Which of the following is false concerning enterprise resource planning (ERP)?
A. It attempts to automate and integrate the majority of business processes.
B. It shares common data and practices across the enterprise.
C. It is inexpensive to implement.
D. It provides and accesses information in a real-time environment.
E. ERP software promises reduced transaction costs.
The Correct Answer Is:
- C. It is inexpensive to implement.
ERP is inexpensive to implement. This is a False statement. Financial investment, personnel, and time are all required when implementing an ERP system. An organization’s size, the complexity of the system, and the level of customization can all influence the cost of implementation. The total cost of ownership is also affected by ongoing maintenance and upgrades.
ERP implementation requires a significant amount of time, personnel, and financial resources. An organization’s size, the complexity of the system, and the level of customization can influence the cost of implementation. Implementing ERP involves a variety of costs, including:
- Licensing fees: Software and licenses are purchased separately.
- Hardware costs: ERP software requires servers and storage, which are expensive to purchase or upgrade.
- Implementation and customization costs: Costs associated with hiring a consultant or implementation partner to help with ERP software installation and customization.
- Training costs: Training employees on how to use the new system costs money.
- Data migration costs: Costs associated with migrating existing data.
- Maintenance and support costs: The cost of maintaining and supporting the ERP system on an ongoing basis.
The implementation of ERP comes with additional costs, such as lost productivity and interruption to the business, which must also be considered. The ERP system has improved business efficiency, reduced costs, and provided valuable insights into business operations despite these costs.