ERP or Best-of-Breed? (Part 4): 10 Ways to Get the Best of Both — Together

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Based on the factors we outlined in our previous installment exploring the ERP vs. best-of-breed issue and the scope of your project, your strategies for deftly grafting BoB onto your existing enterprise application “backbone” will, of course, vary.

In this next part of the series, the following 10-point checklist from recent Spend Matters research on preparing for and undertaking this type of operation may be helpful. It focuses on how to best use BoB cloud app suites and ERP together.

10 Best Ways to Marry ERP and Best-of-Breed

  1. Post-ERP “optimization.” Get best-of-breed “R” to get value from ERP “I.”
  2. Reduce IT costs and integration headaches with BoB suites.
  3. Use diagnostics and benchmarking to get a reality check and to “size the prize.”
  4. Don’t overly re-engineer before automating. Adoption drives transparency, which in turn enables continuous refinement.
  5. Segment by spend category and by transaction volumes as a start.
  6. “Surround” the ERP at a process level (e.g., P2P or source-to-contract).
  7. “Surround” the ERP at a master data level (e.g., supplier management).
  8. “Land and Expand.” Land some savings and expand the value. Treat it as a services project if necessary (see point #3 above).
  9. Don’t equate a single ERP vendor with a single harmonized modern application.
  10. Think about capabilities and outcomes rather than vendors and products.

Ultimately Think About Capabilities and Outcomes — Not Vendors and Products

We touched on some of these points earlier in this series, but that last one is most strategic.

It’s important to consider some future requirements in your decision as well. This isn’t about including “bells and whistles” functionality, but rather key functionality that will be coming down the road.

For example, if your firm will need to support multi-tier supply chain scenarios, that will require a fundamentally different data model (similar to moving from a “one-to-many” on-premise application data model to a “many-to-many”-based SaaS data model). This is not an overhaul that you should expect from your ERP vendor anytime soon. Or consider where you have some increasingly tight linkages between your sell-side and buy-side processes that in turn would favor a BoB provider for contract lifecycle management (CLM).

Of course, merely choosing between various COTS (commercial off-the-shelf software) providers is only part of the story, because you may choose to develop you own custom software with lower-level tools. You might also go the other way and get your software from an MSP (including BPO providers).

The bigger the gap between the criticality of your need (and the truly strategic benefits you get from the capability) and the availability of commercial solutions, the more you need to consider not just insourcing, but also picking a more advanced niche BoB provider who can be a strategic development partner with you (e.g., where some aspect will be proprietary to you within your industry — but the rest available for the provider to resell).

Now, the Bigger Picture

This all paints a much bigger picture than just the “ERP or BoB?” question at the tip of the iceberg. The discussion of apps vs. suites and BoB vs. ERP is important, but it’s still narrow.

In the next part of our series, we finally get to dive into the crux of this matter: why enabling agile IT architectures to enable agile procurement is the Holy Grail.

Want to get right into why “Agile” is the key? 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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