Q.2 ERPs are often touted as providing ‘best practice’ in functionality and business processes. However, many organisations have their own business processes and often do not want to change. If an organisation is unwilling to change its business processes, can it gain any value from an ERP? How could this be achieved? What are the risks?  

If an organisation is unwilling to change its business process, it can gain some value but not all of them from an ERP. According to Sumner (2005, p35) the business process change associated with making reengineering work is essential to the success of ERP. However, it is possible for an organisation to gain value from an ERP without changing business process. This could be achieved by modifying the ERP software to meet the organisation needs. Nevertheless, there may some risks when modifying the ERP software as outline by Sumner (2005):Ÿ             The potential benefits the package could offer are limited. For example, the technical support may not available from the vendor;Ÿ             An organisation may need to hire a full time employees to maintain the software’s performance and efficiency;Ÿ             The organisation may be less responsive to changing markets and to shifts in competitors’ strategies;Ÿ             An organisation would need more time to implement the ERP software package.Ÿ             An organisation would spend more money to modify the change of the software;

Ÿ             The data may not integrate functionally through each module. Many of the inconsistencies may not be eliminated;

Ÿ             An ERP may not support these unique requirements/business processes;

Ÿ             Customisation is difficult, since modules are integrated;

Ÿ             Customisation is not constrained by the tool ‘best practices’;

Ÿ             Customisation may entail the expense of much external consulting;

 Q.6 In recent times, there has been a trend away from total (or vanilla) ERP implementations towards ‘best of breed’ systems. Research this trend and describe how it differs from standard ERP implementations. Contrast the approaches and describe advantages and disadvantages. What are some of the considerations that would affect the decision to use the ERP or best of breed approach?  

A standard ERP system provides cost saving, convenience and efficient data sharing (Sumner 2005). It has an integrated database supporting different modules in an organisation. The Best-of-breed approach therefore usually provides richer functionality (On line Consultant Software 2007). The Best-of-breed approach is designed specifically in just one application but the ERP system provides multiple applications with a common database and consistent user interface.

Some disadvantages of a standard ERP system are:

• ERP system can be very expensive to install often ranging from $US 30,000 to $US 500,000,000 for multinational organisations (Wikipedia 2007);
• ERP system can be difficult to use;
• ERPs are often seen as too rigid and too difficult to adapt to the specific workflow and business process of some companies—this is cited as one of the main causes of their failure (Wikipedia 2007);
• There are frequent compatibility problems with the various legacy systems of the partners (Wikipedia 2007);
• An integrated ERP system has taken longer to implement. It is very time consuming (Sumner 2005);

Some advantages of a standard ERP system are:

• One vendor solution typically allows the users to communicate with just one source (Geishecker 2007);
• The ERP system may have lower licensing costs and does not require costly interfaces and is usually less expensive (On-line Consultant Software 2007);
• The ERP system has an integrated database with easier access to shared data (Sumner 2005);
• The shortage of IT people who can integrate and maintain disparate systems is a big advantage to the integrated approach (On-line Consultant Software 2007);
• Fewer inconsistencies; reduction in clerical overheads; better responsiveness to customers (Sumner 2005);
• Timely decision making; more effective customer service; elimination of redundant tasks and bottlenecks (Sumner 2005);
• Ability to integrate systems, instead of maintaining many separate systems (Sumner 2005, p43);
• Ability to use timely operational data (Sumner 2005, p43);
• Reduction in time and cost systems development and maintenance (Sumner 2005, p43);
• Ability to enhance systems without incurring the time and cost of custom development and modifications (Sumner 2005, p43);

Some advantages of a best-of-breed approach are:

• In general Best-of-Breed vendors have selected a product offering that matches their core capabilities. They have taken the path of “doing one thing and doing it well” (Geishecker 2007). As a result, they have total experience relevant to that one thing (Geishecker 2007). Expertise potential of Best-of- breed approach is better than an ERP implementation;
• Best-of-breed there is no need to worry about the impact of implementation decisions on other products so it can take less time to implement (Geishecker 2007);
• With best-of-breed, there may have more options that match the functional requirements of an organisation (Geishecker 2007);
• Specialised feature of Best-of-breed can create a competitive advantage which may cut cost or increase revenue (On-line Consultant Software 2007);

Some disadvantages of a best-of-breed approach are:

• Emerging technologies have seen the reality of components and open systems, but the interfaces to external packages still have limitations (Geishecker 2007);
• Lack of integration;
• Growing complexity;
• Higher overhead costs as more tools are added over time;

Some of the considerations that would affect the decision to use the ERP or best-of-breed approach are:

• Consider the user productivity tool being replaced – Will you be able to modify or configure the application to suite organisational needs? (Benjamin 2007);
• Consider the organisation’s existing technology infrastructure – ensuring the technology of the chosen system fits together with the organisation’s existing IT infrastructure will help minimise implementation and support costs for the project (Benjamin 2007);
• Think about the flexibility of the system – will it help the organisation to survive in a competitive marketplace for 5 or 10 years (Benjamin 2007);
• Think about the competitive advantages (i.e. functionality) of the system – what can it offer an organisation? (Benjamin 2007);

References:

Benjamin H 2007, Best of breed vs. Suite – what to consider before making a CRM decision, viewed 26 November 2007, http://www.crm2day.com/library/50163.php.

Beth C 2007, ‘Best-of-breed or integrated approach to monitoring tools?’, InformationWeek, viewed 26 November 2007, http://www.informationweek.com/story/showArticle.jhtml?articleID=172300953.

Geishecker, L 1999, ‘ERP vs. Best-of-breed’, Strategic finance, viewed 26 November 2007, http://www.allbusiness.com/technology/computer-software/282133-1.html.

On-line Consultant Software 2007, Best of Breed vs. Integrated Systems, viewed 25 November 2007, http://www.olcsoft.com/select_0800.htm.

 Sumner M 2005, Enterprise resource planning, Pearson Prentice Hall, Upper Saddle River, NJ.