The Advantages and Disadvantages of Enterprise Resource Planning Software
Enterprise Resource Planning (ERP) has evolved as a strategic management tool to handle and track business activities. Enterprise Resource Planning, more commonly called ERP, is the incorporated management of various business functions, often real-time and mediated by various technologies and software. ERP involves application development, customization, integration, and tracking of data in an integrated manner so that it can be accessed, analyzed, and made use of in different business operations. ERP also involves improvement of efficiency and control in business processes.
Enterprise Resource Planning software systems are designed to integrate with other applications such as management information systems, supply chains, human resources, distribution, manufacturing, and accounting. This enables an organization to make better use of the existing assets, and at the same time, cut costs and improve productivity.
Human Resources: Human resources include an entire team of employees who are an integral part of the company. They include supervisors, managers, recruiters, executives, and employees. Human resources departments need accurate and reliable data in order to properly hire and develop individuals for the various positions within the company. Therefore, it is essential that an enterprise resource management system provides analytics to the human resources department so that they can make the best possible decisions for the employee.
Finance: Financial business processes are perhaps the most critical components of Enterprise Resource Planning. ERP helps in the financial management by integrating all the internal and external financial procedures. This enables an organization to adopt a coordinated approach towards financing and to monitor the overall efficiency and cost effectiveness of its financial business processes. Enterprise Resource Planning software programs come with advanced analytical capabilities to handle the complexities inherent in today’s complex finance systems. Finance is an essential part of Enterprise Resource Management. Therefore, companies that offer ERP solutions should also offer comprehensive finance analytics.
Customer Analytics: ERP analytics is crucial for customer management. It enables organizations to monitor the satisfaction levels of their customers and to measure and improve the process performance. This enables organizations to effectively improve the business processes and implement best practices to attract and retain better customers. Enterprise Resource Planning software applications also play an important role in helping organizations achieve maximum productivity and at the same time reducing operational costs. Hence, an effective ERP system would enable organizations to get closer to their goals and stay far away from the bottom line.
Finance and Human Resources: The finance and human resources departments are the two most important departments in any organization. Finance is concerned with the budgeting and managing of resources, while human resources deals with recruiting, hiring, training, and development of employees. Therefore, these departments face a great deal of challenges when implementing Enterprise Resource Planning.
ERP software applications enable organizations to efficiently and easily manage their business needs by providing the right tools and the right information. They also contribute to the success or failure of any enterprise in the corporate world. Hence, organizations should adopt best practices for integration of finance and human resources departments through enterprise resource planning.
Supply Chain Management: ERP applications have a major role to play in the supply chain processes. ERP applications can integrate the order and supply processes to streamline operations and provide valuable information about the processes involved. Enterprise resource planning can help organizations identify the missing or redundant parts of their supply chain processes and can reduce operational expenses by streamlining the processes involved.
Customer Relationship Management: ERP solutions are also important for integrating customer relationship management (CRM) and enterprise resource planning. ERP helps to improve customer service by improving customer retention rates, creating awareness about product and services, and developing improved feedback mechanisms and methods for managing customer relations. Enterprise resource planning also helps to improve customer retention rates by helping them acquire the products and services that they need at the most cost-effective prices.
Enterprise resource planning can also reduce operational costs by providing IT and business intelligence tools. These tools can be used for effective and efficient employee utilization. They can also be used to optimize the sales processes and make it easier for organizations to reach out to their customers.
On-Premise and Off-Premise ERP Applications: ERP solutions can only be implemented when an organization has an elaborate business structure with many departments. Large-scale ERP solutions cannot be implemented on a small scale. When a company has a complex business structure, it requires an in-house ERP department to install, design, and manage the ERP applications. Small companies usually have very few departments and can implement ERP applications within their own business structure. This is mostly due to the time involved in setting up ERP solutions when compared with on-premise ERP solutions.
