ERP stands for enterprise resource planning. ERP involves the integration of all processes in an enterprise to bring down the overhead costs and improve productivity.
Enterprise Resource Planning Software (ERP) enables companies to run their businesses more efficiently by providing goods and services at low prices, which in turn increases profits. In the past, ERP was considered a costly proposition for small and medium enterprises. However, with the passage of time and rising competitive forces, ERP has become cheaper and easy to use for midsize and large enterprises.
Enterprise Resource Planning Software Price
The reason behind the recent fall in the pricing of ERP systems is that many ERP vendors have failed to adopt the Six Sigma methodologies which focus on improving operational efficiencies.
Lack of cooperation and lack of sharing of knowledge among top vendors has led to severe competitive disadvantage. As a result, many ERP vendors have resorted to heavy-handed tactics to implement expensive ERP projects. To deal with this issue, U.S. manufacturing companies have decided to develop their own in-house ERP system which will reduce costs and increase efficiency. On the other hand, most European companies have decided to outsource ERP projects to third-party ERP vendors.
Components of an ERP System
ERP system is composed of different components. Enterprise Resource Planning or ERP includes ERP applications like ERP software, Customer Management Information Database (CIM), and Workflow Business Processes(WBS).
Integration and deployment of these ERP applications require a considerable amount of time and effort. In addition, deploying these business processes require frequent real-time monitoring and reporting in order to ensure the correct functioning of ERP applications. Without proper supervision or guidance, ERP can cause drastic changes in a company’s business processes and can even lead to drastic losses in the future.
ERP Software Consultants
The majority of the ERP Software packages being sold by many vendors and they try to consolidate the various disparate systems by installing a single ERP system.
Although a single ERP offers users some advantages like reduced training costs, simplified diagnostics, and streamlined decision making, it has several disadvantages as well.
ERP software system requires substantial additional resources for its implementation. It requires extensive planning and onboarding of employees who have to be trained and motivated for its implementation. Moreover, ERP implementation involves both financial and human resources which may not be available at all times. Its always best to choose the best ERP Consultants like Connected IT Consulting.
ERP Software Implementation
Another reason for ERP implementation resulting in disproportionate utilization of resources is an inefficient use of IT tools and weak communication links between the ERP system and the rest of the organization.
Communication features present in ERP implementation are either missing or unreliable due to a lack of suitable implementations in the past. Communication features like multi-user and multi-tiered control panels lead to ineffective utilization of IT resources and poor business performance.
ERP Software Solutions
ERP software solutions primarily aim at integrating the functional units of an enterprise like manufacturing, sales, and marketing, accounting, and human resource. Integration capabilities of ERP are either weak or non-existent and do not guarantee effective integration of the core business processes of any organization. ERP solutions cannot identify the real ERP activities and duplicate them.
ERP Key Processes
Enterprise Resource Planning software (ERP) can integrate the key processes of any organization but it cannot pinpoint and measure processes that are not part of the current ERP structure or those that may have become outdated due to lack of timely updating.
ERP solutions cannot provide a complete picture of any organization’s business performance. ERP software can integrate all the internal processes but it cannot forecast future business growth and determine what processes will bring in extra revenue or make up for decreasing market share. ERP system cannot predict the impact of new innovations and introduce new business processes.
Lack of accurate and up-to-date information
Lack of accurate and up-to-date information about the existing processes and about potential processes for improvement can lead to ineffective ERP implementation and faulty business analysis.
ERP software is very helpful in making decisions based on current and long-term information and it allows users to forecast future business prospects. But ERP implementation requires lots of investment from the owners and this can slow down business growth.
Information technology departments spend most of their time implementing ERP applications and also train IT, managers. Enterprise system software does not include the financial systems or inventory management systems that are implemented by the purchasing and inventory control sections of the ERP system. ERP implementation is quite expensive and it requires lots of training from the employees involved in this process.