-
Essay / Advantages and Disadvantages of Enterprise Resource Planning
Enterprise Resource Planning (ERP) System Cost: Enterprise Resource Planning (ERP) systems are designed to enable businesses to make more effective decisions by improving access to data. Unfortunately, sometimes due to wrong decision of the company regarding ERP maintenance cost, it results in huge financial losses (Fryling and Adviser-Richardson 2010). ERP is a continuous process, so proper estimation is necessary for its implementation cost as well as recurring maintenance costs. According to a study, the success rate of ERP implementation is thirty-three percent and it has also been studied that around ninety percent of ERP implementation is exceeded. budget (Martin, 1998). Apart from all this, it is also evident that there are many hidden costs in ERP implementation (Lindley, Topping & Lindley, 2008). Expenses related to implementing an ERP system represent approximately ninety percent of overall system expenses (Francalanci, 2001 and Patrick, 1995). Chen (2001) studied that few companies define the cost of implementing their enterprise resource planning system as sixteen percent software, thirty-two percent hardware, thirty-eight percent systems integration and fourteen percent personnel (Malhotra & Temponi, 2010). Here are the main cost points in detail: • Design implementation: ERP system integrates all divisions of the company by database and software, which makes the system more flexible and perfect for the competing market (Bingi, Sharma and Godla, 1999). So, analyzing various business perspectives and developing a business plan will give the idea of selecting the right system and all this will further provide insight into designing new processes (Ehie & Madsen, 2005). • Software: Third-party ERP system software is many times custo...... middle of paper ......w ERP system has brought many positive changes in the business. Customer service has been improved and Omantel has made a new mark in Oman in the telecommunications sector. Besides all these benefits, there was only one element that was not done properly: employee training (Maguire, Ojiako, and Said, 2010). Conclusion: Summarizing all the above and the case study, we can say that the ERP implementation cost is affected by many elements. Any company planning to upgrade its business with ERP system must consider all the segments before implementing it. Despite this, the technology has developed a lot and is therefore not as expensive as before. Moreover, in this globalized world where more and more multinational companies are multiplying, it is essential for the company to have a system capable of integrating all the data and providing a common platform..