When choosing or upgrading business process software, there are two approaches: the Integrated ERP and the “Best-of-Breed”. Choosing the right approach is a real challenge for any business in this digital age. Each approach has pros and cons concerning what is ultimately best for you and your business. For example, a single integrated ERP solution ensures tight integration of business processes and data that lives in a single place to be used for transaction execution and information analysis. On the other hand, solutions considered “best” may split processes between software modules and require duplicate transaction entries and the development of interfaces to keep multiple databases in sync.
Let’s look at the real meanings of each of these terms and examine which may offer the best solution for manufacturing and engineers looking to decide on an integrated ERP vs best of breed.
Integrated ERP System
An integrated ERP system is a single software application used across multiple departments within your company to simplify and streamline your business processes. Vendors that sell all-in-one applications embrace bundling and grouping collections of modules that many companies typically want. Therefore, if you need many different functionalities, this can be an easy way to avoid choosing extra add-ons as they are already there for you. In addition, the diverse functionality areas are integrated right out of the box and fully supported by the same vendor, meaning that choosing an all-in-one solution gives you easy access to various functionality right off the bat. However, it would be good also to consider that you are paying for everything whether you need it or not, which can come at a higher cost than best-of-breed solutions.
Advantages of Integrated ERP System
- Quick wins and results
- Simplifies the IT footprint
- Reduces the total cost of ownership by using delivered integrations
Disadvantages of Integrated ERP System
- Greater potentials for software functionality gaps
- Greater organizational change to align with general ERP functionality
- High initial invesment as you might be paying for modules that are not needed
Best-of-Breed ERP
Initially, a Best-of-Breed ERP system is built by choosing individual software for each business function, depending on the department’s needs. These solutions are usually incredibly powerful for the job and cover all functionalities needed on a departmental level. Departments retain responsibility for their software.
The implementation times for standalone software are fast. The reason is that there is little to no information exchange between the modules; each exists as a data silo.
Advantages of Best-of-Breed ERP
- Deeper and industry-specific functionality
- Minimizes potential for software functionality gaps
- Not locked into a single vendor
Disadvantages of Best-of-Breed ERP
- Greater total cost of ownership for maintaining custom integrations
- Adds complexity to the IT footprint
- Complex Integration. Potentially data silos until integrated
How to Choose the Right ERP Implementation for your Business?
Selecting an ERP solution is likely one of the most important investments you will make for your organization. As with all business decisions, it is critical to focus on your needs and requirements. If there isn’t one clear answer at the start, you need to keep a few things in mind.
The first thing you need to understand is that no ERP vendor, not even those that advertise themselves as a best-of-breed solution, is the best at everything. Some ERPs have excellent manufacturing capabilities, some have powerful project management modules, while others may focus on the supply chain functions. When looking at an all-in-one ERP, you should review the capabilities that matter most to you. For example, if you are a private equity firm, it won’t matter if the suite includes materials requirement planning capabilities. However, Suppose you’re a SaaS company. In that case, the complexities of the subscription billing models, and revenue recognition requirements might lead you to favour a best-of-breed financial management solution that excels in this area. The same applies when looking at a best-of-breed solution; you should focus on the most relevant capabilities to your organization. For example, if you are a food manufacturing company that needs robust ingredient traceability, inventory & warehouse management, transportation integration, and other specific functionality, an all-in-one food manufacturing suite could be a better overall fit.
When choosing an ERP for your company, you must pick a solution that currently meets your business’s needs and is strong enough to address your future needs. Keep in mind through your analysis, that the general rule of 80/20 can apply. If you can get 80% of the requirements met by one system, then the remaining 20% needs to be discussed further. This can either be by changing your requirements or processes to fit the solution available or you will need to look at customizing the solution or look for another solution and perform an integration. There are many decisions and discussions to be had before finalizing your decision and this is where we can help.
If you have more questions about which approach to take, including a hybrid approach, please do get in touch. We would be more than happy to discuss these options and how we can help you choose the best option that best suits your business.
