What is ERP?
ERP, or what is known as Enterprise Resource Planning, is the means of using an integrated computer system to manage all the information and resources associated with a company’s operations. The operations mostly include product planning and development, manufacturing, and sales and marketing.
The ERP software, which has always been considered as an enterprise app, is a popular tool among large firms because it requires a division of teams to handle data, upgrades, and implementations. It has four types of trends, namely mobile, social, two-tier, and cloud ERPs which can be integrated into the system. For businesses that are eyeing to invest in this software, be aware of the challenges it can pose to your company based on other companies’ previous experiences:
Commitment from Top Management
One of the factors which contribute to the success of ERP implementation is the support of top management. Their decision-making and early preparations are crucial to how well it will go. They must be able to foresee issues and prevent them from happening. Business-wise, they need to foresee whether or not implementing ERP software entails productivity and profitability. If it is promising, then the investment will most likely be made. Besides that, the top management is also in-charge of preparing the employees for drastic change in terms of business procedures once the system gets going.
The employees can be internal or outsourced, but they need to be trained either way. The new set of procedures with regard to the ERP system must be explained in detail and all system updates must also be announced so as to avoid confusion among employees. Afterwards, the employees must be given ample time to adjust to the new system and to make themselves comfortable using it.
Compatibility of Product Integration
Often times, clients are not satisfied with a single application. In order to meet their needs, companies integrate multiple applications. The problem arises within this process because there are cases wherein the middleware which connects the app to the system is incompatible. To recap, these applications are based on the following approaches: mobile, social, two-tier, and cloud ERPs. Further analysis must be done on the middleware because ERP errors can affect the chain of business operations.
High Implementation Cost
In all honesty, the implementation costs can be 3 to 5 times higher than the unit price of the software not including the customisation costs. Not only will you be spending on the software, you will also be spending on employee trainings, system consultants, technologists, and so on. It is best to prepare a huge budget before anything else.
To date, there are about 500 ERP applications in the market. This is a top management concern since they hold the power to decide which among the 500 apps are necessary to meet client needs and to attract potential clients as well.
In conclusion, you need to consider these factors and decide whether or not your company is up for the challenges. ERP software is a big investment but can turn out to be great once challenges are surpassed.