There are many important issues in ERP outsourcing which the organizations have to deal with. Outsourcing is considered so as to avoid the implementation problems. The organizations look at outsourcing everything from software, hardware and the consultant services from the vendors. Outsourcing is a good option for the small sized and the midsized companies who cannot otherwise afford to go for the ERP implementation. However there are many important issues in ERP outsourcing the organization has to take care of. Some of the issues are as follows:
1. Cost: Outsourcing may cost lesser than the traditional way of implementation of ERP but in the long run the costs may exceed than what was thought. The cost of the services and the leasing may increase with time and overrun the budget. The organization should be involved in order to check for delays.
2. Data Privacy: With the involvement of the vendor, the data privacy and security can be an issue. There could be requirement of sharing of crucial and important data with the vendor. This may be risky for some organizations. Privacy and security of data is one of the important issues in ERP outsourcing which has to be considered.
3. Expenses: The organization looking for ERP outsourcing has to manage the employees who look after the implementation. There are maintenance expenses too as outsourcing does not completely omit all the problems involved in the traditional way of implementation. These important issues in ERP outsourcing need to be considered before going in for outsourcing.
4. Quality of Solution: The quality of the solution provided may or may not be satisfactory due to the constraints. The vendor is not involved in the actual business environment so the customizations provided may not fit into the actual business environment. This leads to problems and should be avoided by selecting the right vendor who can analyze the business requirements well. This is one of the important issues in ERP outsourcing.
5. No ownership: when the services are outsourced and taken on rental basis, the organization has any ownership of the software. In the traditional method of implementation, the organization owns the software and is of use in future for upgrades.
6. Credentials: One of the most important issues in ERP outsourcing is selection of the third party. It is essential to evaluate the party from whom the organization will outsource the services. It is beneficial to know about their resources and success rates in the past. It is important to know the credentials of the third party before making the selection.
These are some of the important issues in ERP outsourcing which cannot be overlooked. ERP outsourcing is beneficial when the consultants handling the implementation are experienced and skilled. The third party needs to understand the complexity of the business processes well enough to provide apt solution. The resources should be analyzed for customization to take place properly. The technical resources of the third party are important as the consultant services play an important role in the successful implementation of ERP.
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