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ERP software isn’t just for big businesses anymore. Within the last ten years, the ERP software industry has shifted to accommodate smaller business looking for lower-cost solutions. This shift has been fueled by the emergence of a number of niche ERP vendors offering solutions for specific industries. But the question remains: is implementing a suite of best-of-breed solutions more effective than implementing a single ERP system for the entire organization?

The short answer is, it depends. Small businesses may not have the money to implement a full ERP system, but they should still consider the long-term possibility of growth and the inevitable need for integration. However, best-of-breed systems, which encompass a variety of specialized functions from a variety of specialized vendors, are not always ideal either. Following are some pros and cons of best-of-breed solutions:

Pros:

  • Cost-savings for small businesses
  • More opportunity for differentiation among competitors
  • Strong, in-depth functionality in particular areas

Cons:

  • Can result in inconsistent information across departments
  • Takes time to integrate
  • May have to implement a full ERP system down the road to accomodate corporate growth

Considering the depth of functionality, a best-of-breed option may be easier for employees to accept and the more powerful capabilities may prove attractive to everyone in the organization. However, from an executive’s perspective, adding best-of-breed solutions to the long list of ERP software choices means more time spent on software selection. With so many choices, organizations should expediate the process by, first, determining their competitive advantage.

Areas that offer an organization competitive advantage should probably not be housed in a “core” ERP system. Instead, an organization should select best-of-breed software related to their competitive advantage, while housing basic functions such as HR and accounting in its “core.” This solution is a great way to reap the rewards of best-of-breed while, at the same time, enjoying the benefits of a “core” system that is already integrated.

Even when an organization has best-of-breed software and a “core” ERP system, it should still allow adequate time for integration. Each functionality within the best-of-breed software needs to be integrated, which in turn, needs to be integrated with the “core.”

With the growth of the small business sector, it is no surprise that more and more ERP vendors are offering functional-specific solutions. Not only small businesses but also large businesses can benefit from this exciting opportunity for differentiation. Despite this intrigue, best-of-breed software may not be right for your organization. It’s important to consider the technical complexity of integration as well as your organization’s long-term goals.

Where is your business headed? If best-of-breed software is looking attractive to you, Panorama can help you select the best software for your organization. Visit our ERP Software Selection page to learn more.

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