An ERP system integrates an organization's data and processes but implementation has high costs and risks. While an ERP streamlines functions, the costs of software, training, and customization are high. It is difficult to measure an ERP's ROI and systems offer limited customization. Resistance from end users and reengineering processes can also challenge implementation. Given these potential disadvantages, an organization should carefully consider alternatives to an ERP system.

1. Build an argument either for or against the adoption of ERP systems. Provide facts
and analysis as necessary. Be sure to cite all sources.
Enterprise Resource Planning is a tool used to integrate the data and processes of an organization
into one single system using many components including hardware, software, a unified database,
etc.1 An ERP system streamlines and integrates different functional areas within an organization
to ensure proper communication, productivity and efficiency. 2 (Refer Appendix B)
However an ERP system need not be always the best solution for the organization and there may
be many disadvantages associated with it. To begin with, ERP systems are extremely expensive
(Refer Appendix C). There are multiple expenditures involved in an ERP system which includes
the software, hardware, training, implementation, licences, maintenance, consulting, etc raising
the overall cost of implementing an ERP system. To further add to the woes, it is very difficult to
ascertain the ROI of an ERP System. There are no specific tools and techniques available to
exactly measure the Return on Investment of an ERP system, hence making it difficult to
measure the value addition in monetary terms, by an ERP system. With respect to features and
compatibility, ERP systems offer very limited customization and are often too rigid and too
difficult to adapt to the specific workflow and business process of some companies. Re-
engineering of business processes to fit the "industry standard" prescribed by the ERP system
may lead to a loss of competitive advantage. Furthermore, the “industry standard” process
prescribed by the vendor may not be the best practice followed. Some large organizations may
have multiple departments with separate, independent resources, missions, chains-of-command,
etc, and consolidation into a single enterprise based on the specifications of ERP system may
yield limited benefits.2 It is alarming to note the amount of time that is invested to implement an
ERP system in the organization. Also, workers have to shun their regular labour and undertake
training, which disturbs the regular functioning of the organization. 3 There is a high risk involved
with the Security of the data, which is centralized in one place thereby increasing the risk of loss
of sensitive information in the event of a security breach.2 Finally, the biggest impediment to
successfully implementing an ERP project is the resistance of End Users. Since, the operators are
used to using the legacy system they do not accept the new system easily, which could result in
failure of the system.
Hence, based on the above points articulated it can be stated that implementing an ERP system
may not be the best option for the organization. It is important that every organization weighs the
benefits and other alternatives carefully before deciding to implement an ERP system.

2. 1
http://www.exforsys.com/tutorials/erp/the-advantages-and-disadvantages-of-erp.html
2
http://en.wikipedia.org/wiki/Enterprise_resource_planning#Advantages
3 http://www.erpwire.com/erp-articles/erp-advantages-disadvantages.htm
2

3. Appendix B
Streamlining and Integration of various departments in an organization using ERP.
Ideally, ERP delivers a single database that contains all data for the software modules, which
would include:
Manufacturing
Engineering, bills of material, scheduling, capacity, workflow management, quality
control, cost management, manufacturing process, manufacturing projects, manufacturing
flow
Supply chain management
Order to cash, inventory, order entry, purchasing, product configuration, supply chain
planning, supplier scheduling, inspection of goods, claim processing, commission
calculation
Financials
General ledger, cash management, accounts payable, accounts receivable, fixed assets
Project management
Costing, billing, time and expense, performance units, activity management
Human resources
Human resources, payroll, training, time and attendance, rostering, benefits
Customer relationship management
Sales and marketing, commissions, service, customer contact and call center support
Source - www.prosysinfotechinc.com/index_ERP_solutions.htm
3

4. Appendix C
Average cost of ERP Systems.
Source - http://www.oracle.com/corporate/analyst/reports/corporate/cp/es101306.pdf
4