What Is ERP Security and Why Is It Important?

ERP systems are vital for modern organizations, as they integrate key business functions such as finance, human resources, and supply chain management. However, this centralization of operations also makes ERP systems attractive targets for cyberattacks, which can result in unauthorized access, data breaches, and significant operational disruptions.

In light of growing cyber threats and the increasing complexity of these systems, robust ERP security measures have become a strategic imperative. This article explores the most common ERP security vulnerabilities and offers practical solutions to safeguard your organization.

Importance Of Security In ERP Systems

The importance of ERP system security cannot be overstated. A comprehensive ERP security strategy is important for several reasons:

1. Data Protection

Large volumes of sensitive data, such as financial records, personnel data, and confidential company information, are stored in ERP systems. Malicious attackers could gain this information from a single breach highlighting ERP security threats.

 The global average cost of a data breach rose 10% in 2024, reaching $4.88 million, up from $4.45 million in 2023, highlighting the financial impact of failing to secure sensitive data.

2. Regulatory Compliance

Strict laws pertaining to data protection apply to several businesses. Serious penalties may be imposed on security teams and companies for breaking laws like the Health Insurance Portability and Accountability Act (HIPAA) in the United States or the General Data Protection Regulation (GDPR) in the European Union.

For example, GDPR violations can result in fines of up to €20 million or 4% of a company’s total global revenue from the previous fiscal year whichever amount is higher. For less severe violations, fines can reach up to €10 million or 2% of the company’s global turnover from the preceding fiscal year whichever is greater.

3. Operational Continuity

ERP systems manage important business processes, and a security breach can seriously hinder operations.  According to Gartner, downtime costs businesses an average of $5,600 per minute.

4. Trust And Reputation

A successful cyberattack has the potential to damage a company’s reputation with its clients, associates, or investors. According to a survey, 63% of internet users believe that most companies lack transparency regarding their data usage, and 48% have stopped shopping with a company due to privacy concerns.

5. Financial Protection

Financial fraud, theft of intellectual property, and ransomware attacks are real threats to ERP systems.  In 2024, the global average cost of a data breach reached $4.88 million, a 10% increase from last year and the highest ever, according to IBM’s Cost of a Data Breach Report.

6. User Access Control

With many employees accessing the ERP system, it’s critical to control who can view, edit, and manipulate data. Poorly managed access can lead to internal data breaches or unintentional data loss, which can have devastating consequences.

Now, let’s examine the factors that make ERP system security vulnerable to threats.

5 Factors That Make ERP Systems Vulnerable to Attacks

ERP systems face unique security challenges due to their intricate architecture and extensive integration with other business applications. Let’s take a look at the various factors that make ERP systems vulnerable to attacks:

1. Complexity of Integration

ERP systems are often linked to third-party applications (like customer portals, supply chain software, and CRMs) and integrate a number of business operations. Every integration offers a potential point of entry for attackers. In 2024, 15% of data breaches involved third-party entities, like software supply chains, hosting partners, or data custodians.

“During one of my assignments, we found that hackers were able to get around ERP security safeguards and get private customer information by exploiting an unpatched vulnerability in a CRM integration. This emphasizes the necessity of strict third-party safety measures.” -Bhavesh Vaghela, Head of Engineering

2. User Access Control Weaknesses

Unauthorized users may obtain sensitive data as a result of uneven or poorly implemented user access controls. A Verizon study found that 68% of breaches in 2024 involved the human element, which includes poor access control management.

3. Outdated Software

ERP systems that are not regularly updated or patched leave the door open for attackers to exploit known vulnerabilities. Many attacks, such as the 2017 WannaCry ransomware incident, exploited vulnerabilities in outdated software. In fact, 60% of breaches involved vulnerabilities for which patches were available but not applied.

4. Insufficient Security Measures

Many companies use the default security settings, and many don’t invest in multi-factor authentication or encryption. Studies show that 43% of cyberattacks target small to medium-sized businesses, many of which don’t invest enough in cybersecurity, believing they won’t be targeted.

