The Pros and Cons of an ERP System for Your Business


Is an ERP system the solution your business needs? Learn about the pros and cons here to help you decide if it’s worth the investment.

ERP, or Enterprise Resource Planning, is business management software that helps you use the resources you have in the most efficient way. ERPs are integral to large organizations and public entities, but mid-sized businesses might see benefit from implementation as well.

In the following article, we’ll help you come to your own conclusion about that by going over each of the pros and cons. Let’s begin!

Pro: Cost Savings and Productivity Boosts

There is an undeniable cost savings and productivity boost that comes with an ERP system. That’s why the industry is expected to grow from $45.3 billion this year to $101.3 billion by 2025.

Businesses and organizations see and feel the benefit. What makes it so efficient and productive, though?

Two things. It’s much easier to collaborate within a large organization that uses the same platform, and the technological streamlining causes many redundant processes to be swept into the dustbin of inefficiency.

Con: Large Upfront Investment Required

The software itself is always going to be a major expense. What that expense is, depends on the size and needs of your organization. Nevertheless, the cost of ERP software is huge.

That’s because you have to invest in new tech, train employees, implement the software, and run both old and new systems concurrently to keep operations from being interrupted while your employees get their bearings.

Pro: Improves Data Visibility

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A public body, such as a large municipality, perfectly illustrates the pro of data visibility and is often used by ERP lead generation companies to sell the effectiveness of the system. Using one platform means police, fire, information technology, utilities, and a variety of other divisions can speak to each other without being siloed.

Con: Further Customization May Be Required

Every organization is different. Yes, ERP companies have a lot of experience with building modules to suit businesses or organizations like yours, they’ve never dealt directly with your business.

That means some customization inevitably will be required. ERP implementation already isn’t cheap. Additional work will only add to that expense.

Pro: Better Reporting and Insight

Since different departments use the same platform in an ERP system, reporting is faster with real-time capabilities. Enhanced speed, currency, and capabilities give organizations a better snapshot of how they are functioning and really allow them to drill down to explore key performance indicators (KPIs) like never before.

Con: Data Migration and Employee Frustrations

At some point, you’ll have to flip the switch on your ERP system to get any value out of it. That means migrating data to the new system. In some cases, not everything will port over the way you would prefer.

Losing data in a transfer can be very frustrating. Add to that the existing frustrations of employees trying to do their jobs and change the way they do their jobs at the same time, and you’ve got a potential “perfect storm” if you don’t know how to manage it.

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ERP Technology Is the Answer

Yes, there will be challenges when implementing an ERP system, but it’s still crucial to maximizing your success as a business or organization. The key is to get the different parts of your organization talking and cooperating under one business management software platform.

Without that cooperation, your business might devolve into a monument of inefficiency. Once that starts, it’s the beginning of the end. To learn more about this and other business technology essentials, check out some of our related posts.