Limitations of an ERP System: Challenges and Recommendations

This article discusses the limitations of an ERP system, including policy limitations, inadequate training, and high implementation time. It also provides recommendations for developing a proper ERP system. The article is relevant for students studying enterprise resource planning and related courses.

Running head: LIMITATIONS OF AN ERP SYSTEM
LIMITATIONS OF AN ERP SYSTEM
Name of the Student
Name of the University
Author Note

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LIMITATIONS OF AN ERP SYSTEM
ERP system is used by multiple enterprises in order to manage the physical resources
like labour and supplies.
ERP system are implemented for following reasons:
 To develop new enterprise application (20%).
 To replace accounting software(15%).
 To replace home-grown system (16%).
 To replace out-of-date ERP software(49%).
ERP software Module
Generally, ERP system are consist of multiple enterprise software modules. This
modules are used according to the business requirement (van et al. 2014). Every ERP system
is constructed of a specific area of business process such as product marketing and
development.
Some of the most common ERP modules include those for product planning, material
purchasing, inventory control, distribution, accounting, marketing, finance and HR (Tabata et
al. 2013).
 Manage human resources and payroll
 Accounting and financial applications
 Standardize critical business procedures
 Facilitate better project planning
Limitations
The successful implementation of an ERP system is vast, expensive and thorny. It also
need enormous amount of time and commitment from the IT department of certain
organization (Van et al. 2015). The major limitations of the ERP system is followed:
 Policy Limitation
 Limited ongoing support
 Inadequate Training
 Expensive System
 Very High Implementation Time
 Degree of Customization

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LIMITATIONS OF AN ERP SYSTEM
Limitations of the ERP system
 Nestlé incurred high initial costs of purchasing software, consultant costs and
disrupting the work flow of its employees.
 Retraining of all employees with the new system became costly and time consuming
(Duan et al. 2013).
 The change of business roles and department boundaries created upheaval and
resistance to the new system.
Recommendation
These are the certain recommendation to develop a proper ERP system and bypass the
limitations.
 Chose appropriate ERP system.
 Provide trainings and practices.
 Proper monitoring and support.
 Proper Authorization.
Conclusion
After analyzing the limitations of ERP system. It can be concluded that the
developing process of ERP system is very critical. A precise implementation plan need to be
conducted before start the development process.
Questions audience may ask:
1. What is an ERP software vendor?
A: Enterprise resource planning (ERP) is business process management software that
allows an organization to use a system of integrated applications to manage the business and
automate many back office functions related to technology, services and human resources.
2. Difference between Bolt-on and integrated ERP system?
A: Bolt-on remains a bolt-on because it doesn’t integrate seamlessly with the core ERP
package. Where integrated ERP system matches the core system’s interface while
complementing its features.

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LIMITATIONS OF AN ERP SYSTEM