Single ERP Or Best of Breed?

Single ERP Or Best of Breed?

Eric Kimberling (ERP and Business Consultant)

Although it may sound shocking to some that have jumped on the ERP bandwagon, ERP is not the answer for everyone. In fact, during our ERP software assessment and selection process, it is not uncommon for Panorama Consulting to conclude that ERP is not the right answer for a client.

For some reason, it is easy to get caught up in all the hype and marketing of ERP. Big companies such as SAP and Oracle do a great job of convincing us all that ERP is an absolute must for companies of all sizes and industries. However, that's just not the case.

First, it is important to remember that there are other options out there. ERP in the traditional sense means implementing a single system to handle all critical business functions. But some companies instead find that implementing and integrating niche packages that handle specific functions extremely well are more suited for their organizations. Others find that their business and operating models are so unique that a completely custom solution is a feasible option. With open platforms such as .NET and WebSphere very pervasive these days, custom solutions aren't as crazy of an idea as they were 5 or 10 years ago.

So how is one to decide? What are the tradeoffs? In general, there are three key considerations that should help you guide your decision:

1. Business Risk. This is probably the most important. ERP is risky from a business perspective because its functionality may not meet the requirements of your business. Custom or best of breed solutions are risky from a technical perspective because, if not managed properly, the cost and time associated with developing a system from scratch can quickly spiral out of control.

2. Technical Competency. Many ERP systems use proprietary development tools, which means that you as a company will have to rely solely on the vendor and/or you will have to hire employees with very specialized skill sets to maintain and modify the software going forward. On the other hand, if you go with a custom or best of breed solution, you may have to beef up your IT staff with people that know .NET, integration, etc. In either scenario, most companies require more technical staff and resources after they implement new software.

3. Business Processes. This one is easy to overlook. During the evaluation and selection process for new software, it is important to identify and prioritize which business processes are the most important to your success and competitive advantage. Those are generally the ones that you don't want to break and want to continue to find ways to improve. It is in these areas that you want to be much more discriminating in terms of what software will meet your needs. Many companies have spent years developing and tweaking their business processes to give them a competitive advantage, so it is important not to give this up just because you are implementing new software.

While the above three areas do not suggest that any option is better than the other, they do provide a few starting criteria to use when determining which direction you want to go with your organization. In many cases, companies find that one particular ERP package will meet all their key requirements. In others, they find that after evaluating their ERP options, their needs will be better suited with a custom or best of breed solution. In either case, what's important is that companies carefully consider their options and scenarios as part of their overall IT assessment and selection process.