By design, ERP solutions were intended to cover the ground of multiple applications on a single platform. But while great in theory, ERP solutions don’t always work effectively using only “one” platform. In fact, organizations are often pressured or forced to think using an ERP suite is the only option. However, choosing a Best-of-Breed (BoB) solution somewhat negates this approach and in some cases simply makes sense for an organization to adopt this single platform approach.
While one size does not fit all, there are some compelling reasons a BoB will work better for upstream procurement. Below are the top 3 reasons why an organization should prefer a BoB suite vs an ERP solution for strategic sourcing:
#1. BoB focuses on “Ease of Use” and Higher Adoption
User acceptance and usage of a system defines the effectiveness or ineffectiveness of a system. This has a direct impact on adoption rates in procurement which can be divided into upstream and downstream. Downstream (i.e. Procure to Pay), which extends to AP into Finance, is a traditional strong hold for ERP. P2P is focused on user adoption for pushing catalog requisitions and purchase orders to the “masses”.
However with upstream processes, you are often dealing with a smaller core base of users that have traditionally been focused on a narrow definition of sourcing such as eRFx or eAuctions. As the definition of sourcing expands into areas such as spend analytics, category strategies, contract management, and supplier relationship management, BoB solutions are providing more innovative tools that focus on bridging these functions together, but don’t take a long time to deploy.
Additionally, since users in upstream procurement are more focused on supplier management today more than ever, using platforms that are designed to extend eSourcing into areas such as risk and performance can be an effective approach for assisting procurement to collaborate with legal, supply chain, finance or HR. Since managing suppliers in complex areas such as compliance and regulation is essential today, getting these disparate groups to work together requires tools that are “easy to use” and “easy to adopt”.
#2. BoB is “Client Driven”
The old argument, “You can’t be good at everything” applies here. Given more limited resources, BoB solutions are more focused on providing functionality that is client-driven. This not only means technology, but a focus on client support before, during, and after the implementation is complete. So even if ERP functionality in a demo has “95% of the functionality needed out of the box”, what happens as requirements evolve and you need a technology provider to also be your partner for making things work?
Additionally, traditional achievement of a positive ROI from ERP often fails because of a lack of breadth and repeatability, high personnel (consulting) costs and excessive customization. For instance, when is the last time you heard of a BoB implementation in procurement taking several years? With ERP solutions like SAP or Oracle this is all too common, especially in large enterprises where scope creep is rampant due to bad planning, and because someone thought a bigger platform was a safe bet.
#3. Distribution of IT Procurement Risk (BoB) vs. Risk of One Throat to Choke (ERP)
If your main goal is to mitigate failure, having the risk of “one throat to choke” (found in ERP) is a bad idea, because it doesn’t give you any leverage. If you’re wedded to one vendor, they have the opportunity to hold you hostage regardless of what kind of value they’re delivering. Also, bigger ERPs are public, and most BoB solutions are private. As a result, it’s common for larger players to be focused on corporate level activities (i.e. mergers, acquisitions new platforms, changes, etc.). Therefore, the focus for ERP providers tends to be shareholder value, whereas BoB focus is the customer. So, although you might have one throat – and you might be choking it – you’re still stuck with it. And from an IT perspective, should the relationship go awry, the more embedded provider, the harder it will be kick them out. The end result? Choking can only get you so far.