QS Study

Challenges of Enterprise Resource Planning (ERP):

Enterprise Resource Planning (ERP) is a process by which a company (often a manufacturer) manages and integrates the important parts of its business. An ERP management information system integrates areas such as planning, purchasing, inventory, sales, marketing, finance, human resources, etc. ERP software focuses on supporting the supply chain processes involved in the operations of a business.

Through the benefits of ERP are many the cost and risk are also considerable. However, the cost or challenges of ERP are as follows –

1) Hardware and software cost;

2) Cost of developing a new process (Re-engineering);

3) Preparing employees for the new system (training and change management);

4) Lack of proper analysis of requirements will lead to non-availability of certain essential functionalities.

5) Appropriate training is very essential during and after the implementation.

6) Converting data from previous legacy system to the new cross-functional. ERP system is another major category of ERP implementation cost.

7) Risk of failure: Firm experienced spectacular and costly failures, heavily damage their overall business.

8) Losses in revenue. Profit and market share resulted when core business processes and information system failed or did not work properly.

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