For many businesses, an enterprise resource planning (ERP) system is a valuable, universal solution—the software seamlessly integrates into every aspect of an organization to monitor and optimize accounting, human resources, supply chains, and customer service, and optimizes critical information flow. Best practices and best processes rule the day.
But, is it possible to have too much of a good thing? If your business successfully operates in a mixed application environment or you don’t reasonably anticipate a need for software functionality beyond the programs you currently use, a full-blown ERP solution may simply be more than is practical. A best of class (also known as best of breed, or B.O.B.) approach may be your best bet.
Which to choose? Let these key considerations be your guide:
Total Cost of Ownership (TCO)/Long-term value: The initial purchase price of software can be almost deceptively low, causing some businesses to commit to a much larger solution than they need. When installation, deployment, maintenance, support, and upgrades are tallied, TCO can easily reach a tipping point that exceeds value-add. Be sure to identify and tally all costs before making a choice.
Integration: When exploring integration, it’s important to understand a key difference between an ERP system and best of class software. An ERP system is designed based on its own logic, which may not initially align with your company’s current practices, necessitating customization. Best of class software, on the other hand, is smaller in scale. It can be built to fit your processes from inception. A commonality, however, is that both may be customized to evolve with your business.
Competitive Advantage: Maintaining and growing market share are largely dependent on service, and your software solution needs to allow your employees to build superior, difference-making customer relationships seamlessly, from initial touch points through assurances of fulfillment and regulatory compliance. Here, best of class software and an ERP system can provide the infrastructure to support these efforts with efficient, transparent workflows. Plus, both offer customization capabilities that allow you to preserve and enhance established, brand-differentiating processes with a consistency that translates to a competitive edge.
These broad buckets are a good jumping off point for a conversation about ERP vs. best of class software, but let’s do an apples-to-apples comparison so you can make a decision that is best for your organization.
When to Implement Best of Class
Best of class software may be right for your company if:
- Each department requires the best possible type of product, with the most features and functions
- Substituting, flexing and/or maintaining individual software components is imperative to process and service optimization
- You work with a number of specialized vendors
- Access to the latest technology improves performance in individual departments or across the board
The trade-offs must also be weighed:
- Multiple systems, databases and vendors can be difficult to manage
- Training can be complicated
- Troubleshooting in a multi-vendor environment can be problematic, interfering with data integrity and IT effectiveness
- Interfaces, processes, presentation layers, and data models will differ for every best of class application
When to Implement ERP
A comprehensive ERP solution is a good fit if:
- Consistency in processes and modeling across the entire organization is a primary goal
- Streamlining vendor relationships is ideal
- You wish to contain implementation, training, and maintenance costs
- Optimal company efficiencies dictate a single data entry point into one system
- Your business processes can support a one-platform methodology
An ERP system can mean sweeping changes to business practices, which can come with some drawbacks:
- Automated processes are used so the system works to the software’s best practices, not necessarily the ones your company currently uses
- The one-vendor solution could mean limited flexibility in adding/deleting/modifying ERP system features and functions
ERP vs. best of class isn’t a decision to be entered into lightly, especially since profitability and customer relationships hang in the balance. Reach out to a Wipfli expert today to discuss the practicalities of each solution, and which will put you in the best position to take advantage of current and future opportunities.