The Advantages and Disadvantages of ERP

There are a number of powerful advantages to Enterprise Resource Planning. It has been used to solve a number of problems that have plagued large organizations in the past. At the same time, it is not without a number of disadvantages. Being able to weigh the two will allow a company to decide if this solution will properly meet their needs.

It should first be noted that companies that fail to utilize systems such as ERP may find themselves using various software packages that may not function well with each other. In the long run, this could make the company less efficient than it should be.

There are a number of processes that a company may need to integrate together. One of these processes is called design engineering. When a company is in the process of designing a product, the process of actually creating it is just as important as the end result. ERP can be useful in helping a company find the best design process. Another area where ERP can be useful is order tracking. When a company receives orders for a product, being able to properly track the orders can allow the company to get detailed information on their customers and marketing strategies. If different software packages are being used, this data may not be consistent.

Perhaps one of the most important advantages of ERP is its accounting applications. It can integrate the cost, profit, and revenue information of sales that are made, and it can be presented in a granular way. Enterprise Resource Planning can also be responsible for altering how a product is manufactured. A dating structure can be set up which can allow the company to be informed of when their product should be updated. This is important, because it will allow the company to keep better track of their products, and it can allow the products themselves to be produced with a higher level of quality. Another area where ERP can be an indispensable tool is the area of security. It can protect a company against crimes such as embezzlement or industrial espionage.

However, with all the advantages that ERP offers, there are a number of disadvantages as well. Perhaps one of the biggest disadvantages to this technology is the cost. At this time, only large corporations can truly take advantage of the benefits that are offered by this technology. This leaves most small and medium sized businesses in the dark. A number of studies have shown that the biggest challenges companies will face when trying to implement ERP deals with investment. The employees must be continually trained on how to use it, and it is also important for companies to make sure the integrity of the data is protected.

ERP has a number of limitations. The success of the system is fully dependent on how the workers utilize it. This means they must be properly trained, and a number of companies have attempted to save money by reducing the cost of training. Even if a company has enough money to implement ERP, they may not be able to successfully use it if they do not have enough money to train their workers on the process of using it. One of the biggest problems with ERP is that it is hard to customize. Very few companies can effectively use ERP right out of the box. It must be modified to suit their needs, and this process can be both expensive and tedious. Even when a company does begin changing the system, they are limited in what they can do.

Most ERP vendors will not allow the structure of the software to be altered. One advantage to ERP is that making the necessary changes to use it may actually make a company less competitive in the market. In addition to the costs involved with implemented ERP and training workers to use it, the ERP vendors may charge additional license fees, putting a strain on companies that do not have enough resources to pay for them. The technical support of ERP departments has been questioned, and a number of problems could arise due to security, since corporate representatives must give sensitive information to the tech.

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How To Increase Profits With ERP

While the process of setting up ERP can be complex, the end results are relatively simple. The goal of a company who uses this system is to be more productive and efficient. By doing this, a company can improve its bottom line. However, many companies think that by simply jumping on the ERP bandwagon, they can gain an edge on their competition.

This is a misconception, and it has led to failure and disappointment for numerous organizations. It is important for companies to realize that ERP are tools that are designed to improve business processes. It is by no means a panacea. If you find that your ERP system is not successful, it is likely that your processes are to blame rather then the software itself.

If ERP systems are combined with high quality business processes, a company can see a great return on their investment. In order for this to occur, the ERP system must be implemented in conjunction with a BPO, or Business Process Optimization program. Most importantly, the future state of the system must be well defined. When this occurs, the goals of the company will be directly connected with those of the project. The business process will be altered in a way that will allow it to be efficient, and once this happens, the software can be correctly utilized. When the operation is done like this, the business process of the organizaion will prove, and they will see an improvement on their bottom line.

When a failure occurs with an ERP system, the company is quick to blame both the software and the vendor. However, this is a mistake. The reason I say this is because in most cases, the company did not have a strategic plan for implementing the software. Before you begin the process of building this software or finding a vendor, you must have a detailed plan of how it will be used. Not only must a company have a detailed plan on how they will use the system, but they must also be prepared for the changes that will occur because of its introduction. If your company has failed to successfully implement ERP, you will want to look at your own actions rather than those of the vendor. If you don't do this, you are likely that repeat the same mistake over again in the future.

