Advantages and Disadvantages of Enterprise Resource Planning (ERP)

This short article complements the videos you just watched. Look back on your notes from the videos and your answers to the questions posed in these notes. Did you uncover any advantages or risks that are not mentioned in the video or in this article? Did the these resources list advantages or risks that you had not considered? Given the advantages and disadvantages of implementing an ERP system, write a cautionary letter to your company CEO in response to this email she just sent you:

"Good morning. I want to implement a new ERP and you are the lead for the transition. I want it online quickly but don't spend a lot of money on it. Also, make sure everyone has access to it; I don't want the IT department to be the only employees around here who can make sure this system works."

Consider sharing your letter on the discussion forum.

Advantages and disadvantages of Enterprise Resource Planning (ERP)

Advantages:

  • Better organizational control, especially in large companies, where the volume of information is more than in a small company.
  • Duplication of information is avoided.
  • Improved communication, both internally and externally.
  • Company profitability analysis can be carried out to analyse where costs are higher and where there are more sales.
  • Improved decision-making process within the company.
  • The company is able to react better to any unforeseen problem or situation.
  • Better use of time.

Disadvantages:

  • The high cost of implementation and maintenance. (High initial investment)
  • Adaptation to the hardware in the company.
  • It is necessary to train all employees in the company so that the system is used efficiently.  This is a cost for the company as well as the time and effort needed for it.
  • Integration with other applications in the enterprise needed.
  • Inflexibility of the system, because this is a generic system.
  • There are few experts in this system.
  • If the system is not applied correctly, it can be very detrimental to the company.

Source: Cristina Fernandez Arciniega
Creative Commons License This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License.

Last modified: Thursday, October 29, 2020, 5:43 PM