The Importance of Enterprise Resource Planning

The Importance of Enterprise Resource Planning

There can be no doubt that ERP is an important tool in our world of today. As more businesses begin to compete on a global scale, it will become critical for them to streamline their operations and processes. However, it is important to realize that ERP is not the cure to all the problems a company will face. There are a number of pros and cons to this technology, and those who understand this will be the most likely to succeed.

One of the most powerful benefits of ERP is that it successfully companies the many system architectures of a company. Indeed, this is why the technology was originally introduced.

When business processes are streamlined into a single cohesive unit, the company will operate at a higher level. This will lead to a higher level of productivity, and this in turn will lead to more profits. Another powerful advantage of ERP is greater levels of information flow, along with a higher quality of information. Given the fact that we are living in the Information Age, this is critically important. Companies must be able to rapidly transfer information from one place to another. When information is transferred quickly and efficiently, the company or organization will be able to act on the data within a short period of time.

However, it is not simply enough to transfer information quickly. The organization must be able to make sure the data is high in quality. All of the information in the world is useless if it is not high in quality. In addition to information flow and data quality, ERP is also powerful because it allows a company to effectively manage its inventory. When the products are manufactured, it will be done with a high level of precision. Perhaps the most important thing about this technology is that the costs will be decreased. When a company has to deal with large amounts of paperwork, managing it can be costly. It is also expensive to integrate various software tools that were not originally designed for each other.

Once the processes of a company are integrated, the costs involved with maintenance and transfer of information will be low. The money saved by the organization can be used to invest in new products or marketing strategies. Enterprise Resource Planning is powerful because it allows a company to become highly flexible. An organization that uses this technology will be able to quickly adapt to changes that occur in the market. Though it may require a great deal of corporate restructuring, the benefits will pay off handsomely in the end. Flexibility is very important today. If an organization is not flexible, it will be difficult for them to stay competitive.

One of the most powerful advantages to ERP is the implementation of software. Even though Y2K didn't become the disaster that many people expected, it gave rise to the concept of making sure software was properly implemented. In addition to dealing with software issues, ERP can also help companies integrate their operations. At the same time, it is important to realize that there are a number of challenges involved with utilizing ERP. Perhaps one of the greatest of these challenges is cost. Enterprise Resource Planning tools are outside the price range of many organizations.

When ERP was first introduced, the only companies that truly could afford it were Fortune 1000 companies. Even then, there was the problem of getting workers to accept the new tool. A number of companies would purchase complex ERP tools, only to find that it was not successful because the end users failed to properly use it.

Another problem with ERP is the implementation. Setting up this system can be complex and time consuming, and the minimum implementation time for a large company is six months. Despite this, there have been cases were it took 18 months to fully implement the system. Some clients have also complained that ERP software is not flexible.

It is important to understand that ERP tools must be customized to meet the needs of the company. In most cases, it will not be useful when it first purchased. Each company has unique needs, and ERP tools must be able to meet them. A number of companies run into problems when they attempt to customize the software.