ERP implementation is increasing in Indian organizations, but many might not be on the right side of the law: compliance with data privacy under DPDP Act, 2023. While ERP systems consolidate HR, financial and operational integration, they are also a central repository of truth for a myriad of sensitive personal (and corporate) data. Without due diligence, ERP implementation can quickly become a compliance hazard under the DPDP Act.

ERP Systems: How or Why Will They Behave Like Sensitive Citizens?

Enterprise Resource Planning (ERP) systems are built to integrate core business functions-handle everything from payroll and employee onboarding to vendor contracts and customer databases. It’s an environment having plenty of information on ERP systems which include:

· Names of employees, contact details, Aadhaar numbers, salaries and health records

· Customer orders, reviews, payment details

· Suppliers’ contracts Details about your bank GST numbers

This type of personal and sensitive information is exactly what is protected under the DPDP Act. While other regulations or even internal policies have wiggle room, GDPR is black and white, and it is extreme. One slip-up, whether in data migration, user access, or third-party integration, and you could have a 9% legal exposure and growth.

What the DPDP Act Requires (Simplified)

The Digital Personal Data Protection Act, 2023 is India’s framework for how organisations collect, store, process, and share personal data. It applies to all private and public entities processing digital personal data.

Here are key obligations ERP-linked projects must meet:

· Valid Consent: You must have free, informed, and revocable consent before processing personal data.

· Purpose Limitation: Only collect and use data for specific, legitimate business purposes.

· Data Minimisation: Avoid collecting more personal data than necessary.

· Retention Limits: Store data only for as long as needed for its purpose.

· Breach Notification: Notify the Data Protection Board in case of a data breach.

Data privacy auditors in Ahmedabad and across India are increasingly being consulted during ERP rollouts to ensure these obligations are met.

Risks in ERP Implementation Without DPDP Safeguards

A typical ERP project involves multiple phases—data migration, system configuration, integration with third parties, and user onboarding. Each phase presents risks if data privacy isn’t prioritised:

· Consent Not Captured: Data from legacy systems may be moved without revalidating user consent.

· Over-Access: Broad internal access can expose sensitive data across departments unnecessarily.

· No Deletion Rules: Data often sits indefinitely in ERP systems without automated retention workflows.

· Vendor Non-Compliance: Integrated tools and plugins may not meet DPDP standards.

· Weak Audit Trails: Lack of logging can make it hard to detect or investigate data misuse.

Ignoring these issues can attract regulatory penalties of up to ₹250 crore and damage your business’s reputation.

Bridging the Gap – How to Embed Privacy into ERP Projects

The key to bridging ERP and data protection is to adopt a privacy-by-design approach. Here’s how businesses can make their ERP systems DPDP-compliant:

· Conduct a Data Protection Impact Assessment (DPIA) Identify what data will be processed, where risks exist, and how to mitigate them—especially during system configuration and data migration.

· Map Personal Data Flows in the ERP Have the knowledge of what data you’re collecting, where it’s stored, who can access it, and how it moves across modules and third parties.

· Implement Role-Based Access Controls Limit access to personal data based on job roles. No more ‘all-access’ dashboards.

· Automate Retention and Erasure Policies Configure workflows to auto-delete or anonymise data once it’s no longer needed.

· Embed Consent Management Tools Build interfaces that let users (employees, customers, vendors) give, withdraw, or manage consent.

· Maintain Detailed Logs and Audit Trails Ensure all interactions with personal data are traceable—crucial for breach investigations or user rights requests.

How Cyberra Legal Services Can Help

At Cyberra Legal Services, we operate at the intersection of law and technology—offering expert guidance as one of the top data privacy law firms in India. We support businesses with ERP compliance by combining legal insight with technical assessment. We also

collaborate closely with data privacy auditors in Ahmedabad and cyber security consulting firms to offer holistic solutions.

We offer:

· ERP Privacy Audits to assess compliance readiness

· DPIA Reports tailored for ERP projects

· Policy Drafting for data governance, access control, and user rights

· Consent and Grievance Redressal Workflows

· Cross-Border Data Flow Advice

· End-User Training for staff, IT teams, and compliance officers

Whether you’re planning a new ERP deployment or reviewing your current system, we can ensure that legal risk doesn’t derail your digital goals.

Final Thoughts: ERP Success Needs Legal Alignment

ERP systems are central to modern business, but in the age of data privacy regulation, their implementation must be legally sound and privacy-aware. With the DPDP Act now in effect, businesses must act swiftly to ensure compliance.

If your ERP system processes personal data—and nearly all do—it’s time to ask: Is your ERP legally compliant and privacy-ready?

Contact Cyberra Legal Services today for expert guidance on making your ERP rollout compliant, secure, and future-ready.