Background

 ERP, otherwise known as enterprise resource planning, involves taking disparate computer
and automated systems and pulling them together into one jumbo system that can be managed to
perform all the original tasks. In addition, an ERP system is frequently expected to provide new
benefits of automation, data security, data mining, better management control of business
processes and increased business efficiencies in company activities.

However, the first critical rule to remember regarding ERP is that it is software; it is a computer
language tool that can either be used well or badly, depending on how the user behaves.

ERP Software Limitations

 The first problem with an ERP system once it is put into place is the awareness of what it can
and cannot do. Users generally figure out very quickly what the limitation of a system is through
trial and error. Because ERP fundamentally involves the automated processing of data in one
coded format only, flexibility and customized practices that may have existed before with paper
mode no longer exist in ERP. For example, in a simple situation, an analyst's self-created, color-
coded folder system for filing documents would be wiped out in ERP. Document sorting would
have to conform to whatever filing system was provided with the new ERP, whether convenient
or not.

Rigidity
 Further, a company is now constrained to the ERP system and its capacity, so new business
ventures and directions have to conform to the system to be usable, not the other way around.

Customization doesn’t occur quickly in ERP as it may with open-source code or custom-written
software for specific tasks. Because of this fact, businesses built on a competitive edge of being
creative with business software may find themselves suddenly hamstrung with a bulky ERP
system that only does business one way with no alternatives.

Workaround approaches can begin to develop as units within a company begin to build liaison
systems or shells to still communicate with an ERP system but do business differently. Over time
this creates loopholes and corruption to the clean ERP processes and can eventually affect the
ERP performance.

Excessive Cost
 ERP costs come in three packages: the initial design and build cost to install the system;
training and implementation; and the ongoing maintenance and support cost. Frequently the
second and third costs are not planned out well or understood, and companies later find
themselves scrambling to either come up with the money or cut back on the ERP support
services needed.

Resistance to Change
 A major issue with ERP adoption is organizational cultural resistance. Many units and
divisions of companies prior to ERP adoption have already developed business processes they
know well. ERP can be perceived as having two threats to such situations: replacement of a
known process with an unknown, and taking away control or decision-making authority for the
normal practices. If the benefits and direction of ERP adoption are not explained well, the
recipients can passively resist and slow down the successful adoption of the system in a company
by sabotage or refusal to use it correctly. Eventually the system data gets corrupted and the
system begins to fail its purpose.

Out-of-Control Demand
 A secondary, downstream problem with ERP tends to be what is called the “toy box effect.”
New ERP systems will generally include a lot more bells and whistles than old business process
systems. Users may suddenly become enamored with such possibilities and then want every
potential option possible. Designers and management need to control systems to not have them
run amok with lots of goodies and no performance