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.⁂