What are the relevant issues in ERP outsourcing?

Enterprise resource planning helps companies in many aspects. In many cases it has been found that companies would experience a higher rate of success if ERP operations were vested to an external third party person. Hence the need of ERP outsourcing arose.

Some of the related points are discussed as below:

The success rate as told above discourages the companies to go for ERP. Companies that experience a phenomenal growth through ERP are more than happy with the enterprise applications. But what happens to the others who have invested millions and got nothing or lost something. What is the remedy available to them? This has been the plight of corporate giants.

Many of them have resorted to outsourcing ERP to do away with the headache of self-proclaimed ERP systems for many reasons like costs, burden of training and doing everything right from business process reengineering to undergoing the hilarious procedures in choosing an ERP vendor. The professional charge of an ERP outsoucing service provider ranges from $500-$1500 besides consultation fee levied at periodical basis. It also depends on whether the company goes for developer ERP outsourcing or consultant ERP outsourcing.

Companies are known to choose ERP outsourcing for these reasons:

Manpower deficiencies

IT professionals are always in great demand all over the globe. It becomes very difficult to retain IT talent pool. The case of an ERP professional is in no way different. It will be difficult for the company to train new people on their systems. Such training will take long time for the person to be acclimatized to the process. Companies therefore prefer to outsource ERP rather thank relying on the undependable human factor which exhibits a very high rate of attrition.

Vague understanding of ERP

The level of expertise required for ERP during the stages of ERP training, implementation has to be at par with industry standards. Unfortunately this does not happen in many companies for reasons like poor training or apprehension to change or other practical difficulties.

Companies find themselves strayed with the half-baked knowledge on ERP. Since this is bound to do more harm than good a large number of they are keen on ERP outsourcing. The company could also face the dilemma of choosing developer ERP outsourcing or consultant ERP outsourcing.

Vagaries of IT Department

The IT departments (comprising of both ERP and non ERP professionals) are either unable to meet the demands of the ERP process in the company or not competent enough to carry on the same. Another issue is that the company does not necessarily heed to their advice and modifications in every stage. All these could affect their autonomy which in turn will reflect on the progress of ERP in the company.

When the company is outsourcings ERP services they are not going to have any say unless explicitly agreed upon. Moreover the tendency of the human mind accepts the view of an external person's in the right sense even if it is a criticism. The company should make a choice between developer ERP outsourcing and consultant ERP outsourcing.

Conclusion

The above parameters should not be taken as the guiding factor for ERP outsourcing. It all depends on the needs and circumstances of the company. ERP outsourcing is not the only solution to ERP. Rather it is one among the solution to tackle ERP problem. Similarly ERP outsourcing need not necessarily bring fortunes to the company. They also have ups and downs which will be discussed in other articles under relevant heads.

What are the merits and demerits of ERP outsourcing?
What are the impacts of Application Service Provider on ERP outsourcing?
Who are the popular ERP outsourcing service providers?
What will be the impact of ERP’S future due to outsourcing?
What are the essential elements to be considered in choosing the firm providing Outsourcing Services?
What are the steps involved in accounting the performance of ERP outsourcing?
Is ERP outsourcing necessary for all organizations?
Who are the parties and what are the technicalities involved in an ERP outsourcing process?
What are the crucial issues in outsourcing ERP?
Business Process Outsourcing

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