Outsourcing ERP - Company Can Reduce Implementation Risks

Outsourcing ERP is the trend nowadays in the market. Enterprise Resource Planning implementation is being sought after by most of the companies. By outsourcing ERP, the company can reduce many risks which are involved in the implementation of the ERP system. Outsourcing can help in many ways by decreasing the disturbance during the working process repeatedly. A third party takes care of the implementation of the Enterprise Resource Planning. Implementation usually takes a lot of effort and time. The duration for implementation process can extend up to two years in some cases depending upon the business process. If the company looks at implementing ERP on its own, it may lose the man hours and result in loss of business. If the company concentrates on the implementation process more than its business, it results in loss and if the company concentrates more on the business, the implementation may take long and result in a failure. There are a lot of risks involved with the implementation of ERP system.

Outsourcing ERP reduces these risks as the company can concentrate on the business as the third party takes care of the implementation. The success of implementation of ERP would be higher when taken care by the third party. Many times, the company invests a huge sum for ERP and the result is a failure. This makes them resort to outsourcing ERP and reduce the burden of the training and costs. The choice of vendor for providing the ERP has to also be done carefully and the company has to pay heavy license fees. By outsourcing, all these problems are done away with.

Some of the reasons why outsourcing ERP is preferred are because of poor understanding of Enterprise Resource Planning, deficiency of proper manpower and unpredictability of the IT department. The IT department may be unable to meet the demands of the ERP process or incompetent. The level of expertise needed for the implementation has to be of high standards and if not, it leads to poor training and failures. It is difficult to retain the professionals as they are in a lot of demand.

Companies are looking at outsourcing to reduce the total costs of ownership and improve the enterprise value of the application. By skipping the hurdles of ERP the company improves its efficiency by paying more attention to the company's core competence. Outsourcing can simplify the problems of implementation and other related problems like hiring and retention of IT staff. The company would have more simple operations and a decent budget level. The burden of training and day to day operations will be with the third party who does the outsourcing. The drawbacks of outsourcing ERP are that the costs of outsourcing can increase with time. The outsourcing third party may not be able to offer complete support to modifications when required. A proper study must be done before outsourcing ERP as it can have its pros and cons. The company will enjoy the advantages in terms of technological expertise and skills with ERP outsourcing.