5 Myths about ERPs That Businesses Need to Know

An enterprise resource planning system or ERP system describes a suite of software programs that collect, store, disseminate, and interpret data for core business processes. These software systems make it easy for enterprises to communicate and share information internally. They also help streamline company workflows and make it possible to automate routine tasks, driving operational efficiency and reducing the risk of costly errors that manual labor can bring. 

While ERP systems are becoming increasingly more popular across all industries worldwide, certain myths and misconceptions about ERP systems and their implementation remain. Businesses that familiarize themselves with these myths and the counterarguments to them will be one step closer to making the most of their own ERPs.

Here are five of the most prevalent ERP myths, debunked:

ERP Systems Are for Big Businesses Only

Offhand, many people will assume that big companies stand to benefit the most from adopting ERP solutions. After all, large businesses process higher volumes of customer transactions, employ more people, and utilize longer and more complex workflows than small- or medium-sized enterprises. It, therefore, makes sense that they’d need to utilize more sophisticated tools than traditional spreadsheets or hard-copy accounting books for enterprise resource management.

While it’s true that ERP systems in the past were more likely to be employed by bigger firms, that’s no longer the case today. Thanks to modern technological innovations, most contemporary ERP solutions are highly customizable on multiple levels. This means that they can be scaled up or down according to the size and needs of the business using them. 

ERP Is an Expensive Investment

While it’s true that the most cutting-edge, high-end ERP solutions can rack up a high upfront investment, ERPs are much more affordable than they appear. Technological developments such as cloud computing and mobile compatibility have helped make ERP solutions more affordable for smaller enterprises. Certain ERP vendors may also allow customers to choose from among variable pricing packages depending on their projected usage.

It's also important for businesses to remember that ERPs, when properly implemented and used to the fullest, can deliver a high return on investment (ROI). Because an ERP system helps optimize business processes and reduce efficiency gaps, it can ultimately generate hefty savings for the company in the long run.

ERP Solutions Are One-Size-Fits All

Enterprise resource planning is not a standardized process that can be reproduced across different businesses. Because each company has its own unique needs and operating procedures, ERP solutions must likewise be tailored to the needs of the companies that use them to be fully effective. For instance, companies can usually select what ERP modules they use with their chosen system, allowing them to incorporate the programs and functions that will be most useful to them.

The customizable nature of ERP systems means that every company’s ERP system will look a bit different from those of other firms once fully implemented, even firms in the same industry. Businesses should compare their options and assess their needs before buying. They should primarily look for software that aligns well with their business goals, industry-specific needs, and production requirements.

ERP Implementation Processes Take Too Long

Businesses skeptical of adopting their own ERP systems or upgrading older legacy systems often cite the length and complexity of the implementation process as a major deterrent. Many imagine a drawn-out, resource-intensive process that spans several years and, thus, fear that such a lengthy implementation will fail to produce a satisfactory ROI once completed. The truth, however, is that these protracted implementation timelines are usually the result of poor scope-setting and faulty planning, rather than an inherent quality of the process itself.

Effective ERP implementation depends on the company’s ability to set the appropriate scope and objectives for the project, as well as any time and resource constraints they’ll be working with. It’s equally critical for businesses to clearly identify the available resources they can take advantage of during the implementation process. A well-managed ERP implementation project can take anywhere between a few months to a few years, depending on its scale and size.

ERP’s Only Benefit Senior Executives and Management

One final misconception about ERPs is that they primarily benefit those working at a company’s upper levels and aren’t as relevant to rank-and-file employees. It’s certainly true that ERP systems provide business executives and managers with valuable perspective on the company’s processes, which allows them to make more intelligent business decisions going forward as a result. However, this is far from the only advantage an ERP system offers.

ERP systems’ ability to maximize processing efficiency, optimize information sharing, and improve data management ultimately stands to benefit the enterprise as a whole. An effective ERP system will improve companywide collaboration and communication, which leads in turn to more optimal project planning, fewer errors, and lower operational costs.

At the end of the day, it’s no surprise that ERP systems are rapidly becoming ubiquitous in companies of all sizes, from the most modest home-based business operations to the largest multinational corporations. Companies who look past the misconceptions about ERPs will soon see that they facilitate smoother, faster, and more productive business management all around.