Erp Systems - Advantages and Disadvantages

Advantages

An ERP system can increase the organization's overall efficiency and effectiveness since all the parts within the ERP system are connected and integrated with each other. Subsequently, people may have faster access to the information so that it enhances facilitating decision-making.

ERPS support the management of organizational interdependencies by enabling cross-functional information flows, language sharing and cognitive integration among functional units. Consequently, it may increase the organization's overall efficiency and effectiveness.

Disadvantages

The major impact of ERP systems on the organization is that they cause the organizational structure change. An ERP system requires the re-engineering of an organization's process and culture. A new ERP system may contribute to the redefinition of how organization actors communicate, what behaviors to sanction or reward and how people enact power, possibly being drawn upon in the day-to-day operations by all organizational members in order to make sense of and cope with organizational activity. Thus, it can be said that introducing an ERP system is to reproduce a new organizational structure.

ERP Failure

Top Management could not spent their precious time in order to get training about how to use ERP, so subsequently they faces lack of technical knowledge regarding ERP, so due to lack of resources spent and time allocated which is required for successful implementation, this results in failure of ERP.

In order to get the competitive advantage over competitors, most of the organization tries to implement ERP without considering either they have adequate grounds or organizational structure to which ERP system successfully comply. In that case, they have to change their organizational structure, and they faces many problems in changing organizational structure.

Implementation of ERP requires huge changes in the organizational structure. And most of the old employees resists to the implementation of ERP.

In order to enjoy the real benefits of ERP, for which they are designed. It requires adequate integration with business process. Difference in the business process and ERP process results in failure of ERP.

Common mistake is made when a company leaves out the self-examination of business processes and uses ERP to cover-up weaknesses. It is easier to buy software than to perform the more difficult task of identifying weaknesses and opportunities for improvement.

Lack of technical development in supporting industries also results in the failure of ERP.

Development and implementation of ERP is really a expensive process. Due to capital rationing, many organizations tries to reduce its cost and make it much cheaper as possible.

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