Because of the costs involved with implementing ERP, a failure to do it correctly the first time can reduce the funding that a company has, and it can weaken their ability to invest in future projects. There is a very important concept discussed in this article that everyone reading it must understand. If you do not understand this central concept, you will not be successful with ERP or other technologies that are designed to increase the productivity of your business. The central concept is this: No matter how much technology a company purchases, it cannot move forward as an organization if the humans that comrpise that organization do not change.
The ERP projects that become successful are those that are viewed in a realistic manner. The business process that it is designed for must be efficient, and the ERP system must be designed to extend it. The employees of the company must be properly trained to use this software, and they must understand the need for it. When the workers are presented with a new technology, many of them will wander why it is needed. Remember, humans are resistant to change.
You must educate them on why the technology can improve the current procedures that they are using. Enterprise Resource Planning is a tool, and like any tool, it must reinforce the new methods of operation. When this is done, the system will become much more efficient.

The costs involved with ERP are extensive. If a company is not able to define in detail how the technology will be used, and if they are not able to successfully encourage their workers to use it, this creates a situation where the company could lose a great deal of money on worthless project. Once these challenges can be overcome, the company will be able to use ERP in a way that will allow them to increase their revenues.

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ERP Products Overview

Oracle E- Business Suite
Oracle E-Business Suite is the industry's only complete and integrated set of enterprise applications, working together seamlessly to streamline every area of your business—from sales, service, and marketing, through financials and human resources, to supply chain and manufacturing. Oracle E-Business Suite is your fastest path to high-quality enterprise intelligence, bringing your company a true 360-degree view of your finances, your customers, and your supply chains, so you can make faster, better decisions and grow profitability in a competitive marketplace.

Application software typically automates only departmental business processes. Oracle E-Business Suite is different; it automates all parts of your business. From developing, marketing, selling, ordering, planning, procuring, manufacturing, fulfilling, servicing, and maintaining, to handling finance, human resources, and project management—Oracle E-Business Suite provides a comprehensive and integrated offering. In the past, you had to choose between an integrated suite and “best of breed” for rich functionality. With Oracle, you can now have an integrated suite built on unified information architecture—with the functionality you need in each individual application. These applications connect business processes within and across departmental, geographical, and line-of-business domains. With Oracle E-Business Suite’s depth of product functionality and breadth of product offering, you can take your business further by automating processes across the enterprise.

Oracle E- Business Suite - Industry Applications
Oracle E-Business Suite 11i.10 offers over 2,100 new capabilities, half of which meet specific industry needs, including:
Financial Services: SOP documentation and auditing for compliance with Sarbanes-Oxley and other regulations.
Healthcare: Medication administration, patient encounter-specific financial information, integrated patient care and operational intelligence.
Manufacturing/High Technology: Option-dependent sourcing, automated spare parts return and repair processing, international drop shipments, distribution planning.

SAP
What is SAP?
SAP (Systems, Applications, and Products in Data Processing) is the leading ERP (Enterprise Resource Planning) software package. SAP was the first to integrate a corporation's worldwide functions tightly into one application. SAP R/2 was released as the first version of their software in 1979. Its domination of the market occurred during the 1980s, expanding first throughout Europe (early 1980s) and then North America (1988). SAP R/3, an advanced, client-server based version of the popular R/2 product, was released in 1992 and sparked a stunning takeover of America's largest businesses — 44% of US companies were using it within five years of its expansion. In 1999, SAP introduced its newest major product upgrade. Named mySAP.com to emphasize its shift to an e- business focus, mySAP.com builds on the strengths of the SAP R/3 product in a fully Internet enabled architecture. MySAP.com also incorporates SAP's newest business applications for CRM, Supply Chain Management (SAP APO), and Data Warehousing (Business Information Warehouse or BW).

Prior to the introduction of mySAP.com, these applications had been incorporated as add-ons to SAP R/3 and were known as New Dimension products. Given below is a brief overview of both the products from SAP – SAP R/3 and mySAP.

SAP R/3 Overview
SAP R/3 is SAP's integrated software solution for client/server and distributed open systems. SAP's R/3 is the world's most-used standard business software for client/server computing. R/3 meets the needs of a customer from the small grocer with 3 users to the multi-billion dollar companies The software is highly customizable using SAP's proprietary programming language, ABAP/4. R/3 is scalable and highly suited for many types and sizes of organizations.

The R/3 architecture is comprised of application and database servers. The application servers house the software and the database servers handle document updates and master file databases. The system can support an unlimited number of servers and a variety of hardware configurations. For more information see SAP R/3 Architecture at SAP home page.

SAP R/3 is based on various hardware and software architectures, running on most types of UNIX, on Windows NT and OS/400. SAP R/3 runs on several databases Oracle, Adabas D, Informix, DB2 for UNIX, DB2/400, and Microsoft’s SQL Server 6.0. Since R/3 foundation, SAP has made significant development and installed thousands of R/3 systems.

For more visualization and complete Oracle Apps 11i tutorials, visit http://www.exforsys.com/content/category/17/260/342/.

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