Enterprise Resource Planning (ERP) software is often used to manage projects, however, it is questionable how effective these systems really are. ERP is a method of using computer technology to link various functions— such as accounting, inventory control, and human resources—across an entire company. We will be looking specifically at the advantages and disadvantages of a single all-encompassing solution as opposed to multiple best-of-breed softwares integrated together.
Advantages of ERP Software
- Single point of data entry.
- Efficient transfer of information between organizational units.
- Centralized business data.
- Standardization of data structures and coding conventions.
- Consistent interface across all business functions.
All of these advantages result in the project management team being able to make better, faster decisions with fewer errors because they are seeing the complete picture.
Disadvantages of ERP Software
- Expensive to purchase and implement.
- Require customization.
- Inflexible, rigid structure that caters to the financial team rather than the project controls team.
- Can drive inefficiency as users try to find ways to continue to complete their tasks while populating the system for the benefit of others.
- Difficult to stop using it once you start.
Many ERP softwares offer “add-on” project modules that they claim can effectively manage a project. However, the disadvantages mentioned above prove that they have their limitations. It is far better for an organization to create an ERP system out of multiple best-of-breed solutions. This way, they are connected by a central nervous system of data communication keeping all parts of the project aligned. Note that project management systems and ERP systems can co-exist. Many organizations have implemented Enterprise Project Controls systems, which integrate with their current ERP software and manage the project effectively with much less number-crunching and duplication of effort.
ARES PRISM has been developing their Project Lifecycle Management suite of software for the past 20 years. We have worked with project-centric organizations of all sizes, industries, and global locations to implement PRISM software and help them improve their project controls processes.
Project management tools like PRISM take the project from estimate through to completion with the flexibility to manage the project as the PMO Office chooses to, while also interfacing with ERP systems in terms that Finance will understand. Resulting in the absolute best of both worlds.
To learn more about the use of ERP systems in the management of projects, you can read our newest White paper: Can ERPs Effectively Satisfy Project Control’s Requirements?