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.
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:
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.
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:
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.