Relevant Issues In ERP Outsourcing - Cost, Management And Data Privacy
Peter Filinovich • onErp 8 years ago • 3 min read

ERP outsourcing is been done to realize the benefits of ERP without much hassle. Outsourcing provides a solution to the company and avoids certain implementation problems.

Enterprise Resource Planning outsourcing is been done to realize the benefits of ERP without much hassle. Outsourcing provides a solution to the company and avoids certain problems of implementation. Companies look to outsource everything from the vendors including software, hardware to consultancy services also to implement the new ERP system. They want implementation to be faster so as to realize the benefits faster. The relevant issues in ERP outsourcing are many and need to be considered before choosing the outsourcing vendor. To realize the benefits of ERP, it has to be properly planned and understood. Some of the relevant issues are:

  1. Cost: By outsourcing ERP one may eliminate the cost of license fees and fees to be made every time modifications are made. But the cost of outsourcing can increase as compared to the traditional method in the long run. The process might increase with time as proper testing of the solution has to be done before taking any decisions.
  1. Management and Maintenance: The company might have to experience some expenses on resources for management. The company may have to hire professionals to look after the solution and related process. This leads to similar situation as that of in house implementation of ERP and the issue of software implementation cannot be eliminated completely by outsourcing.

  2. Quality: The vendor providing the services may not be aware of the actual business environment because of location restrictions. Due to this limitation, the vendor may not be able to provide the appropriate customization, modifications or methodologies. For high quality service it is important to choose the right vendor who can provide the services as required by the client.

  3. Data Privacy: Data privacy is one of the relevant issues in ERP outsourcing as it raises concern over the security of the data. The vendor possesses the data and critical information of the company. This may discourage some companies from choosing to outsource Enterprise Resource Planning implementation services. The data security point should be considered before taking up the outsourcing services.

  4. No ownership: If the software is rented out, the company will not own anything at the end of the day.

  5. Expertise: The expertise needed for ERP during the training and implementation should be at par with the industry standards. For this a proper understanding is required by the vendor so as to be able to provide the needed solution.

These are some of the relevant issues in ERP outsourcing and should be taken well into consideration before choosing the vendor or going in for the services. Many small and medium sized companies are getting attracted to go in for outsourcing ERP as it looks to reduce some costs. The need for outsourcing arose as it was found that outsourcing would lead to a higher rate of success of ERP implementation. Companies resort to outsourcing ERP to do away with the burden of training, reengineering, costs, etc. There are some limitations and problems associated with outsourcing also. The relevant issues in ERP outsourcing should be considered according to the needs of the company.

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