Enterprise resource planning (ERP) is a business management methodology and software platform related to the real-time collection, storage and interpretation of data for core business processes. ERP integrates various organizational systems and facilitates information flow among all business functions, with the aim of error-free transactions in production.
ERP software is a multibillion dollar industry, with ERP systems becoming more common in small and large enterprises. Despite its popularity, misconceptions remain about enterprise resource planning and its implementation in today’s marketplace. Let’s take a look at some of the myths.
Myth #1: ERP is too expensive
While high-end, innovative ERP solutions can still carry a hefty price tag, technical advancements such as mobile and cloud computing are expected to make ERP software more affordable. Also, some ERP software companies may offer variable pricing packages depending on usage.
Myth #2: ERP is only for Big Business
Although ERP systems were typically used by larger firms in the past, smaller businesses increasingly are able to explore enterprise resource planning due to the growing options for customization through technological innovation. ERP solutions come in various shapes and sizes. Choosing the right ERP solution, whether the business is big or small, is vital for effective implementation and longevity.
Myth #3: ERP only benefits executives and management
Yes, ERP can provide upper management with important information for decision-making purposes. But the benefits can spread to the entire business, improving operational procedures and boosting employee performance across all levels. Enterprise resource planning enables the widespread sharing of information, which may increase communication, improve project planning, cut duplication of tasks and lower purchasing costs, among other advantages. In other words, ERP solutions can benefit the whole company.
Myth #4: ERP solutions are only used to impress customers
If implemented correctly and utilized effectively, ERP solutions certainly have the potential to impress customers. However, that is neither their sole nor their primary purpose. Providing superior results through enhanced operational performance and improved quality of products and services can help companies to boost customer goodwill and strengthen client relationships.
Myth #5: One ERP solution fits all
It’s important to compare ERP solutions and select the best fit depending on the business requirements, trends, functionalities and features. For example, a company that produces one product likely differs in its enterprise resource planning needs from a manufacturing unit that makes a variety of products. Additionally, a manufacturing unit that produces metal goods will have different processes than a chemical plant. The specific attributes and capabilities sought from an ERP system should change depending on the particular business needs.
Myth #6: ERP, SCM, CRM and MRP are all the same
Enterprise resource planning (ERP), supply chain management (SCM), customer relationship management (CRM) and manufacturing resource planning (MRP) are different systems targeting different business processes. These systems can be implemented and integrated separately or in combination depending on company requirements.
Myth #7: ERP takes too long to implement
The time required for an ERP implementation generally will be dictated by a range of factors, such as the size of the business, the expectations of company leadership, the number of users, the degree of customization, the scope and technical complexity of the change, and the availability of resources. Successful implementation, therefore, could require a commitment ranging from several months to a couple of years.
Myth #8: ERP is an IT system and belongs in the IT department
Enterprise resource planning is a business asset that requires ownership and input across departments and up and down the corporate hierarchy, from hands-on workers to C-suite executives. So, while information technology (IT) is an integral part of ERP implementation and maintenance, each and every business function has a role to play in the success of enterprise resource planning.
Myth #9: An ERP system enables Enterprise Resource Planning
An ERP system facilitates enterprise resource planning. However, qualified professionals are required to configure the system to a business’ specific needs, which requires strong product knowledge and implementation experience. Additionally, although ERP solutions can improve efficiency and productivity on many dimensions, there are still business activities that require manual intervention and guidance.
By decreasing errors, saving time and cutting expenses, the implementation of enterprise resource planning can improve human processes in the workplace. But it does not eradicate the human aspect of those processes.