When it comes to choosing a business solution there are two approaches: the ERP and the "Best-of-Breed". The purpose of this article is to help you make the best decision for your business which is why we have provided you with the advantages and disadvantages of each.

ERP solutions (Enterprise Resource Planning) have historically dominated the market. But in recent years, BOB solutions (Best-of-breed) seem to have taken the lead, giving greater flexibility (in terms of customisation) and in meeting more complex needs.

To better understand these different solutions, we will start by defining an ERP and a BOB and then outline each of their advantages and disadvantages. 

Main features of an ERP 

An ERP system helps you manage your entire business. It's essentially a suite of software packages that performs accounting, sales management, human resources, project planning and other business tasks. 

An ERP solution has three main characteristics:

  • Integrated system 
  • Operates in real time
  • Process automation 

Why you should implement an ERP

There are many benefits in implementing an ERP solution, here are the major ones.

Since an ERP is a centralised solution, it allows to have all your data is one place avoiding data redundancy. With that being said, you will be able to easily access data from any department. Moreover, you will have more visibility on all your resources and activities across all the departments.

Additionally, you will be able to easily analyze and compare data from different departments by instantly generating reports. 

By implementing an ERP solution, you will be creating more synergy between your departments, improving your firm's overall performance. 

What you should think about before implementing an ERP

The most striking disadvantage is its price. Such a solution will involve many costs, both in terms of upfront investment or training time required to implement it.

We have identified different types of concealed costs that come with implementing an ERP, these include: 

  • Implementation : You won't be able to install the ERP by yourself, you will have to hire a team of professionals that will set up everything for you. The reason why it's so costly is because installing an ERP is complex it requires changing your operating systems, upgrading or changing servers, and changing other hardware and software that you use. 
  • Training: As mentioned earlier, an ERP is a complex applications, which is why you will need to hire professionals that will train your employees on how to use the programs. This will require lots of time and effort from your employees.
  • Customization: For your business to run smoothly you will need to develop custom reports so that your employees can carry out their tasks efficiently. This would require all full time IT staff dedicated to creating these custom reports. 
  • Process redesign: By implementing a new ERP system some of your business process are likely to change in order to correspond to the ERP's processes.  
  • Maintenance: Like any other software, your ERP will need to be maintained and to ensure it keeps running properly.
  • Upgrades: To avoid being out-of-date your ERP will require regular updates which is costly because t's such a complex and heavy system. Keep in mind that upgrading your ERP could affect your business processes and would incur more costs.
  • Support: Don't expect to become an expert ERP user overnight, these things take time. You and your team will most probably run into some difficulties. You will definitely require technical support to help solve these issues which is another thing you could add on your ERP bill. 

Change management is not an easy process, it takes time, money, patience and strong commitment from the entire organisation. For it to be successful, everyone has to be on board. Which is why, you should start your change management early on in the process. One way to do it is by leaving the Status Quo!

Many companies often don't take into account the sheer complexity of an ERP and how much change is required to implement it. These figures speak for themselves: 51% of firms surveyed saw the implementation of their ERP as a failure. Which is why preparing for change is crucial. 

Because the ERP will take over all aspects of your business, there may be imbalances between the different modules, including functionality or ease of use. For the solution to be optimal, it will require a lot of maintenance and software updates.

But here's where it really hurts, let's say you're experiencing disparities between the modules, it will be very difficult for you to replace them even if you have found a more adequate solution. The company then becomes dependent on the solution. 

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For example, In 2000, Zetes an international group specialised in identification and mobility invested in a "traditional" ERP. However, due to insufficient business coverage, a lengthy deployment and increasingly expensive maintenance costs, Zetes decided in 2004 to equip it's head office in Brussels with a "best-of-breed" solution. This allows the company to gain operational efficiency, flexibility and autonomy.

The company went on to implement the solution in most of its branches. Today, more than 300 employees are using the new solution. 

Now that you've learned about the advantages and disadvantages of an ERP, we are going to focus on best-of-breed solutions, and what they bring to the table. 

Main features of a Best-of-Breed solution

A best-of-breed solution focuses on providing the best product of its category.  A company would purchase software from separate providers in order to obtain the "best-of-breed" for each application area; for example, an accounting  package from one provider and a human resources package from another provider. 

A best-of-breed solution has three main characteristics:

  • Specialised
  • Flexible
  • Customisable 

Why you should implement a BOB solution

The first and most obvious advantage is having the best solution for each of your targeted areas. 

This type of solution allows you to become more agile in the way you work. This is because best-of-breed solutions allow you to build and create the perfect environment for you to operate in.  By doing so, you'll be able to easily identify problems and come up with solutions that really correspond to your needs and optimise your activities. 

Essentially, by implementing a best-of-breed solution you're gaining in efficiency and flexibility, which is not really the case with ERP's. Because they are designed to address broad issues, they don't have the ability to meet very specific requirements on specific issues.

What you should think about before implementing a BOB solution

A company implementing best-of-breed solutions will most probably have a different software for each of their target functions.

You will have to deal with numerous providers and numerous databases. This will result in inconsistent information across departments since the data is not centralised and you will end up with data redundancy and information that is scattered.  

Sharing data across teams and departments will be difficult when everyone is using a different type of system. Your employees will have to spend more time trying to extract the right kind of information rather then spending time on revenue generating activities. 

Moreover, integrating with other systems is complicated process.

These issues will have a big toll on your employees performance and productivity which can will hinder the company as a whole. 

How to choose the perfect solution for your organisation

Choosing the right system for your company is not easy. Between best-of-breed solutions, a global ERP system or even a hybrid you'll definitely have to weigh the pro's & con's. 

But not to worry, you won't have to do this alone. To help you out, we have outlined the three most important questions you should be asking yourself when searching for new tools to implement:

  • Which processes and activities are you looking to improve? Once identified, you'll have a better idea of the type of tool you should implement.
  • How important is flexibility and scalability? This is a crucial step in your decision making process. You must find a solution that will meet your needs today and tomorrow. 
  • How is my company structured? is it based on a functional, matrix or project structure? Business structures are essential variables to take into account, regardless of the sector of activity that we are looking at. Choosing an ERP or a best-of- breed will depend on your organisation's structure

Do you want to know figure out whether a BOB is the right way to go? Or do you think an ERP is better suited for your needs?

Here's a short quiz that will give you a better idea on the type of tool you should invest in!

Are you more ERP or Best-of-breed?

  YES NO
The issues I am trying to solve involves all the activities within the company     
I have 6 months (or more) to address this issue     
I have internal resources to support the implementation of a new tool    
The company has the necessary means to invest in a new tool     
Having a centralised tool is a priority    
Flexibility is a priority     

 

A majority of "YES"? Then you should invest in an ERP. This Capterra ranking will help you find the best ERP solution for your organisation. 

A majority of "NO"? Then you should invest in a Best-of-breed solution. If you want to improve areas such as project planning, time management, resource planning and increase your visibility, ask for a free consultation with one of our advisors.