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Single Source or Best of Breed - The Debate Continues

Written By: Olin Thompson
Published On: September 1 2003

The Situation

The ERP base is up and running and now the needs of the business demand the addition of functionality beyond that base. The additional functionality may be supply chain management (SCM), business intelligence (BI) New Product Development (NPD), or any of a long list of acronyms. Perhaps your ERP vendor will not have the extension or its functionality will be clearly inappropriate for your needs and you will turn to another vendor for the functionality, a "Best-of breed" vendor. But in many cases, the ERP vendor will have applications that potentially fill your need and you can get everything from the "Single Source" vendor. In either situation, is it better to limit yourself to the products from a single vendor or pick from other vendors who appear to better fit your needs? Do you go "Single Source" or "Best of Breed"?

In this discussion, two issues will be hotly debated with, in most cases, a trade off between the two extremes of having the best integration versus the best functionality. The opposing approaches will each claim they have both - but a few possible exceptions (I know these exceptions must exist) do not change the basic issues.

Superior integration is very important, but it is not the Holy Grail. Superior functionality is very important, but it is not the Holy Grail. Both are important but it is still rare that you find a solution that has both superior integration and superior functionality. The debate on these trade-offs typically follows two standard arguments between the two different types of vendors. The ERP or single source vendors claim great integration (and it is usually better) and will also claim their functionality is superior. The best-of-breed vendors claim superior functionality and also claim they can integrate. Let's look at both sides and understand the realities so you can sort the facts from the hype.

Single Source

The single source vendors (usually ERP vendors but now some SCM vendors) offer many add-on packages. These add-ons vary in both quality of functionality and integration. In the past, it was typical that the quality of functionality for these add-ons was inferior to the quality offered by the dedicated or best-of-breed vendor. This assumption can no longer be made.

Do not assume the ERP add-on modules are of less functional quality than the dedicated best-of-breed vendor's, but also, do not assume they are better or equal. Always include your ERP vendor's add-on modules in your search, but evaluate them fully against your needs and the options from the best-of-breed vendor.

A key place to evaluate is in the area of vertical industry needs, often a weak point. While you may not need the best available functionality, you do need a practical level of functionality, one that does not limit your operational abilities.

It may be obvious that the integration offered by the single source vendor should be superior and although this is usually true, it is a dangerous assumption. Today, many add-on products have been purchased by the ERP vendors or have been developed with a minimalist approach to address competitive issues. In these cases, integration may be minimal or even non-existent. Assuming that purchased modules were built for integration is a dangerous assumption.

Has the vendor made the effort to fully integrate these modules? If the answer is that they have not, but it is "planned", that should be a contractual issue. If the module was developed for competitive issues, they may have taken a "meets minimum" approach to either functionality or integration or both. Only careful evaluation of both the functionality and the integration can prove the worth of the single vendor's offering.

Add-on modules may be the result of a "partnership". The word "partnership" is an overused term that tells little of the real relationship. The cold reality is that most partnerships in the vendor world end at a joint press release. Is this partnership more than a press release? Is it more than selling together? Have the partners invested in integration? Is this partnership a long-term arrangement?

All partnerships are discussed in terms of long-term commitments but few really are. The odds of a long-term relationship are higher if the divorce terms are painful for both parties. If you buy an add-on that comes from a partnership, your contract should make the break-up of the partnership painful for the two partners.

Best-of-Breed

Best-of-breed vendors are typically very focused on a single application and sometimes within a single vertical industry. This focus should mean that they are more knowledgeable and they have produced a richer set of functionality. The functionality from a best-of-breed vendor should be better - that is the only competitive advantage they have.

While integration of best-of-breed products is a requirement for these vendors, you still need to know if the product was designed to be integrated? Do special file structures, methods and technology exist to facilitate the integration? Does the vendor offer a supported integration to your ERP system? If yes, how will it be supported in the future? The discussion of partnerships above relate to these best-of-breed integrations. With these prepackaged integrations, understand the responsibilities of the best-of-breed vendor and its willingness to add those responsibilities to the contract.

The integration offered by the best-of-breed vendor will almost always be of less quality than that offered by the single source vendor (the exception is when the add-on application was acquired or comes from a partnership arrangement). Perfect integration is not your objective; you should be striving for a practical level of integration. Loosely coupled modules based upon good integration technology will prove superior to tightly integrated modules.

Remember that part of the integration challenge is dealing with the separate and usually unrelated release schedules of the two vendors, how will the best-of-breed address these issues? Less than perfect but practical integration will mean duplicate files, semantic issues (the same field not meaning the same thing, both files will not have identical fields, etc.) and data maintenance challenges (where do you update the data that is in both files, where do you resolve the issues of files that do not overlap). Data integrity issues will exist - as a good friend once told me, "Duplicate data isn't."

Summary

What about the issues of staying with a single vendor versus a best-of-breed approach? In reality, you will probably have some best-of-breed components to your overall systems because it is very rare for a single vendor to meet 100% of a company's needs. You should strive to minimize the total number of vendors in your total business solution, but trade-offs will exist. It will boil down to better functionality versus better integration.

On the single vendor side will be the long-term cost of having less than the best functionality versus the long-term benefit of better integration. On the best-of-breed side will be the long-term benefits of better functionality versus the long-term cost of inferior integration. This will never be a clear-cut decision - it is all about the trade-offs.

About the Author

Olin Thompson is a principal of Process ERP Partners. He has over 25 years experience as an executive in the software industry with the last 17 in process industry related ERP, SCP, and e-business related segments. Olin has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce and the impact of technology on industry.

He can be reached at Olin@ProcessERP.com.

 
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