Accounting Information Systems: The Processes and Controls, 2nd Edition

BENEFITS AND RISKS OF ERP SYSTEMS (STUDY OBJECTIVE 7)

As is true of any IT system, there are both benefits and disadvantages to ERP systems. The next several sections describe some of the benefits and disadvantages.

BENEFITS OF ERP SYSTEMS

ERP systems have characteristics that allow an organization to experience many benefits. However, to gain any benefits from an ERP system, the organization must successfully implement and operate the ERP system. The characteristics that allow organizations to benefit are the following:

1. The interactive nature of the modules allows processes to interact with each other. For example, the ordering and receiving processes can automatically trigger payment processes.
2. The real-time nature of processing decreases the total processing time and allows more immediate feedback to management.
3. The “best practices” nature of the processes in ERP systems—ERP systems have evolved from many years of software experience with various companies, and the software reflects tried and true practices.
4. The single database enhances sharing of information between the business's functional areas and between processes.
5. There is the capability to analyze large amounts of data in a single database. Analytical tools that enable detailed analysis of the data are incorporated into ERP systems.
6. The capability to enhance e-commerce and e-business—the ERP systems of today incorporate modules to fully incorporate e-commerce and e-business.
7. ERP systems have the capability to interact ...