Pros and Cons of Best of Breed and Centralized ERP Systems
It is becoming a popular trend for companies looking for an ERP (Enterprise Resource Planning) software solution to select multiple vendors rather than just one, which is known as the Best of Breed option. Best of Breed occurs, for example, when a company picks one ERP system to handle the financials, another ERP to handle engineering, and another ERP for manufacturing. This allows them to pick the best of the best for each area, rather than settling for one ERP, which may have strengths and weaknesses. Although this sounds ideal on paper as there are many pros, there are also many cons to this method, as there are to one centralized solution as well. Let’s take a closer look at these pros and cons to see what the best fit for you may be.
Best of Breed ERP
Vendors flexibility. You are not trapped with the pricing and functionality of one vendor. By having multiple, you are protected from dangers like dramatic price increases, losing the ERP product due to vendor going out of business, and updates that cause issues. If any of these happen, you still have another ERP vendor to lean on and can use to not suffer.
Top notch functionality. Since you are selecting the best fit for each area of the company, every aspect should be running smoothly. The optimization of processes should be very noticeable and improve the company’s output, make employees happier, and make more money for everyone.
Price is significantly higher. When you buy multiple systems from different vendors, that comes with multiple implementation costs which include training, data migration, and maintenance. Breaking this up into smaller pieces means vendors will have to charge you more so they can make a profit.
IT infrastructure requires more attention. The IT department, or cost charged by your vendor, becomes much larger when you are trying to manage multiple systems for your company. Independent time and attention is given to each system as they all have different needs and maintenance on them is unique as well. Should you wish to integrate any of these systems as well, that will come with a price tag and additional time and resources needed.
More affordable. With one vendor, you can get a concrete price for everything- implementation, configuration, and ongoing maintenance. This will likely come at a lesser cost because it will be a larger installation, whereas having three smaller installations would come at three separate costs.
Less work required to run the system. Running one ERP is far easier than running three as you only must do items like data migration and configuration once, rather than three times. The same goes for future updates and training on the ERP.
Sacrificing best functionality. Going with one ERP means there will likely be areas of strength, but the sacrifice comes in the areas of weaknesses. There will be other ERPs that may excel in financials for example, but because one ERP is better in all other areas you choose that one. In that case, the financials will suffer; it does not mean they will be bad or fail, but it does mean it is not optimal.
Committed to one vendor. You are stuck with one vendor because you have no other options once you are committed. If they raise prices for upgrades or do an update that you do not like, you must pay and go with it. If you completely bail out, you are back to square one and out of all the money and time you have spent on that system.