In recent years, many companies have opted to rely on an ERP system for their growth and better task management, while others decide not to do so due to the large initial financial investment it requires. Therefore, before making any implementation it is necessary to know the advantages and disadvantages of an ERP.
An ERP system is currently essential within a company, whether it is an SME or a multinational, thanks to its ease of automating processes and streamlining functions between the different areas of an organization.
However, as with any new tool, its correct operation will depend on various factors, both positive and negative, and therefore it is important to know the advantages and disadvantages of an ERP.
What is an ERP for?
An ERP system serves to centralize the information of a company from a single platform in order to achieve greater agility in workflows, a greater reduction in operating costs and improve collaboration between the multiple departments of an organization.
There are different that help entrepreneurs to have an orderly control in the day to day of an administration. For this reason, it is key to know all the functions that this software offers in order to get the most out of it.
These are some of the main functions of an ERP:
- Provides better human capital management to develop employee talent.
- Offers greater financial control by managing revenue, billing, and accounts receivable.
- Facilitates relationships with suppliers and customers, orders, prices and deliveries.
- Optimize warehouse and stock management to avoid overproduction and storage costs.
- Provides relevant data for the marketing area.
- Generates greater control of online sales, by providing greater visibility of transactions.
Advantages and disadvantages of an ERP
Having an ERP system often translates into greater efficiency in a large number of tasks and provides a broader vision of where you want to take your business.
But the fear of new technological tools can also be an obstacle to taking the leap and therefore it is important to weigh the advantages and disadvantages of an ERP before choosing its implementation.
Advantages of an ERP
The list of benefits that this system offers to promote and maintain the development of a company is extensive. But below we have summarized the main advantages of an ERP to understand its value for the business.
- Improve decision making
- Eliminate duplication
- Increases the flexibility and agility of the organization
- Allows process automation
- Provides company information in real time
- Improve customer service
- Increases control of all production processes
- Provides greater information security
- Unifies company information and removes barriers
- Multiply the return on investment
Improve decision making
Through the collection of information in real time, the data analysis is deeper and more efficient, which improves decision-making, without the high risk of having more complete reports.
Eliminate duplication
Having a centralized information on a single platform avoids the duplication of records, activities or operations that can cause the delay or operational capacity of a company.
Increases the flexibility and agility of the organization
The needs of a company change over time and it is likely that in the future they will require more services or modules that you do not even consider today. Therefore, it is important to choose an ERP capable of adjusting to the needs of the company as it grows and cope with those changes that arise over time.
Allows you to automate processes
Thanks to the ease with which the ERP system performs multiple tasks for us, it helps reduce the use of manpower, the time spent and the need for certain knowledge that would cause more time and expense in training.
Provides company information in real time
Once again, having the information collected on a single platform makes it much easier to access it when and where you need it, so that when making a decision you can consider different options and find the most appropriate one.
Improve customer service
Through this software, the process is streamlined and it makes it possible to accompany the customer in each phase, from guiding them through the purchase process, providing them with the data for a purchase decision that meets their needs, and finally offering an excellent after-sales service that ensures their loyalty once and for all. once the item is received.
Increases control of all production processes
By integrating a system that allows you to simplify manual processes for automation in all areas of the company, it is possible to increase productivity and efficiency, as well as reduce the chances of human error in a manual task.
Provides greater information security
By centralizing the information of your company and clients in a single platform, it is very easy to ensure control, since this data will not be scattered, on different servers or even physical, in file cabinets, with all the risks that this entails.
Unifies company information and removes barriers
Easy access to company data allows for greater order of information. In this way, response times are better and there is more control within the operations, increasing the efficiency of the workers.
Multiply the return on investment
Despite the initial cost of implementing an ERP, its impact will be very positive by reducing the costs of labor, production, training and other expenses that will also be reduced, therefore, the investment will return with a vengeance.
Disadvantages of an ERP
It is normal that when migrating the information of a company to this software and adapting the processes and functionalities there are setbacks in different areas, so it is convenient to take into account the disadvantages of an ERP before implementing it.
- It has a high initial cost
- It takes time for adaptation and preparation of workers
- Requires constant updates
- Demand for additional capital investment
- Requires a sizeable development team
- It involves redesigning work schemes and processes
- The benefits are not immediate
It has a high initial cost
The cost of this software is usually high and is considered a disadvantage because not all companies can afford it in their budget. However, today there are ERP systems for each sector and type of company (such as specialized Bind ERP for SMEs), as well as personalized financing plans.
It takes time for adaptation and training of workers
Due to how complex an ERP system can be due to its various functionalities, its effective management requires prior training of the staff to make the most of its advantages. Therefore, this requires a certain amount of time for each employee to adapt and prepare.
Requires constant updates
Depending on the ERP provider that is chosen for its implementation, it will need updates at a certain time, which mostly mean an additional expense, in addition to new staff training.
Type: in some cases it is possible to negotiate with the company in charge of implementing the system that is included in the contract the updating and maintenance of the system, as well as training for the company’s collaborators, so that it does not imply additional expenses.
Demand for additional capital investment
Most ERP systems are managed by modules and according to the growth of a company in the future, it is likely that more tools will have to be added that translate into an extra capital investment.
Requires a sizeable development team
Implementing an ERP that suits your needs requires a specialized development team to carry out the deployment of the tool, as well as the configuration of the essential functions for your business and resolution of possible problems.
It involves redesigning work schemes and processes
The implementation of a new ERP system within an organization is usually complex and takes a few months until it is 100% functional. Therefore, the transition to this software may imply a redesign of the functions and tasks so that it is efficient.
The benefits are not immediate
Not only is the installation of the system usually time-consuming, but the results are not immediate and it takes time to fully enjoy its benefits.
This is one of the disadvantages that companies take into account the most when deciding whether to implement an ERP or not, because together with the initial cost of the software, it casts doubt on whether it is feasible to implement it or not. However, the return on investment both financially and in terms of productivity through an ERP is usually a great deal.
How to choose the best ERP software for my company?
There are many softwares for each type and size of company, therefore the correct choice of the best ERP software is a strategic decision in which several issues must be taken into account to ensure its effectiveness.
For choose the best ERP The most important thing is to take advantage of all the advantages that the platform offers and consider the following keys that we will give you:
- Evaluate the needs and functionality of the system before the price.
- Be aware of the size of the company and know where they want to go.
- Understand that it is a long-term investment that provides efficient results.
- Define the objectives they want to achieve with the ERP.
- Identify the areas that need improvement to prioritize the modules that need to be customized.
- Try the demos and find a simple and clear interface that best suits the needs of the company.
- Choose a supplier with experience that is capable of dealing with changes, that is adapted to your needs and sector of your activity, as well as responding to possible maintenance failures.
conclusion
Implementing an ERP is one of the most important milestones in a company. However, for them to materialize, your company needs to have a certain level of maturity, size, talent and resources allocated for this.
We hope that this article has helped you determine if it is the right time, or not, to implement an ERP in your company. Without a doubt, this tool has the capacity to boost your business, but before considering it, you have to study all its implications.
Finally, as we mentioned above, an ERP and an online store is a winning combination that can boost a business. If you still don’t sell online, then we invite you to discover our platform and get your business off the ground with our free 30-day trial. It is very quick and easy .
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