5. Human Error

Employees remain one of the biggest security risks. Mistakes like using weak passwords, clicking on phishing emails, or not following data security protocols can lead to breaches. According to IBM, human error was a significant factor in 95% of all data breaches.

Most Common ERP Security Issues

Multiple issues that ERP security solutions encounter might put organizations at significant risk. It is necessary to understand these problems to create techniques that effectively safeguard confidential data. Here are some of the most common ERP security issues:

1. Unauthorized Access

Unauthorized users may be able to access private data due to weak access controls, which could result in data tampering, theft, or sabotage. In larger businesses, when the system may be accessible to several users, this risk increases.

Businesses must put strict access controls in place, periodically check user permissions, and set up clear processes for providing and eliminating access to important modules to lessen this problem. Frequent access log audits can also aid in spotting questionable activity and stopping illegal access.

2. Data Breaches

Financial data losses, damage to one’s reputation, and legal ramifications are just a few of the terrible outcomes that can result from data breaches. Many factors, like insufficient security protocols, human error, or targeted cyberattacks, might cause them.

Companies need to carry out extensive risk analysis to find any possible weaknesses in their ERP and cloud ERP security systems. Organizations may promptly discover and resolve data breaches before they worsen by implementing incident response strategies, intrusion detection systems, and routine security testing.

3. Insufficient User Authentication

Today, using passwords alone to authenticate users has become increasingly ineffective. Sensitive information can be accessed without authorization due to weak passwords that are simple to guess or crack.

 By forcing users to confirm their identity using various methods, like a physical token or a mobile app, multi-factor authentication (MFA) greatly improves security. Organizations should also implement strong password rules that mandate complex passwords and periodic changes.

Using tools like Google Authenticator or YubiKey can bolster MFA, providing an extra layer of security for ERP systems. -Subash Vadadoriya, Senior DevOps Engineer

4. Inadequate Data Encryption

Encrypting data is necessary for safeguarding private information while it’s in transit and at rest. Data can be retrieved in the event of a system intrusion or intercepted during transmission if it is not properly encrypted.

Organizations should implement strong encryption protocols to guarantee that all private information kept in the ERP system is secured and that information sent across networks is secure. Even in the event that attackers are able to get past other security measures, this layer of protection reduces the possibility of unwanted access.

5. Weak Access Controls

Excessive user permissions resulting from poorly defined access control policies raise the possibility of unintentional or deliberate data leakage. By putting role-based access control (RBAC) into practice, businesses can grant permissions according to specific job functions, guaranteeing that workers only have access to the information required for their positions.

6. Outdated Software Vulnerabilities

Maintaining security requires keeping ERP software and related apps up to date. Cybercriminals often gain access to systems by taking advantage of well-known flaws in out-of-date software.

 To guard against recently identified dangers, organizations should set up a regular patch management strategy that guarantees all software is updated on time. Additionally, companies can remain proactive in their security operations by keeping an eye on vendor announcements for important updates and vulnerabilities.

7. Poorly Managed Third-Party Integrations

ERP systems can function better when third-party apps are integrated, but if not handled carefully, these interfaces can also present security threats. To make sure that third-party vendors follow strong security processes, organizations must perform extensive due diligence on them. Risks related to external integrations can be reduced by clearly defining security expectations and routinely evaluating third parties’ adherence to them.

8. Lack of Employee Training

As employees are frequently the weakest link in the security chain, accidental breaches may result from inadequate training. Frequent ERP security best practices training sessions assist staff in identifying possible dangers like social engineering and phishing scams.

Organizations can enable staff members to actively participate in protecting confidential data and following security procedures by cultivating a culture of security awareness.

