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“There are so many misconceptions about ERP, it’s a wonder that the acronym has not been replaced. Are you guilty of harbouring one of those misconceptions?”
There are so many misconceptions about ERP that it’s a wonder that the acronym has not been replaced. Here, we take a look at those misconceptions to help understand the role of ERP in your manufacturing organization.
|ERP is only for Fortune 500 companies – Many people believe ERP was designed only for the Fortune 500. This misconception is partly based on not knowing what ERP does. ERP stands for enterprise resource planning, which does not offer a clue as to what it really does. In the past, many organizations would optimize a business process for a particular department at the expense of other departments and the business as a whole. ERP is supposed to automate business processes across an organization and thus eliminate inefficiency caused by silo thinking.
Implementing ERP is expensive and time-consuming – A second misconception is that all or most implementations will be expensive and take years to finish. This may have been true in the early years of ERP, but it is not generally the case now. The reasons for the change include ERP being implemented in smaller companies, more reliable systems in which the problems have been ironed out, less customization and improved project management.
You can’t trust ERP vendors – Too many people believe that ERP vendors are not to be trusted. The reality is that just about every one of the vendors wants to become the trusted advisor of its clients, and that won’t happen if it is dishonest. These companies make their big money on the annual maintenance fees, which are like a perpetual annuity. And their clients don’t want to go through another ERP implementation unless absolutely necessary. Vendors, however, need to be honest from the get-go. They know your decision is largely based on trust and that if they misrepresent themselves, you won’t trust them. The only caveat is that you must be precise in what you ask of a vendor.
|Customizing your ERP means you can’t upgrade – One of the misconceptions about ERP is that customization will force a company not to upgrade to a newer release. This used to be true, but many of today’s ERP systems allow some customization to occur outside source code, thus allowing for an easy upgrade process.
Implementing ERP will lead to layoffs – Much like many employees fear that automating a process will lead to job loss, many still believe ERP will lead to mass layoffs. But the truth is that most companies retain their employees and give them more value-add jobs to do after implementing an ERP system. Often these companies will be able to grow substantially without adding new people.