Advantages and Limitations of Enterprise Resource Planning Systems

According to Fortune Business Insights, the enterprise resource planning software market is valued at more than USD 81 billion and is expected to reach over USD 238 billion by 2032. Why are 60% of businesses opting to adopt this modern technology?

Enterprise resource planning (or ERP) solutions integrate business-wide processes and data into an easy-to-use, unified platform, leading to improved communication, productivity, and ultimately, profitability. But knowing if an ERP system is right for your business requires doing your research—and that includes looking at the benefits, the possible limitations, and how to avoid those risks.

The Purpose of Enterprise Resource Planning

As noted above, an ERP solution is a unifying platform. It brings all your data, processes, and people under a single umbrella, enabling every member of your team to access real-time, accurate data, streamline complex workflows, communicate clearly, and collaborate easily with each other. Essentially, they’ll have the resources, tools, and information they need to do their jobs successfully.

An ERP system’s purpose, then, is to create an informed, productive, and efficient team, which is what ensures a profitable and thriving business.

Advantages of Enterprise Resource Planning Systems

Here’s a comprehensive list highlighting the business benefits of ERP solutions.

Improved Efficiency and Productivity

Efficiency measures how well you use your resources to accomplish a task, and productivity measures how much work you get done in a certain timeframe. They’re vital metrics that determine business success, and an ERP solution helps improve both by centralizing workflows, reducing redundancies, and automating manual tasks, which gives team members back time they can use to do more—and do it better.

Real-Time Data and Reporting

Having access to real-time data used to be just a dream, but with advanced ERP solutions, it’s now a reality. Data from across an organization flows into and out of an ERP system’s centralized database, enabling team members to collect and analyze it as soon as it reaches their screens. Instead of requiring hours or even days to painstakingly gather, the information is automatically synchronized and immediately available for use. This instant communication empowers team members to deliver crucial reports and up-to-date analytics quickly, which helps leaders make timely, business-enhancing decisions.

Enhanced Collaboration

Collaboration means working together towards a common goal, and, for your business to succeed, it’s essential. With a shared ERP platform, all people and departments work with the same information at the same time, ensuring clear communication throughout the organization and eliminating any roadblocks to smooth, effective collaboration. Improved project management, better task coordination, and an overall increase in team morale are just a few of the many benefits.

Cost Savings

While it’s true that investing in an ERP system isn’t cheap, your not-so-future return on investment far outweighs the initial costs. For example, the ERP system is designed to improve operational efficiencies, streamline resource allocation, reduce waste, improve productivity, and provide valuable insights. Added together, these benefits cover the short-term cost of the system while delivering long-term profitability.

Improved Customer Experience

Customer satisfaction with your products and services determines your business’s longevity. So, to satisfy your customers, you need to know what they want, when they want it, and why they are—or are not—pleased with how you provide it. An ERP system can help you improve your customers’ experience by offering centralized data that empowers your team members to give faster, more personalized responses to customer needs.

Scalability and Growth

Keeping customers satisfied based on the insights you’ve gleaned from your ERP system will put your business on the fast track to exciting and consistent growth. ERP systems—specifically, cloud-based ones—are flexible by design, which means they can accommodate business expansion and support increasing complexity through their modular architecture. Adding new functionalities and modules (e.g., manufacturing, distribution, inventory, supply chain, etc.) when you need them is an easily managed internal capability handled by your ERP vendor.

Limitations of Enterprise Resource Planning Systems

There are many advantages to implementing an ERP system, but can every solution give you these benefits equally? No, they can’t—which is why you’ll need to do your ERP research, consider the perceived limitations of different systems, and avoid those limitations by choosing the best system for your business.

High Initial Costs or Hidden Fees

Some ERP vendors charge significant implementation fees and hide costs in complicated contracts. To avoid this risk, make sure you choose an ERP vendor that is open, fair, and transparent about all costs from the start.

Complexity of Implementation

Some ERP implementations are lengthy and complex because they force a business to change its processes to fit the system’s rigid framework. Instead, choose an ERP vendor that will fit the system to your business and offers easy ways for business process experts (not just developers) to configure the software to your unique needs.

Resistance to Change

Some employees may be anxious about switching to a new business management system. To bring these employees on board, choose—and prove to them that you have chosen—an open ERP system that is verifiably easy to use, puts information specific to their roles at their fingertips, and can be integrated with the mission-critical programs they need.

Potential Data Security Risks

Some ERP vendors have less stringent security protocols. When reviewing your ERP options, advanced security measures and constant, comprehensive data protection should be at the top of your must-have list.

Get the ERP System That Is Best for Your Business

With an ERP system, you can expect improved efficiency and productivity, real-time data and business-enhancing insights, improved collaboration, happier customers, and a greater ability to scale. To get the best system for your business, you’ll need to do research ahead of time—particularly weighing each vendor’s reputation and transparency.

Cannabis company Happy Valley did, and after considering and discarding a few ERP options, the team chose Acumatica and QuantumLeaf—an Acumatica value-added reseller (VAR) and independent software vendor (ISV)—with tremendous results.

“The Acumatica/QuantumLeaf solution is now a part of our DNA,” says Kai Earthsong, VP of Supply Chain Management. “We rely on it day in and day out for information access, production order planning, procurement and tracking what we produce, inventory control, spot counts, cycle counts, inventory awareness—you name it.”

And Sean Corrigan, VP of Operations, adds: “It might be a little scary to change things, but [deploying Acumatica] is one of the better decisions that we’ve made as a company.”

If you’re ready to take advantage of an innovative, affordable, and award-winning cloud ERP solution, contact our Acumatica experts today. We’ll walk you through what an ERP system can bring to your organization and explain how, together, we can build the future of business.