the implementation of
the ERP system. Testing is one of the important stages which take care of the system and
the user acceptance testing.
 Final touch and on-going support- The ERP software will go live, once the IT team of the
company will check the ERP software implementation. Now the ERP software provides
the help to the company to avoid the systematic glitches.
 Implementing an ERP in the business is filled with the promise and danger for the
company. The benefit of implementing the ERP in the business also brings the pitfalls.
Some of the pitfalls of the ERP system contain the wrong motive for ERP; the choice of
the ERP software is done by the company with the wrong motive. Many companies
implement the ERP software in their organization because they want to clean up their
disordered way of operations. This will end with the disaster and to avoid the pitfalls the
company should remove the procedures to the reasonable standards so that they can think
for an ERP (Panayiotou, Gayialis, Evangelopoulos, & Katimertzoglou, 2015).
Underestimating the efforts is another pitfall of the ERP, the implementation of the ERP in the
company requires dealing with the complex procedure. The preparation of the implementation of
the ERP consumes the time and work and the underestimation of the required efforts will lead to
the failure of the implementation of the ERP system of the company. Underestimating the cost is
considered as the pitfalls of the ERP; the offer given by the supplier of the ERP seems to be very
clear but may cause conflict. The company should consider the cost components that might

Enterprise Resource Planning 5
create an impact on the contract of the company. For instance- the company didn’t analysis the
cost and later leads to the failure because of robust cost/ benefit analysis before selection and
implementation.
Choosing the wrong ERP is one of the most crucial pitfalls that may lead tote problems for a
company. The small and the medium-sized business should make sure that they avoid the use of
big ERP system. Before selecting the ERP system for the company they should consider their
requirement and the budget. For instance, a small sized company is working on project-oriented
ERPs and production-line oriented ERPs (Khot, Mudur, Thorat, & Doulatramani, 2017). The
company should make sure that they are choosing the system that forms the alignment with the
type of business.
The implementation of the ERPs system in the companies leads to certain benefits to the
company. The ERP is used to meet their information system requirements. Each and every
company is implementing the ERP system in their originations because they are getting some
advantages with the implementation of the software. The main advantage that the company is
getting includes the improvement in the productivity of the operations of the company. The
proper implementation of the ERP software in the organization will help the company in
reducing the wastage of the material and the time (Issar, & Navon, 2016). It provided the better
organizational control in the large companies because these companies maintain the volume of
information along with this, the system of the ERP avoid the duplication of the information that
can affect the working of the company.
The company gets the advantages of the low cost; the implementation of ERP is lower to the cost
of the IT. The Unified ERP system can help the companies to lower the IT expenses that include
the management/administration staff, support, infrastructure needs, and the application licensing.

Enterprise Resource Planning 6
The use of the single system will reduce the cost of the training requirements to the end-users.
The ERP implementation in the organization provide the visibility, ERP in business makes the
data easily available and accessible for the different department and the manager in the
organization (Duan, Faker, Fesak, & Stuart, 2013). This visibility offers the company more
coherent workflows and allows inter-departmental processes that are easy for tracking the
maximum efficiency of the company.
ERP leads to the improved reporting and planning system in the organization. Implementing the
ERP in the organization shows that there is a presence of the unified reporting system for each
process and departments. The single resource in the organization leads to the ready generation of
the report and the analytics any time. The software can provide the help to the manager of the
company in comparing the functions of the different departments without any hassle of the
various spreadsheets and the e-mails (Kanellou, & Spathis, 2013). Every system in the
organization leads to the advantages but along with the advantages certain time the company has
to bear the disadvantage. The biggest disadvantage of the ERP system to the small and the
medium organization is the cost of the implementation of ERP in an organisation. The cost is
high because the implementation of the ERP in the organization includes the process of planning,
testing, customizing the software and the configuring.
Most of the companies are not able to implement the system of ERP in their organization
because the cost of implementation is not affordable for the company. The cost of implementing
the ERP system in the company is not the only cost that is faced by the company. The company
has to spend the amount of manpower and time that is required to a successful implementation of
the ERP system in the company. The company needs to provide the training to the employees so
that they can implement the system easily. The ERP system will lead to the retentions of the

Enterprise Resource Planning 7
employees or the resistance of the employees which leads to the disadvantage for the company.
The evaluation of the ERP implementation needs to be done in the right manner if the step of the
implementation is not done properly and technical that it may lead to the failure (Jain, & Sharma,
2016).
The paper shows the ERP system process and the ERP implementation in the organization. An
ERP system is a useful tool for each and every company and the core procedures can be
supported by software. There are important benefits to an implementing an ERP but there are
some of the pitfalls that can be faced by the company. The company will get the benefits of
implementing the ERP system but along with the benefits of the company have to face the
disadvantages of the company.

Enterprise Resource Planning 8
References
Beal, V., (2017). ERP - enterprise resource planning. Viewed on 13th November 2017,
http://www.webopedia.com/TERM/E/ERP.html
Duan, J., Faker, P., Fesak, A., & Stuart, T. (2013). Benefits and drawbacks of cloud-based
versus traditional ERP systems. Proceedings of the 2012-13 course on Advanced
Resource Planning.
Ganore. (2013). Basic Modules of ERP System. Viewed on 13th November 2017,
https://www.esds.co.in/blog/basic-modules-of-erp-system/#sthash.IxU4daxB.wZCmS
oHs.dpbs
Issar, G., & Navon, L. R. (2016). Enterprise Resource Planning (ERP). In Operational
Excellence (pp. 33-36). Springer International Publishing.
Jain, D., & Sharma, Y. (2016). Cloud computing with ERP-A push business towards higher
efficiency.
Kanellou, A., & Spathis, C. (2013). Accounting benefits and satisfaction in an ERP
environment. International Journal of Accounting Information Systems, 14(3), 209-
234.
Khot, N., Mudur, K., Thorat, O., & Doulatramani, Y. (2017). Information Intendance System
on Cloud.
Leon, A. (2014). Enterprise resource planning. McGraw-Hill Education.

Enterprise Resource Planning 9
Lorenc, A., & Szkoda, M. (2015, May). Customer logistic service in the automotive industry
with the use of the SAP ERP system. In Advanced Logistics and Transport (ICALT),
2015 4th International Conference on (pp. 18-23). IEEE.
Magal, S. R., & Word, J. B. (2013). Business Process Integration with SAP ERP. Epistemy
Press LLC.
Ng, C., & Wang, E. (2014). An exploratory study of the emergent theory for enterprise
resource planning upgrade decision. ACIS.
Nwankpa, J., & Roumani, Y. (2014). Understanding the link between organizational learning
capability and ERP system usage: An empirical examination. Computers in Human
Behavior, 33, 224-234.
Oracle+ NetSuite. (2017). The #1 Cloud ERP. Viewed on 13th November 2017,
http://www.netsuite.com/portal/home.shtml
Panayiotou, N. A., Gayialis, S. P., Evangelopoulos, N. P., & Katimertzoglou, P. K. (2015). A
business process modeling-enabled requirements engineering framework for ERP
implementation. Business Process Management Journal, 21(3), 628-664.
Schniederjans, D., & Yadav, S. (2013). Successful ERP implementation: an integrative
model. Business Process Management Journal, 19(2), 364-398.
Seethamraju, R. (2015). Adoption of software as a service (SaaS) enterprise resource
planning (ERP) systems in small and medium sized enterprises (SMEs). Information
systems frontiers, 17(3), 475-492.

Enterprise Resource Planning 10