6 Ways To Fix ERP Security Issues

A comprehensive and proactive strategy is necessary to address the security issues ERP systems face. Organizations can safeguard sensitive data, reduce risks, and secure ERP systems by putting these six measures into practice:

1. Implement Strong User Authentication

To improve ERP data security, strong user authentication techniques must be used. All ERP systems need to use multi-factor authentication (MFA) by default. By forcing users to present many kinds of verification before providing access, MFA adds a degree of protection. According to Microsoft, MFA offers strong protection, keeping over 99.99% of accounts secure and reducing compromise risk by 99.22%, even cutting it by 98.56% in cases of leaked credentials.

As potential attackers would require more than simply a password to get access to the system, this greatly lowers the danger of unauthorized access. To make password security easier, companies should also encourage consumers to generate strong, one-of-a-kind passwords and think about using password management software.

2. Establish Role-Based Access Controls

Managing user rights in an ERP system requires the use of role-based access control or RBAC. RBAC limits exposure to sensitive data by ensuring that users only have access to the information and features required for their specific duties.

 Organizations can lessen the possibility of unwanted access and the possible impact of internal threats of security incidents by explicitly defining user roles and responsibilities. As users can only access information relevant to their roles, this systematic approach improves security and increases accountability.

3. Conduct Regular Security Audits

Frequent security audits are necessary for finding ERP system flaws before bad actors take advantage of them. Organizations can find risks and take proactive measures to fix them by doing systematic inspections of security rules, configurations, and user access records.

Assessing adherence to robust security measures, analyzing the efficiency of current controls, and making sure best practices are being followed are all important components of security audits. Regular audits strengthen the organization’s overall security posture by promoting a culture of alertness on external threats and ongoing development.

“In my experience, security audits of mid-sized businesses have revealed hidden permissions that might have resulted in data breaches. During these audits, problems can be fixed before they become more serious.” -Chetan Joshi, Vendor Lead Engineer

4. Keep Software Updated

Keeping software updated is key to guaranteeing ERP system security. This covers any related third-party apps and integrations in addition to the main ERP software. Timely upgrades are necessary to defend against future assaults since software updates frequently include significant security patches that fix known vulnerabilities.

 To ensure that every part of the ERP system is safe and resistant to new threats, organizations should set up regular processes for checking for updates and applying patches.

5. Evaluate Third-Party Security Protocols

Assessing the security policies of third-party vendors and integrations is essential today.  98% of organizations have experienced a data breach involving at least one of their third-party vendors. Businesses need to make sure their partners follow security guidelines that match their own.

This includes carrying out in-depth evaluations of third-party security processes, checking contracts for compliance requirements, and keeping lines of communication open on safety measures. By doing this, businesses can improve their overall security architecture and reduce the risks related to third-party integrations.

6. Invest in Employee Training Programs

Making sure staff members are prepared to tackle security issues is one of the most neglected facets of ERP system security. Employees should receive training on how their actions can affect overall ERP security in addition to how to prevent phishing scams and create strong passwords.

Emerging dangers, secure data handling practices, and how to spot suspicious activity within the ERP system should all be covered in regular training programs. Businesses may lower the risk of security breaches brought on by human error and guarantee that every employee helps to maintain a safe environment by cultivating a security-conscious work culture.

Conclusion

ERP systems are a prime target for cybercriminals as they remain essential to business operations. A proactive approach is necessary to address the most prevalent ERP security risks, including data breaches, unauthorized access, and obsolete software vulnerabilities.

Businesses can drastically lower their chance of becoming victims of ERP security risks by putting best practices for ERP security into place, such as frequent audits, user authentication, and employee training. Investing in strong ERP cybersecurity measures guarantees business continuity, regulatory compliance, and customer trust, in addition to protecting sensitive data.

Supriya Bajaj

About the author

Supriya is a highly skilled content writer with over 8 years of experience in the SaaS domain. She believes in curating engaging, informative, and user-friendly content to simplify highly technical concepts. With an expansive portfolio of long-format blogs, newsletters, whitepapers, and case studies, Supriya is dedicated to staying in touch with emerging SaaS trends to produce relevant and reliable content.