Confused about the right business software strategy for your business? You’re not alone. For reasons I’ll elaborate in future posts, Information Systems are not viewed as a strategic lever by most managers, and they’re missing out.
Let us consider, in a high level, what are the main three ways to go, and major considerations in choosing the right path for you.
Business Software Strategy – 3 Options
- An ERP solution (either implemented on your premise, or used as a service delivered from “the cloud”).
- Best of Breed – buying and implementing different solutions for different areas (departments) of your business (e.g. Human Resources, Manufacturing, Sales, Financials, …) and maintaining interfaces between them.
- Tailored Development Solutions – Software that is designed and developed for your specific needs (may also be to support only parts of your requirements and interface with other solutions from #1 or #2 above).
Each option has its advantages and disadvantages.
An ERP Solution
An ERP solution offers you a fully integrated solution. There are no interfaces to maintain. Technological updates are guaranteed as you upgrade to new versions. Finally, you enjoy best-practices for most processes because they are already implemented for you into the solution based on knowledge of many other businesses like yours.
On the downside, you are usually locked with a single vendor for a long period of time. You may not receive 100% of your requirements in all areas and it may be a costly up-front investment for the on-premise implementation.
I elaborated on ERP in a 4-Blog posts series: from understanding ERP, challenges and opportunities and how to secure a successful project.
Best of Breed
Best of breed allows you to better fine-tune for every department both from a functionality perspective and price negotiation perspective. You may break your investments over time, as you gradually buy the different solutions.
On the downside, you build islands of data. You collect a mix of technologies and required skill-sets. Consequently, that blend have also a cultural impact and influence cooperation and spirit across your company teams. You typically start investing in interfaces between all disparate systems. This practice locks you down on two measures: lack of flexibility to accommodate business changes and high costs to maintain those interfaces.
Tailored solutions offer a 100% match to your current and anticipated needs. They may seem to require a lower investment up-front. You have flexibility in selecting your partner (developer) and perhaps the technologies used.
On the downside, over time the solution does not keep up with technological advancements, with business/regulatory changes, and also require further investments in updating the software. Also, you may find that you are locked with that developer partner (depends).
Tailored solutions may address the very core processes of the business. I myself developed and delivered Excel-based solutions to support diverse industries. Some examples include: sales management and operations; human resources training planning an certification; manufacturing planning and execution; re-insurance brokerage management, and many others.
Crafting a business software strategy has significant implications on your business. You may end up with a solution that is a show-stopper on one end, and a business growth engine on the other. I highly recommend to have an experienced, unbiased consultant helping you reach the best decision for you. Typically, an ERP is the way to go for most businesses today. Find an ERP that meets 80% or more of your requirements from a credible vendor.