ERP systems have many advantages like improve cycle time, automate the business process, integrity of various departments, easy workflow, better reporting, etc. but it has also some disadvantages due to inadequate investment in regular training for users, testing charges, limited customization, reengineering of business process up to some extend, AMC charges for the software and updates, difficult to use, etc.
Complete system can be expensive for your organization, although they are coming for SMEs at lower cost too, but organization should be very careful in selecting the appropriate software that fulfills their requirements in a budget. There are some limitations in customizations; some customization may involve changing of the software structure which is usually not allowed.
Re-engineering of business processes to fit the "industry standard" prescribed by the ERP system may create some problem to the user to understand, they may do some mistakes. New system can be too complex measured against the actual needs of the customers. There is a risk of loss of data in the event of a security breach, because of centralized database in the systems. It has some limitations and do not allow much flexibility in implementation and usage. The new system may be over-engineered relative to the actual needs of the customer. If implementation fails, due to any reason, all the work done by organization in this project will be zero. Organization should be very careful about implementation process.
There may be some compatibility problem between new technology and old legacy system like organization may have to buy new database, new PCs, new servers to implement the software. This will increase the cost of the project. If organization does not have IT department, they may required a new IT manger to implement the system.
There are other disadvantages seen by the organizations who have implemented ERP system, but they are very happy with advantages over disadvantages. Disadvantages cannot effect the organization if planned well to implement the software.
