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Enterprise resource planning (ERP) – Advantages and Disadvantages. How the Cloud based ERPs Change the Market Dynamics Now?

Enterprise resource planning (ERP) is business process management software that allows an organization to use a system of integrated applications to manage the business.  Further, it automates many back office functions related to technology, services and human resources.

Typical ERP software integrates all facets of operations including product planning, development, manufacturing and sales and marketing in a single database, application and user interface.  Mostly, ERP application needs dedicated business consulting  team to customize and analyze and handle the upgrades and development especially in large business.  Whereas in smaller businesses ERP application is a light weighted and often customized for industry needs.

The general characteristics of an ERP system can be summarized as follows;

  • An integrated system
  • Operates in (or near) real time
  • A common database that supports all the applications
  • A consistent look and feel across modules
  • Installation of the system with elaborate application/data integration by the Information Technology (IT) department, provided the implementation is not done in small steps
  • Deployment options include: on-premises, cloud hosted, or SaaS


Enterprise resource planning (ERP) – Advantages and Disadvantages

Some recent trends in ERP solutions are

  • Mobile ERP

In mobile ERP, executives and employees want real-time access to information, regardless of where they are.  It is expected that businesses will embrace mobile ERP for the reports, dashboards and to conduct key business processes.

  • Cloud ERP

The cloud has been advancing steadily into the enterprise for some time, but many ERP users have been reluctant to place data in the cloud.  Those reservations are gradually evaporating, however, as the advantages of the cloud become apparent. is a lighter version of cloud application in the market.

  • Social ERP

There has been much hype around social media and how important it is too added to ERP systems.  Certainly, vendors have been quick to seize the initiative, adding social media packages to their ERP systems with much fanfare.  But some wonder if there is really much gain to be had by integrating social media with ERP.

  • Two-tier ERP

Enterprises once attempted to build an all-encompassing ERP system to take care of every aspect of organizational systems.  But some expensive failures have gradually brought about a change in strategy adopting two tiers of ERP.

There are multiple arguments for and against ERP.  However, with the arrival of cloud based services the issues of cost of ownership, training and vendor power are in the process of disappearing from the market.  Here is a summary of advantages and disadvantages of ERP.


  1. ERP can improve quality and efficiency of the business. By keeping a company’s internal business processes running smoothly, ERP can lead to better outputs that may benefit the company, such as in customer service and manufacturing
  2. ERP creates more agile company that adapts better to change and it also makes a company more flexible and less rigidly structured so organization components operate more cohesively, enhancing the business—internally and externally
  3. ERP can improve data security in a closed environment. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised



  1. ERP can cost more than less integrated or less comprehensive solutions. High ERP switching costs can increase the ERP vendor’s negotiating power, which can increase support, maintenance, and upgrade expenses
  2. Extensive training requirements take resources from daily operations