Startups, SMEs, and large enterprises face dynamic and complex challenges in this competitive business scenario. Irrespective of their business models and industry sectors, all companies need to streamline daily operations while maintaining data privacy and quality. Here, Enterprise Resource Planning (ERP) solutions play a vital role for companies of all sizes. Entrepreneurs utilize ERP software to automate processes, improve decision-making, and enhance security.
However, it is essential to consider some aspects during ERP implementation. Though AI-powered ERP systems are capable of bringing digital transformation in organizations, ethical considerations are necessary to keep in mind. Advanced and sophisticated ERPs like SAP ERP solutions have features based on AI and other emerging technologies. These solutions collect and process a vast amount of data every day raising concerns about privacy and security.
In this post, we will discuss some of the key ethical considerations when you implement ERP software in your organization. It will help you leverage ERP systems with responsible usage for a long time. Let’s start with making a list of ethical issues you may encounter while implementing an ERP solution.
What are the Ethical Issues in ERP Implementation?
ERP solutions are highly beneficial for modern businesses, but they present several ethical challenges. Most of these issues are related to data collection and extensive usage of AI. Moreover, companies need to focus on the impact of an AI-driven ERP system on employees and society. Here are some of the major ethical issues-
Data Privacy and Security
This is one of the most crucial issues and can lead to legal consequences. Privacy protection and data security can cost a lot to companies of any size and scale. ERP solutions collect and store a lot of sensitive and confidential data. This data includes financial and personal information of customers and employees and remains a soft target for cybercriminals. Companies need to protect the individual’s privacy for this reason.
Robust and reliable security measures including encryption, access controls, and regular security audits can help companies achieve this objective. Reputed ERP solution providers can also help companies comply with prevalent data protection regulations like GDPR and implement the best practices.
Ethical Usage of Technology
Organizations need to remain transparent and open about how they collect, share, and process personal data of customers. Robust accountability mechanisms can ensure ethical decision-making using technological advancements. As companies depend more on IoT, AI, and RPA (Robotic Process Automation) technologies, ERP solution integration needs careful planning and proper execution.
It is the social responsibility of companies to ensure ethical usage of ERP solutions and futuristic technologies. Entrepreneurs need to stay away from any practices or technological advancements that harm employees or communities.
Biased or Unfair Approach
Both AI and ML technologies are useful for automating repetitive tasks and optimizing processes by making data-driven decisions. However, a lack of proper execution can lead to a biased approach and unfair outcomes over the period. Unequal treatment for customers and unfair ways of hiring employees are some examples of AI-based biased approaches.
It is, therefore, necessary to use diverse training data and regular auditing of AI algorithms. Most importantly, companies need to maintain human supervision in such processes and keep decision-making in control.
Apart from these ethical considerations, companies need to focus on environmental aspects to maintain sustainability. A reputed and official SAP ERP solution provider can help companies mitigate these issues and leverage the benefits of advanced software.
Why Is It Necessary to Consider Ethical Issues in ERP Implementation?
Ethical issues have a significant impact on companies and individuals alike. Here we mention some key reasons why companies should consider ethical issues in ERP implementation-
Ensuring Privacy and Security
ERP software deals with corporate data to give actionable insights. This data contains sensitive information about customers, employees, and stakeholders. Be it financial or personal data, it is crucial to include robust safety features to protect it from hackers and cyber attacks. Companies need to take measures like encryption and two-way authentication to prevent corporate data from going into the wrong hands.
Ethical considerations can facilitate secure data storage and sharing for accurate processing. These considerations also show the company’s responsible behavior for protecting the individual’s privacy rights. It further results in increased trust and confidence of people in the company.
Improving Transparency and Openness
AI and ML technologies are known for biased approaches, but they can act as they learn. Therefore, it is essential to incorporate AI-powered ERP systems into companies in a way that promotes fair practices and data-driven decisions. It is better to remember that if AI algorithms get biased data they can follow discriminatory practices. This can lead to bias and unfair decisions in the company.
Ethical considerations can make companies ready to address potential biases with improved transparency and openness. Entrepreneurs can take action to mitigate various issues ensuring fair outcomes with a satisfied workforce.
Enhancing Employee Well-being
ERP solutions influence work-life balance and job satisfaction for employees. On one hand, these systems are useful in increasing employee productivity, and on the other hand, they lead to excessive surveillance and micromanagement. When companies have unrealistic expectations for employees, stress and decreased productivity are the outcomes.
Here, ethical considerations like using ERP systems for the employee’s convenience and well-being can promote a positive work environment. It also contributes in avoiding exploitative practices at the workplace.
Increasing Corporate Social Responsibility
Sophisticated ERP systems have many benefits to offer for companies. They are useful in optimizing supply chain operations, reducing waste materials, and managing inventory. However, wrongful practices while using ERP can contribute to unethical outcomes like exploitation. This is dangerous for individuals and communities.
Considering ethical aspects of ERP systems can assist companies to stay away from such practices and promote social good. This consideration can also help business owners avoid legal and social consequences.
Concluding Remarks
ERP software can be a game-changer for any company irrespective of its size and industry sector. However, as this system works with the help of technological advancements, it is imperative to consider ethical aspects. When it comes to implementing ERP solutions in the organization, entrepreneurs need to focus on ethical considerations and best practices. This will result in more transparency, sustainability, and long-term benefits of ERPs for the company.