Question

Research ERP to determine what its purpose is. Also, determine what problems have been encountered when different companies in different industries have implemented this kind of system.

Answer 1

a) ERP or Enterprise resource planning systems are softwares used by the organization to manage it's multiple business functions in an effective and organized manner. It allows an organization to utilize it's resources in an optimum manner.

An ERP not only helps in maintaining cost and accounting records but it also integrates all the business and sub-business processes into a single unified system. It helps in quick and vital decision making by streamlining most of the organization's functions and providing timely and accurate information to various departments of the organization. It also helps in the effective implementation of the business policies and plans.

Hence an ERP has varied advantages for an organization which also forms its "purpose",

b) Problems incurred by companies in implementation of ERP systems are as follows :

i) Selection of ERP product : In the modern world, there are over 500 different types of ERP system vendors in the market. It is very difficult to analyze as to which ERP system is most suitable for the organization.

ii) Implementation and Maintenance Cost : The famous ERP systems such as SAP & Oracle are very expensive. It not only takes a humongous amount for their one time installation but a huge amount is also required to be spent yearly on it's repair and upgrades.

iii) Lack of Adequate Training : This is one of the major problems faced by almost every organization in the implementation of ERP systems. ERP systems are highly complex and they require adequate training for any person to be able to work on them.

iv) Implementation Time : It generally takes a lot of time to implement an ERP and customize it according to the needs of the organization. Generally the best employees of the Finance department have to be involved in this process which consumes a lot of time and which might affect the normal day-to-day operations of the business.

v) Business Philosophy changes : ERP brings an extreme change in the way business plans and implements its policies and procedures. This extreme change from the conventional methods to the advanced technologies does not sit well with a lot of people and may lead to a lot of employees with good potential and knowledge to leave the organization.