ERP or Best-of-Breed? (Part 3): The Realistic Downsides of BoB

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We began this series by reinvestigating the age-old question, “ERP or Best-of-Breed?” The semantics and the assumptions alone are problematic, so we had to throw a few clarifying questions out there first. Then we delved into how to put yourself into a strategic sourcing mindset to begin considering the issue — but we only began scratching the surface of the pros and cons of the various options!

Consider the Realistic Downsides of Best-of-Breed

With that, the theoretical downside of using BoB solutions is generally twofold:

  • Increased time/effort/cost of integration
  • Increased vendor risk (viability risk, implementation risk, support risk, etc.) from having a smaller solution provider

In practice, if the favored BoB app/suite provider doesn’t screw up the sales process (which does happen fairly often), the ERP option is typically chosen when IT doesn’t want to put in the incremental effort to deal with another vendor or when the ERP provider sweetens the pot with price concessions — and/or threatens software audits and license penalties (this happens too!).

It’s generally not because of a higher TCO, including higher integration costs, given that systems are becoming more open (e.g., via web services and micro services) and BoB providers have become very adept at integration.

The vendor risk issue has also become tamped down somewhat with BoB providers because they rarely die. Rather, they get gobbled up by large firms with much larger solution footprints and market ambitions. Also, firms are learning how to buy “XaaS” solutions more effectively, especially since ALL the incumbent technology providers are also moving to the cloud, and IT is becoming more adept at managing a cloud-based app infrastructure.  

In terms of implementation and support risk, this is an area too large to address within this series, but there’s usually plenty of blame to go around here, and plenty of ways to address those risks. Contact us if you want to talk about your particular set of issues.

Other Decision Factors to Consider

Of course, you’ll need to run your own TCO analysis, but also consider other decision factors here regarding things like:

  • Business criticality/impact of the needed applications (beyond “hard ROI”)
  • Current internal application landscape
  • IT organization’s maturity (focus on business results, partnering, change, etc.)
  • Future requirements and the flexibility needed to accommodate them

The first three are straightforward. If you have a large business opportunity through such differentiated capabilities and if you also have the ability to build that capability, you’ll pursue it. Of course, you need to get everyone on the same page regarding opportunity — especially as it relates to THEM.

The last item above is perhaps even bigger, especially given the volatility of digitally disrupting value chains (but it’s also more “hidden”). A single instance ERP environment in a slow-changing regulated industry will be very different than a global discrete manufacturer with 50 ERP systems!

Based on these factors and the scope of your project, your strategies for deftly grafting BoB in with your existing enterprise application “backbone” will vary, and the next part in this series, which will touch on how to best use BoB cloud app suites and ERP together, may be helpful.

Want to get right into some action items? Download your copy of "ERP vs. Best-of-Breed Decision Guide: 3 Recommendations to Kill the Debate Once and For All."

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