Introduction Of ERP - Definition, Benefits And Disadvantages

An introduction of ERP will discuss the definition, benefits and disadvantages of an Enterprise Resource Planning system. ERP is a combination of technology and business management which integrates with the core business of the organization to achieve the goals. Information technology has had a major impact on the businesses. ERP uses information technology to improve the performance of an organization. Introduction of ERP has led to it being the most widely implemented software in many industries for operational control, management control and resource planning. The ERP software includes various modules which aid in integrating the activities of the functional departments of an organization. These application modules such as production planning, inventory control, product distribution, etc provide support to business processes such as human resource, finance and accounting.

ERP has evolved from the MRP II and the introduction of ERP was in the 1980s. ERP offers much more than the MRP and has expanded to integration of enterprise wide backend processes. It has evolved from legacy implementation to a more flexible tiered client server architecture. ERP is not just a software but includes the software, hardware, users and the business processes involved. All these together streamline the business processes and improve the processes. A proper study is important before implementing the Enterprise Resource Planning system else the implementation may not be successful. Some of the famous ERP software are from SAP, PeopleSoft, Syspro, Baan, Matrix, etc. There are a number of benefits that can be realized by the successful implementation of the ERP.

With the introduction of ERP, organizations were able to experience a smooth flow of data between the various departments. The coordination between the functional departments increased resulting in increased efficiency. ERP aids in day to day management and aids in improving the productivity of the organization. The ERP systems cover a wide range of functions like Manufacturing, Customer Relations, Human Resources, Supply Chain management, etc and integrate them into a single database. Introduction of ERP to an organization helps it to realize many benefits associated with ERP. The advantages of ERP are reduced operating costs like lower production costs, lower inventory costs and lower marketing costs. It facilitates day to day management by providing real time data for quick decision making. ERP systems support strategic planning too.

After the introduction of ERP to a business organization, it can be advantageous for the organization. However there are some drawbacks of the ERP system also. Implementation of the system requires a lot of effort, time and money. Training the employees properly can take quite some time else the ERP will not be efficient. The ERP may not be successful if not implemented in the right manner leading to a lot of loss to the organization. Customization also involves a big amount of money and time. There could be chances of security issues and leakage of information which can be very harmful for the organization. With introduction of ERP come many advantages and many risks too. One has to study the business environment and the company requirements well in order to implement ERP successfully.