Enterprise resource planning, or ERP, manages a company's resources via a software system. ERP is designed to promote smoother, more efficient work flow among all parties, both internal and external, of a given corporation. For corporations seeking to consolidate all business functions and increase overall productivity, the advantages and disadvantages of ERP are worth considering.
ERP's most important advantage is arguably its ability to integrate virtually all business departments of a given company into a single, cohesive platform. In addition to synchronization of work flow, ERP also leads to global decision optimization, a clearer overview of enterprise functioning and quicker performance.
Disadvantage: Startup Cost
A major disadvantage of ERP is its overall startup cost. The implementation requires new hardware, training and consultants to give instruction in addition to the software itself. This creates a high price tag that may not be acceptable to a company—especially for a system that cannot guarantee profit.
Advantage: Reduced Operating Costs
Once the startup costs of ERP are navigated, users may discover rewards for their efforts in the form of reduced operating costs. ERP enables companies to have greater control over marketing, production and inventory. This reduces costs as well as reliance on help desk support.
Disadvantage: External Security
Designed with internal security as a No. 1 priority, ERP is disadvantaged by its vulnerability to external security threats. External attacks can come in the form of dictionary attacks that aim to crack weak passwords or applications flooded by buffer overflows allowing hackers easy access. Other methods include duping users into divulging credentials—this can lead to hackers entering a system as authorized users.