ERP System Impact to Organizational Structure and Culture


·        Organizational Configuration

An ERP software flattens organizational hierarchy and downsizes the organization. This result in scaling of operations, reduced cost, better control over business and faster decision making.

·        Horizontal Integration

An ERP software help cross-functional staff to effectively communicate and to better coordinate their task with each other. Better coordination has a direct impact on the organizational productivity, as it goes several notches higher.

·        Organizational centralization

An ERP system allows organizations to decentralize and delegate its decision-making power. This ensures employee empowerment, efficient decision-making, more free time for the top management to focus on bigger goals, and greater flexibility within the system

·        Organizational standardization

An ERP implementation standardizes organization’s business processes and working practices. The resulting consistency ensures enhanced productivity and efficiency, timely deliveries, cost-efficiency and greater consumer trust in your brand.


Company culture is simply the personality of a company coupled with the core values and ethics, which then supports that company’s processes and procedures. Company culture is the backbone for what an organization does as a collective team to reach an ultimate goal and ERP System is also a backbone of business intelligence for an organization, giving managers an integrated and holistic view of all processes. It effectively coordinates the instrumental actions within the business, converting the company’s culture to one primarily supported by technology. This technology empowers employees to do their jobs better and more efficiently, boosting employee morale and contributing to the company culture.

The advantages presented by the ERP are:

1.      Optimization of business processes.

2.      Accurate and timely access to reliable information.

3.      The ability to share information between all components of the organization.

4.      Elimination of unnecessary operations and data.

5.      Reduction of time and costs of litigation

6.      Then, as each module of the ERP System enters the same real-time database, another advantage is that no duplicate records or playback operations, i.e., redundancy is avoided.

7.      The performance of all work units that make up their business because better use time is increased. If you previously had to make reports and take them from one place to another, now the time is spent on other activities.

8.      To improve performance and save time, optimize the control and analysis of management decisions there in the long term, reduced costs for the company.

9.      Another obvious advantage is in terms of customer service, because the response time is reduced attention to them.

10.  When a company has an ERP system is more competitive in the environment in which it operates.

Disadvantages of ERP are:

1.      The installation of the ERP System is costly. ERP consultants are very expensive take approximately 60% of the budget.

2.      The success depends on the skills and experience of the workforce, including education and how to make the system work properly.

3.      Resistance in sharing internal information between departments can reduce the efficiency of the software.

4.      The systems can be difficult to use.

5.      Change of staff, companies can employ administrators who are not trained to manage the ERP system of the employing company, proposing changes in business practices that are not synchronized with the system.

6.      Having an ERP system has many advantages, but does not guarantee the total success of the company. Organizational culture, know how to involve staff and anticipate changes that will suffer the organization using this system of administration, are important elements for the completion of the implementation.

7.      The effectiveness of the ERP system may decrease if there is resistance to share information between business units or departments. Due to strong changes that implementation of the ERP system brings in the culture of work, there may be poorly trained or disinterested in making use of the same staff...

8.      The benefits of having an ERP system are not presented immediately with the implementation of the software, they will be evident long after the system is running.

9.      The culmination of the implementation depends on the ability and skill of the workforce, also involves education and training, to make the system is correctly applied.

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