One of the articles in the Summer issue of CPO Agenda asks One tool or a whole toolbox? Another viewpoint in the never-ending ERP vs. Best-of-Breed debate, it notes that despite the improving functionality of ERP systems, many companies still turn to Best-of-Breed ( Bob ) vendors to meet their procurement and supply chain needs.
The article notes that some ERP-centric organizations, such as committed customer Delta Air Lines which deploys a single company-wide installation of SAP, runs e-Sourcing and spend visibility software from VerticalNet. The reason, according to Bob Currey, General Manager of Sourcing Information and Supply Management, is that ERP systems are excellent at what they were originally designed for – accounting and transaction processing – but when areas of the business such as the supply function want to extract information from that accounting and transaction data, it can be difficult for them to locate and access the right numbers. In terms of procurement, the information on spend is there alright, but not in a user-friendly format. The ‘canned’ reports don’t meet all our requirements, and custom-developed reports take time and programmer effort. … In any business, programming resources are often at a premium. You can build a business case and wait in line – and then carry on waiting, perhaps indefinitely, for the resources that you need to be made available. Or you can go to a ‘best-of-breed’ vendor, and buy what you need, off the shelf. For us, the time-to-benefit of the VerticalNet solution made a lot of sense.
Of course, as the article points out, from an IT perspective, the ERP solution has obvious merits: better integration, an existing commercial relationship, simpler implementation – and, as the Americans say, “one throat to choke” if something doesn’t work as it should. In contrast, a best-of-breed vendor may offer software that proves troublesome to integrate, might be difficult to deal with, and can lack long-term commercial viability.
So what should you choose?
After all, even as Simon Pollard, Vice President for Discrete Manufacturing at SAP notes, Although we believe customers much prefer to buy a suite of software built around a single platform, our assumption going forward is that we will cohabit with specialised best-of-breed vendors. We can’t do absolutely everything, and wouldn’t want to.
The reality is that there is no Magic-Bullet One-Size-Fits-All One-Software-Package-Does-All solution for any area of your business – and that we’re probably years, and years, away from getting close. My rationale – the pace of innovation in software is still increasing, indicating that there are still miles and miles to go.
Best-of-breed applications tend to fill niches that the big (ERP) systems will overlook, either because the vendors of the big (ERP) systems will not assign the same importance to them or determine that the cost of offering those solutions does not justify the expected benefits (especially compared to another potential offering). In addition, best-of-breed solutions are often years ahead of their traditional ERP counterparts. And when you consider the double-digit percentage improvements these tools can often have across the board, it just makes sense to augment your traditional enterprise systems with best-of-breed solutions.
Furthermore, now that many of the best-of-breed solutions are delivered on-demand using the software-as-a-service model, you can be up and running almost instantly since on-demand solutions have been found to perform better than traditional installed applications, upgrade easier, and install faster, on average, according to Aberdeen Group’s recent study The On-Demand Supply Management Benchmark Report: Enterprises Turn to the Web and Find Quicker and Better ROI to Help Achieve Supply Management Goals (sponsored access). Furthermore, when enterprises deploying on-demand solutions improve spend under management by 28%, which could lead to additional savings of 1M to 3M above and beyond what you would get without the best-of-breed on-demand tools (see: The On-Demand Supply Management Benchmark Report), the business case becomes overwhelming to at least give it a shot.