Quick Tip: The Good, The Bad, and The Ugly of ERP
When you begin to consider ERP software implementation for your business, it is important to be aware of the good, the bad, and the ugly aspects of ERP software before doing so.
- Reduces operational and administrative costs. If a company’s sales department and financial department are not linked together, then each time Sales creates a quote, the Finance department must re-enter the same information to create an invoice. Repetition of this sort leads to wasted time and data entry errors. With ERP software as a solution that connects the two departments, you can reduce time and, therefore, reduce cost.
- Streamlines your operations. Use ERP software to eliminate inefficiencies. This is important if you want to grow, as a company!
- Creates growth. Having efficient processes in place when growth occurs makes hiring, training, and opening new locations much smoother.
- Allows controls. ERP software helps you know what is going on with every line item, every order, every shipment, every payment, etc. It allows you to control each process at the administrative level and create consistency throughout each process.
- Accurate reporting. ERP software contains a unified data layer that provides a diverse set of reporting possibilities. It can also give consistent and timely data that shows you everything you need to know when you need to know it. All departments have access to the same data, so there is no confusion about the number of sales, revenue, etc.
- Integration. Internal integration is exactly what ERP software is all about; it is built to integrate all modules to easily communicate with each other. External integration, however, may still be needed. For example, you might want to include an EDI (Electronic Data Interchange) system, which links sales and delivery data from one system to another.
- It can be costly. While ERP software is a powerful tool and should certainly help your company manage processes and growth, these systems can be expensive. There are many costs that go into your purchase of ERP software, including licenses, implementation, support, and possibly upgraded computers and other equipment. ERP software is not cheap, so be ready for an investment.
- Requires time and energy to implement. Organizational changes may be required with ERP implementation. Your team must take time to learn the software and implementation/training can sometimes seem daunting. This is why MIE Solutions offers multiple training options, including on-site, classroom, and online training.
- Implementation going out of scope. In many cases, companies underestimate ERP implementation time and effort required for training. This can lead to financial loss due to time-related costs (such as monthly license costs and staff salaries)
- Constraints. ERP software can be flexible but it may not be as flexible as some of the individual modules you have been using. Because of the way each feature/module connects within an ERP system, it may not be possible to make each module perfectly customizable for every manufacturing company.
- Risk of failure. One of the preventable statistics, although true, is that over ⅓ of ERP implementations fail. In some cases, the costs and setup time were so high that the project was abandoned. In many cases, the company may have invested in a system that, altogether, was not a good fit.
- Indirect losses. If the ERP implementation or software is a failure, you can lose revenue, create organizational issues, and your employees may lose trust in your company and its decision-makers.
An ERP system can be extremely beneficial to your organization if it is needed and implemented correctly. Our goal, at MIE Solutions, is to make sure that our software is a good fit for our customers and that our customers are a good fit for our software.
Keep a lookout for the next Quick Tip: “Questions to Ask Your ERP Vendors”