Studies have shown that for some companies the implementation of al ERP system has a negative effect on their business, the impact of an ERP system upon an organisation can be immense disruption to the operation of the business indeed there have been a number of cases of companies going out of business following the implementation of ERP systems. So what is it that drives companies to continue to invest in these systems? Since most of the companies are sales driven, there has always been the need for senior staff to monitor and plan the volumes being produced not to be under stocked.
This instigated software developers to build applications with the intention to manage resources in a company and to facilitate planning according to client demands. Using an automated system to calculate your raw material stock and final product produced can be in a way dangerous. One of the main issues of which could lead to operation disruption in a company is that if a system is inputted with incorrect data, the result would be significantly misleading, thus having a negative impact on business (Garbage In, Garbage Out). Implementing this type of system is expensive and time consuming.
A business man needs to take into consideration not only the amount of money that he will invest on the software, but should be aware of the expenses that would be required in customising the application and implementing it in his company. Since this type of software would have various components which cannot be customised, drastic changes in the way the company operates, could be needed. The idea of an ERP system was that the company information systems would turn into a ‘smooth running and integrated machine’, and this instigated businesses in investing millions in cash.