Why We Need to Implement New ERP - Assignment Example

In addition to that, these systems are difficult to maintain and upgrade because they are unfathomable in nature as it is difficult to understand them. The most serious shortcoming inherent in the structure of legacy systems is their inability to integrate and become compatible with other systems. For instance, in legacy systems, when a customer makes an order for a product, the sales order system is unaware of the current credit rating of the customer since it is not linked with the financial management system.

As a result, the system may execute the order which can result in a credit sale to a customer with a poor credit rating. Similarly, there are also threats of stock-outs, high inventory carrying costs, and lost sales because the system does not know the current inventory level as it may not be interlinked with the warehouse management system. Moreover, there are higher chances of billing errors in legacy systems because the data entry depends on human intervention as most of them are manual-based systems.

            To grapple with these knotty issues, organizations are implementing ERP which is an enterprise-wide solution that integrates all the core functions of an organization which comprises mainly Sales, Finance, Logistics, Manufacturing, and HR (Linda, 2005). The centralized database and integrated architecture of an ERP facilitate smooth flow of information across departments, eliminates data redundancy, and provides a broader picture of the organization to management.