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Disadvantages of ERP Software

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Disadvantages, Pitfalls and Demerits of ERP Software

Modern businesses need systems to manage external and internal resources including human resources, financial resources, tangible assets and materials. The systems used for this are also known as Enterprise resource planning (ERP) which, basically are integrated computer based systems. The purpose of this kind of software architecture is to facilitate the flow of information between all business departments inside that organization and in the same time manage the connection to outside business partners. Enterprise resource planning systems use a centralized database and a common computing platform thus consolidating all business operations into a uniform system.

These systems have their disadvantages too. The following lines will point out the disadvantages of ERP software.

First disadvantage comes from the tight budget organizations allocate to personnel training thus resulting inadequate use of ERP systems and poor testing and implementing of changes. Some companies don't emphasize the importance of data integrity protection in the ERP systems and the way all these data is used.

The experience and skill of the personnel has a major influence on the efficiency of the ERP systems. Some small businesses cut costs on this area thinking that enterprise resource planning systems can by operated by any type of personnel regardless of previous experience or education with ERP software.

Inexperienced managers with ERP systems might propose changes in business practice that they think will lead to the synchronization with company's selected enterprise resource planning solution. This solution can lead to a lot of confusion and low productivity. This is one of the major disadvantages of ERP software. Trained employee can identify the key points of a particular enterprise resource planning system and take advantages of them thus increasing the productivity. This employee can propose customization of that enterprise resource planning software according to business needs. Some packages allow limited customization until the point of changing the internal structure.

Experienced personnel can suggest to the management to purchase ERP systems from vendors that don't charge annual license renewal fees that in some cases are unrelated to the profitability of a business or its size. Enterprise resource planning systems can be very expensive to install, and that's why it is very important to know what features will benefit the most one business before buying. High cost of these systems is one of the major disadvantages of ERP software.

A lot of companies complain about the rigidity and difficulty in using ERPs to specific workflow. This leads very often to failure. The differences between previous knowledge of database administration of technical support personnel and client user personnel can lead to a lot of confusion. Because of the high costs, once a system is established it is very difficult to switch to a smaller or to a customized software. Customization of these systems is a difficult task for many small and mid size companies and this makes it one of the major disadvantages of ERP software.

The policy of some businesses of not sharing information between departments can reduce the effectiveness of ERPs systems. These blurred boundaries can cause problems into employee's morale, lines of responsibility and also poor communication and execution of operations.

Compatibility problems can occur quite frequent between various legacy systems of business partners. Some systems might be too over-engineered relative to the specific needs of a customer.

These are just a few of the most common disadvantages of ERP software.

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