Advantages and disadvantages of the ERP system – Paweł Prymakowski

The ERP system as every solution has its advantages and disadvantages. However, due to the multitude of solutions, payment and installation models, we’re able to adjust the system to customer expectations. Thanks to this, you will gain a system that meets the most important needs. With the elimination of major disadvantages of standard solutions. For each enterprise, different issues will have varying importance. It is worth finding a system and an implementation company that will understand our priorities and minimize the existence or intensity of negative aspects.

It’s hard to list every advantages and disadvantages of the ERP system. I will focus only on showing the most important and the most common ones.  

Advantages of the ERP system

System modularity

The ERP system is composed of modules, which support all areas in your company. Thanks to this you don’t have to use few applications or systems to operate in different areas of the company. The ERP system is one tool. Thanks to this, management and work become more effective.

What’s important, while choosing the ERP you can implement only the modules you need.  You can run, for example, the finance, accounting, human resources and payroll module, but not the marketing module. A properly selected system will provide you with support in all the areas you need. Additionally, if your company starts to grow, you can always run additional modules.

Flexible costs and functionalities

This solution means that you pay only for the functionalities you use. The very selection of functionality is also flexible. At the stage of choosing the system and implementing it, you don’t have to worry that you’ll lack any functionality. The solutions we offer can be easily extended with new support areas.

Savings

Implementation of the ERP system will bring savings to your company. Because most of the solutions are based on the cloud you don’t have to invest in expensive equipment or infrastructure. The ERP system will also allow you to save costs for the IT department – the support will be provided by your system supplier. Supplier will also be responsible for system updates.

Additionally, as I mentioned earlier, you only pay for the resources you use. Besides, although the system itself is more expensive, it contains the functionalities of many tools and systems that company uses. The transition to one integrated system makes it easier to manage and control costs (including those allocated to IT).

High level of data security

The use of ERP systems, especially those based on the cloud, is a very high level of data security. As the data is secured by the system provider (ie Microsoft), he is responsible for security. Considering the fact that management software vendors are very often leaders in the IT solutions market, you can be sure that your data is protected by world-class security. Even with the best IT team, it’s hard to ensure this level of security alone.

Compliance with regulations

ERP systems are adapted to the legal requirements. Both domestic and international. Thanks to this, you do not have to worry about meeting the relevant customs or tax regulations, because the system makes sure that all documents and payments are made correctly.

Additionally, our specialists ensure that the system is always adapted to changes in the Polish legal system. By investing in the right solution, you invest in the compliance of your business with the regulations.

Better control over the company

As the ERP system allows you to manage all areas in the company, you get one tool that provides you with a view of all processes. You can easily link orders with deliveries or monitor payments. As it’s one tool for all areas of the enterprise, departments can easily exchange and use data with each other. Thanks to this, the entire company is connected by a network of connections and can increase work efficiency.

Increased efficiency

The ERP system allows you to reduce the time and effort of employees to perform their daily tasks. In addition, the solution allows you to reduce the amount or even eliminate repetitive manual processes, relieving team members and focusing on tasks affecting revenue. The system can also help adopt and enforce industry best practices by aligning all activities within the enterprise.

What is more, the technologies offered by modern ERP systems such as artificial intelligence (AI), machine learning, process automation and others support automation and intelligent suggestion capabilities. These features help you manage business activities such as forecasting demand, generating purchase orders, and tracking products from production to delivery.

Disadvantages of the ERP system

The complexity of the project and time consumption

The disadvantages of an ERP system are often the complexity of the project or time consumption. However, it does not have to be this way. There are paths of quick implementations that allow the system to be launched in a company within a few days.

IT Vision offers quick, 10-days implementation model of Dynamics 365 Business Central system.

Complexity and time-consuming occur when a company needs a system tailored to its individual needs. In this case, the extended implementation time and its complexity result from the adaptation of functions to the individual and unconventional needs of the company. So from the so-called customization.

At this point, it is worth emphasizing that not every company will need such customization. Depending on expectations, the system can be implemented in as little as 10 days or within a few weeks/months. To determine the time needed for implementation, it is best to contact a specialist, communicate the system requirements and find out what solution will be most suitable for the company.

Quite a financial expense

Many companies planning to implement a management system or replace their ERP systems are afraid of significant financial expenses. Yes, implementing an ERP system is not cheap. However, its cost depends on the number of customizations and modules that we will implement in the company. The price also depends on the deployment model (cloud, local installation, or mixed model) and the purchase and subscription of a license. It is worth remembering that this expense is an investment. ERP will allow you to reduce labor costs by automating it. It will also allow you to reduce material costs thanks to production planning and efficient use of resources. Additionally, ERP will increase financial liquidity. In summary, the cost of installing the management system will be related to the return on investment.

High risk and complicated implementation

Often the implementation of such a comprehensive and complex tool as a management system is associated with high risk. Especially if the system has a lot of individual adjustments / customizations. Additional modules or individual solutions mean that the risk may increase. The complexity of implementation is also increasing. In case of proven and experienced partners, such as IT Vision, the answer to these threats are: proven implementation methodology and implementation in the fixed price model.

Fixed price is a pricing model with fixed costs. It guarantees a fixed project budget, regardless of time and costs. The main advantage of the fixed price model is that it allows the customer to plan and set an accurate budget.

Fear of high maintenance costs

One of the common concerns and indicated drawbacks is the high cost of maintaining the system. In this update. The implementation model we offer is a predictable level of maintenance costs and cheap upgrades. Additionally, it is worth remembering that the benefits (and savings) of implementation quickly outweigh the costs.

The advantages and disadvantages of ERP systems depend on the type of implementation

It’s worth emphasizing that some of the advantages and disadvantages of ERP systems will depend on the type of implementation. In case of locally installed systems, it will be necessary to invest in technical facilities or pay for system upgrades. In the case of a solution purchased in the cloud, you will need a strong and stable link to ensure access to the system and keep your data up-to-date.

Is it worth it to decide to purchase a management system?

It is. However, you should choose a system that will be both within our financial reach. As well as one that will meet the needs of our company. We emphasize that cheap does not always mean cheaper in the long run. It’s worth consulting with a specialist in this regard, who will help you choose the most optimal system from a number of solutions on the market.

In addition, whether we use the full range of advantages and avoid possible disadvantages related to the installation of the system depends to a large extent on the company carrying out the implementation. Therefore, it is worth choosing an implementation partner with knowledge and experience. One that will make the implementation of a new management system a shot in 10!

Author

Paweł Prymakowski – CEO of IT Vision – a company implementing ERP since 2000. Experienced executive, sales and business development expert.
Experienced expert. He has led many international projects. He has experience in many industries: IT, services, production, construction, facility management, trade / distribution. Paweł also knows very well business areas such as: management, controlling, BPR, accounting, IT project management, EU funds. As well as planning and implementation of international projects