The Benefits & Limitations of ERP Solutions

The popularity of ERP software solutions has quickly spread across the business world over the past few years. This is because there are myriad ways that ERP, and especially cloud ERP, systems can greatly improve the operations of an organization of any size. Like anything, there are drawbacks to implementing ERP software.

These are the benefits and limitations of ERP solutions:

What Is ERP Software?

For anyone in the process of learning about ERP—enterprise resource planning—there are only a few necessary principles you need to know. Essentially, ERP is a way for a business to integrate most or all its departments and assets into one convenient place. These applications can take many forms, from streamlining IT and HR office tasks, to interconnecting a fleet of vehicles.

What Are the Advantages of ERP?

Obviously, it’s important to know the true benefits of a product before implementing it in your business. ERP solutions provide companies with a wide variety of incentives. These are some of the most notable pros to switching your business logistics to ERP software:

  • ERP can save businesses a lot of money in various ways. The most concrete way ERP can boost ROI is by lowering your personnel needs. Since ERP can automate a lot of the processes typically done by HR or customer service, your business can repurpose capital to other areas. Additionally, large businesses that choose a cloud ERP software will not need to maintain as large of an IT staff, as data is not stored locally and the ERP provider can help debug the software when issues arise. It still makes sense to have a few staff members dedicated to monitoring and troubleshooting the ERP—but far fewer than you would need otherwise.
  • The data collected by an ERP system can be invaluable to increasing the efficiency of your business. This software enables you to track specific metrics, and make connections that would have been unobservable without ERP. Introducing ERP to your business will allow you to make smarter decisions based on real-time analytics and results.
  • With cloud ERP software, your company will never be non-compliant with changing regulatory standards. Evolving accounting regulations is one area in which companies continually have to adapt. However, ERP software ensures that your business is never in the wrong, by automatically updating to keep you compliant.

What Are Downsides to ERP?

Despite having such monumental upside potential, there are also downsides to cloud ERP that you need to consider before implementing new software. Your business could potentially suffer as a result of one of these issues:

  • It can sometimes take a long time to fully implement ERP software within an organization. The amount of effort it will take to integrate ERP with your business depends on the state of the company and the software itself. For large corporations with many independent parts spread across several platforms, this process can sometimes take years before the system is running on all cylinders. It’s also important to note, however, that even with this upstart time, your business will still likely conserve resources in the long run by choosing an ERP that’s the right fit.
  • High turnover within a company can result in ERP software not being used to its full potential. If new managers are brought onto a team, it’s likely that they’re going to want to do things their way. This doesn’t always go well with ERP systems, as having experience within the system allows a user to understand how to best use it. This issue can be headed off by enacting company policies that reduce turnover and speed up on-boarding.

These are some of the most important factors to include in discussions whether to migrate your company to cloud ERP software. This is a big decision, and one that shouldn’t be taken lightly. However, when correctly implemented, the benefits to ERP make it overall worthwhile.

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