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The Pros and Cons of SAP ERP Systems

System Applications and Products (SAP) is a multinational software development company based in Germany. It is mainly known for its Enterprise Resource Planning (ERP) software, which is designed to help small, medium, and large enterprises optimize their critical business systems and processes. In this article, you’ll learn about the pros and cons of SAP ERP systems.

On our site, we have additional articles covering topics such as using an ERP for the manufacturing industry, along with SAP Business ByDesign pricing info as a way to provide you with all the information necessary to make a purchasing decision.

SAP ERP Overview

SAP ERP systems help support and integrate virtually all functional areas of a company. These include production, procurement, supplies, warehousing, sales, finance, human resource, and accounting. Regardless of the industry, your business requires systems to be fully integrated in order to facilitate the free flow of information across the entire enterprise. This allows your business to connect its internal and external systems.

Through this system, you can achieve the automation of all your business processes, along with the integration of all systems and services, and a reliable flow of information across different applications. SAP ERP also helps with the automation of managerial, operational, and support functions. 

Here are the main functions of an SAP ERP system.

  • Supporting integrated business processes in your company
  • Improving capital planning
  • Streamlining the execution of  business plans and policies
  • Extending your business networks to broader domains, and expanding your products or services to reach more consumers and suppliers
  • Identifying operation risks for enhanced governance
  • Protecting your business against organizational information breaches, security threats, and leakage of data
  • Increasing business adaptation 

Your organization will benefit immensely from these functions of the SAP ERP system. The ERP system also covers numerous functional areas of your business, including:

  • Human Resource: It will help you manage all data related to your employees, as you will have a centralized database containing all the necessary details of your personnel.
  • Finance: An ERP system will give you complete control over all financial transactions and information related to your finances..
  • Sales and Supply: Helps you place and ship orders, track delivery, along with sending and receiving invoices.
  • Customer Relationship Management: This allows for the collecting of relevant data and management of customer relationships.
  • Manufacturing: Helps you integrate all your manufacturing systems and processes for faster and more effective production.
  • Business Intelligence: This system will help you analyze and convert data to develop effective business processes.  

Pros

The following are the main benefits of integrating all your business systems and processes using an ERP system.

Faster Decision Making

The SAP ERP system allows you to make critical decisions quickly using currently available information and reporting tools. Since the information about your daily operations is stored in one centralized database, you can easily access all aspects that will inform your decision.

Reliable Sharing Of Data

With this system, you will have a centralized database allowing the free flow of information across all departments in your company. Allowing you to forgo to the need to repeatedly send critical information to various departments separately. This also minimizes the chances of distortion of the information because everyone has access to real-time data.

Enhanced Financial Management

An ERP system allows you to track all transactions in your company from start to finish. This reduces the risk of financial errors and misappropriation because it provides accurate figures.

Better Utilization Of Time And Money

By automating and integrating all your systems and processes, an ERP system helps you save time and expenses.

Cons

It’s important to know that sometimes it is not easy to incorporate SAP ERP systems into an existing business procedures workflow because of the diverse nature of the business environment. Being so, there can be some initial hurdles to overcome when setting up an SAP ERP system for the first time.

Business Realignment

The ERP system may not align with your current business processes or systems, requiring the re-engineering of your systems. This usually happens when you are using outdated systems in your company.

High Cost Of Integration

While it’s beneficial to integrate all your business systems and processes, the cost of integration can be significantly high. Therefore, you need to work with an experienced system engineer to help you find cost-effective ways to proceed with the integration.

Finally, your SAP ERP solutions should be developed and implemented according to your budget and business needs. The system should, in the end, help you run your business more efficiently.

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