Advantages and disadvantages of ERP system implementation



erp system 850

ERP (Enterprise Resource Planning system) is a software solution that is used for automation of the inventory management, human resources management, business functions and business operations automation, regulatory compliance, real-time data analytics, supply chain management, establishment of single source of data, project management, automation of repetitive tasks and manual processes, improvement of operational efficiency and business growth. This is a single source of truth about business processes and a way to build business environment that will help to reduce operational costs and upfront costs. 

First, let’s list the objective advantages.


Absolutely transparent work

Each business process of the enterprise in this system is visible to all employees – it can be monitored around the clock in real time. For the company’s management, it facilitates control of activities and decision-making based on up-to-date information. This also simplifies the cooperation between different departments and units within the organization, which is good news for large enterprises that often struggle from such issues.

Saving on software

By implementing only one ERP, the company saves itself from the need to purchase many separate programs and train staff to work with them. There is no need for appropriate licensing and technical support. Moreover, a single system can be developed completely from scratch, adapting to the specific needs of the company. Additionally, you can integrate other software with your modern ERP solutions, as they are often cloud-based and offer either open API, or vendor-provided services of integration with third-party software tools.

Information protection

Using many different programs, a company runs the risk of losing confidential data. ERP class systems allow not only to store information centrally, but also to set up access requirements to it at different levels. This ensures information security within the entire company. For example, on-premises ERP software is built on your facilities, which is costly option, but provide you with total control over the information and infrastructure. Cloud-based solutions are maintained by the vendor who is responsible for data security.

Reporting automation

The creation of unified standards for reporting documents speeds up and facilitates the generation of reports. There is no need for manual collection and processing of information. Moreover, system can automatically measure numerous important business processes and metrics to provide you with comprehensive reports that are easy to understand and analyze here and now, which also simplifies decision making and troubleshooting.

Planning optimization

With ERP, you can analyze data in greater depth, comparing different indicators and eventually discovering non-obvious patterns. With such huge entities of data provided in a comprehensive way, you can improve your planning and forecasting and thus reach out to your business objectives faster.

Improved customer service

The entire history of interaction with each customer is stored within the system. Managers can pull up the necessary information at any time to answer a customer’s question in detail. Modern ERP software tools are either integrated with built-in CRM software, or you can integrate your own CRM (Customer Relationship Management) system with it without any significant changes. This will allow you to provide positive customer experience, customer satisfaction and get competitive advantage over your rivals.

Increased productivity

Automating access to data eliminates routine operations with this data and speeds up communication. And established standards and interface uniformity simplify the work of employees.

As an additional benefit, you can also flexibly configure and optimize your ERP system. Examples of cases when this is necessary: launching new processes or products, scaling up the business. The modular structure makes it easy and fast to adjust the system to the changed conditions. But here a lot depends on the particular ERP vendor as well.

Nevertheless, any IT solution has certain drawbacks. And ERP information system is no exception. Basically, the limitations in the work of such programs are related to the functionality and conditions of use.



An undoubted disadvantage is the high cost of an ERP system. Costs require both the program itself and work on its integration, configuration and maintenance. After all, you also have to pay for staff training. Sometimes there is a need to replace the hardware part. Nevertheless, it is not such a big issue for cloud-based solutions, as they are more cost-effecitve than on-premises solutions.

Long implementation

To fully automate business processes, you need to spend a lot of time. In the case of a large company, it may even take several years. Moreover, independent implementation of an ERP system (automation, maintenance, training, etc.) is a very labor-intensive process that requires appropriate knowledge and skills. Therefore, as a rule, employees of specialized companies are hired who are able to provide the optimal software solution for a specific case.

Need for adjustments

Off-the-shelf ERP solutions do not always meet the needs of entrepreneurs. As a result, the system needs to be finalized, which costs finances and time. Nevertheless, some vendors offer wide configurations and customization options for customers, and tough competition between EPR solution developers will be beneficial for users, as customization is one of the most important customer demands.

Difficulty in mastering

Having a rather complex and unfamiliar interface, EPR requires preliminary training of personnel, and therefore, the corresponding monetary costs. Anyhow, you can spend a bit more time on choosing the right software that will have user-friendly interface or provide you with free employee training and onboarding.

Difficulties with data migration

The process of initial ERP customization includes the transfer of information from several disparate sources into a single repository. The combined information needs to be properly processed and standardized. This is a big issue for some companies who have never stored their data in single format, but even for such cases there are some resolutions.

Dependence on an integration specialist

When implementing almost any IT product, it is most often implied that an integrator (system support specialist) is involved.

In general, the disadvantages of ERP are associated with high financial costs and with difficulties in customization. However, all this is also true for any rather complex software. The listed labor costs and financial investments, nevertheless, are paid off by increased efficiency of business processes, if the system is built competently. In the future, all costs will be reduced, and profits, accordingly, will increase.