Alan Morris compares Best of Breed and Enterprise Resource Planning solutions, and evaluates the opportunities and challenges that these differing avenues present to retailers.
"Best of Breed Solutions" and "Enterprise Resource Planning (ERP) Solutions" are terms that are widely used within the retail industry, however for people who work outside the remit of retail IT departments it may not be immediately obvious what the two phrases mean. Therefore, before comparing the functionality provided by Best of Breed applications with that offered by ERP solutions, I will provide a brief definition of the two terminologies in order to ensure that they are understood.
ERP applications provide a single solution that comprises of the array of functionality needed to underpin businesses core processes. By their nature ERP solutions are procured from a single supplier. In contrast, a Best of Breed Solution is an implementation of a number of specialist applications from a number of specialist suppliers. These applications in isolation provide the functionality needed to meet the specific requirements of the users.
There are a number of advantages of using ERP solutions, the first being that their implementation can lead to increases in efficiency. Reducing expenditure is something that most retail IT departments have been tasked with in recent years, and efficiency improvements can lead to a reduction in costs for retailers.
Once developed, ERP solutions can also be relied upon to provide reliable information for the company and ensure quicker processing of information, which reduces the burden of paperwork. Furthermore, they are easily adaptable to changing business environments, which is a useful facility within the ever-changing retail sector.
The primary disadvantage that retailers are faced with when considering purchasing an ERP solution is that they are expensive to implement. Furthermore, once the ERP application is established, the cost of switching providers would be very high for the retailer. This in turn leads to increased supplier negotiating power in relation to support, maintenance and upgrade charges.
In addition, many ERP solutions have been designed to be applicable to a number of different business sectors, which can make them difficult to customise to meet specific retail industry needs. Re-engineering these business processes may divert focus for retailers and / or damage their competitiveness within the busy retail marketplace.
Focussing now upon Best of Breed products, one of their advantages is that they provide the optimal solution for each business area as richer functionality is supplied. This in turn satisfies more users working in various different teams within the business. Also, if existing applications have proved popular with certain teams, these can be retained and the new application can be implemented alongside them, which also protects earlier return on investment.
Furthermore, suppliers of Best of Breed solutions can be relied upon to be specialists in their chosen field, which is reflected in the appeal of their applications. This means that suppliers' development budgets are also focussed upon extending their specialist functionality, and are not expected to be spread across many different features. For example, a supplier of a planning application will invest 100% of their research and development budget in planning functionality, whereas planning functionality would one of many areas of focus for an ERP provider.
Nevertheless, there are also several drawbacks for retailers who chose to implement several Best of Breed solutions from different suppliers. The first stumbling block that the company may encounter is integrating the various applications. This is required to ensure that the array of deployed software provides a seamless solution in relation to addressing end-to-end business processes.
The support model deployed to look after Best of Breed Solutions also needs to be clearly defined and understood, with ideally a single point of ownership (or primary support partner) being identified, in order to counteract "grey areas" between suppliers and their individual and collective responsibilities. Implementation projects are another area that needs to managed by a single point of contact, who holds the "helicopter view" of the end-to-end solution and who can bridge the gaps between the different suppliers.
In conclusion, the decision that retail IT departments are expected to make when choosing between ERP and Best of Breed solutions is not dissimilar to the choice presented to a potential tourist between a package holiday and a bespoke holiday where they select the flights, the accommodation, the duration and what is included. The package holiday gives the purchaser surety that they have a single point of contact (i.e. the travel agent) who will take care of everything, whilst the bespoke holiday gives them the flexibility to get exactly what they want from the experience, but not necessarily one company to turn to if they encounter problems on their journey.
Alan Morris is Co-founder and Managing Director of Retail-only IT services and solutions provider, Retail Assist.