ERP (Enterprise Resource Planning) software started out as one massive software solution from one vendor to handle nearly every facet of business. This includes areas like: Accounting, Project Management, Inventory, Billing, Quoting, General Ledger, HR, Scheduling, and Forecasting, among others. However, a new trend is emerging. Known as BOB ERP (Best of Breed), it still handles nearly every facet of business. However, the key difference is that with BOB, you piece out different sections/departments to different ERP software vendors to ensure the best possible fit for each area. For example, the accounting/financials come from one vendor, whereas all else comes from a different ERP provider. Let’s take a look at the advantages and disadvantages to these two methods.
Traditional ERP Software
- Lower cost of ownership. Buying all pieces of the software from one company, with one maintenance plan, and one implementation cost offers a lesser overall cost than piecing everything out separately.
- Fewer IT needs. The work required on an IT level is far less with only one ERP software system and it often requires less maintenance as well.
- Easier to maintain. With one system, you get the benefit of having to deal with one company. If something goes wrong, your main contact should be able to address your needs and get everything solved. If multiple things went wrong with multiple vendors, getting on the same page and correcting the problems becomes more troublesome.
- Less time commitment. From day one of the selection process, going into the evaluation looking for one solution takes a lot less time rather than having to evaluate bits and pieces of every part of the business. It also allows for a general team to evaluate, rather than needing to have someone from each part of the business taking a closer look to find the best fit.
- Less functionality. Due to the large amount of functionality an ERP can have, it is very rare one ERP solution can offer the best for all the different areas. Some areas will then be weaker compared to others, which could be problematic.
- Committed to single vendor. After buying the software, you are in a contract with a single ERP vendor. Any change from that would be a huge financial burden. Any issues with cost increases or broken promises would have to be dealt with.
- Harder to implement. Taking one gigantic system and fitting all your data and all your processes can be more expensive than taking multiple pieces from different vendors. This is especially true if you have multiple locations and many employees requiring access to the software.
- Not as flexible with complexity. With less functionality, as the business grows or added parts come into play, one ERP vendor could struggle to keep up with the changes brought on by advancing the business. This could result in needing to spend more time and money on the ERP system, which takes away from the company’s bottom line.
Best of Breed ERP Software
- More functionality. Using different vendors for different pieces will allow you to find the best fit for each needs. This can reduce functionality gaps and allow the business to perform at its best.
- Not committed to single vendors. Being in contracts with multiple vendors, it is much easier to cut ties with one if they are not living up to the hype.
- Easier to implement. Rather than take all of your data over to one large, comprehensive system, you take over bits and pieces to various different solutions. Breaking it down into chunks and working on it for cleanings and reformatting is often easier than doing it all at once. Also, getting a piece of software implemented with hardware and company processes in place is a quicker, less painful process than getting one solution to fit everything.
- Better able to handle complexity. With the better functionality, the more complex the business is, the easier it will be able to handle your changing needs. So in addition to helping you grow, it can also grow with you and continue to support as the company improves.
- Higher cost of ownership. With multiple pieces from multiple companies, the costs of implementation and maintenance will add up since each company is having to do it for their parts.
- More IT needs. The work required on the IT side is greatly increased by the various software pieces since each piece will require unique time and attention.
- Harder to maintain. Multiple separate pieces from different vendors means there will be more room for error problems. If one company messes up and causes problems, it can still affect the company as a whole if it is in an area such as accounting or payroll. Making sure everything is up to date and running smoothly is also more time consuming as you have many areas to check.
- Larger time commitment. From evaluation, to implementation, to maintenance, working with two or more systems will always require more time than one. You check the same processes in each of the four whereas it would be just one check with the traditional method of ERP.