Explain in brief various limitations which are associated with an ERP system.

Each good system is having some limitations and for these limitations, sometimes people become reluctant to implement good system. ERP is also not different and it has also got some limitations. The limitations which are associated with an ERP system are discussed herein: Difficult to implement in running businesses Implementing an ERP system in a new business can be very effective. Implementing the same system in an older business can be very difficult. All employees must be trained, and there will be significant down time as the business switches all applications over to the new system. Customization is problematic Every business has its own requirement and there is no ERP which may be suited for all business's requirement so to implement an ERP system in an organisation, first the detailed study about the different processes of a business is done and then various customizations are done to make the ERP suitable for a particular organisation requirement. The customization process involves lots of money and resources which works as a limitation to the implementation of an ERP system in an organisation. Policy Limitations ERP systems do not fit the business plans of every enterprise. Often, ERP systems must be customized to allow for specific tasks. Not all ERP systems allow this depending on the system or company the business uses, it may be against policy to make such drastic changes to the application. Ongoing Support Support for ERP systems often can be difficult to depend on. Technical response can be adept in dealing with minor problems, but major complications with the ERP systems can be beyond the limited customer service available to businesses. Lack of user participation in ERP implementation The participation of users is very important for successful implementation of ERP projects – So, exhaustive user training and simple user interface might be critical. Moreover involvement of key users at the pre implementation stage and implementation stage is very important and lack of their involvement acts as a limitation for ERP system. Resistance to change Implementing ERP system in an organisation requires lot of process changes, starting new process etc. In this process, certain people's profile gets redundant and they need to transfer to other processes. Moreover implementing ERP requires people to adapt to the new processes and technologies. All this become a reason of resistance by people which works as a big limitation for ERP implementation. High Annual Charges Most of the ERP vendors charge large sums of money for annual license renewal that is unrelated to the size of the company using the ERP or its profitability. This acts as a big limitation for an ERP implementation. Cutting Expenses on Training Success depends on the skill and experience of the workforce, including training about how to make the system work correctly. Many companies cut costs by cutting training budgets. Privately owned small enterprises are often undercapitalized, meaning their ERP system is often operated by personnel with inadequate education in ERP in general. This acts as a big limitation. Dependency on one Vendor/High switching cost Once an ERP system is implemented it becomes a single vendor lock-in for further upgrades, customizations etc. Moreover once a system is established, switching costs are very high for any one of the partners (reducing flexibility and strategic control at the corporate level). Time consuming ERP deployment projects are lengthy and are time consuming, projects may take 1 to 3 years to complete and the designed processes may even require further tweaking once implementation is complete. Cost savings / ROI may take years to realise It may take years for the business to realise the benefit of the newly implemented ERP system. The transactional data also takes time to build up and to be accurate for reporting.