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Aberdeen's 2006 ERP in Manufacturing Benchmark Report explored how ERP (Enterprise Resource Planning) strategies are evolving as enterprises strive to derive more and better business value from their implementations. That often means driving the use of ERP deeper into their organizations or broader across more of the enterprise. It means utilizing more functionality, extending the footprint beyond the core ERP functionality and making decisions between ERP vendors and pure play or "Best of Breed" solutions. The trade-off between Best of Breed functionality and ease of integration is no longer as simple as it once was. Over the generations, Enterprise Resource Planning has continued to expand, blurring the boundaries of core ERP functionality. The number of modules and the extent of functionality offered in the ERP suite have steadily grown over the past two decades. At the same time, the consolidation within the software industry is having a broader effect than just on ERP itself. ERP companies have also been gobbling up pure play or Best of Breed vendors that offer extensions to core ERP functionality. This is having a profound effect on the enterprise application vendor landscape and also on how ERP versus "Best of Breed" decisions are fundamentally made. More and more companies are exploring the limits of these boundaries and weighing decisions that balance integration efforts and the ability to upgrade to new releases against extended features, functions and advanced technology.
Key Business Value Findings
The three most important factors to consider in ERP versus Best of Breed decisions are functionality, integration and the ability to upgrade to new releases.
While functionality is a key driver of the majority of software decisions (68%), on average companies use only about 43% of available ERP functionality, implying the right fit is just as important, if not more important, than the number of features and functions available. Yet while the original ERP selection process may have been a two dimensional decision, weighing features and functions of various ERP vendors against each other, a third, and possibly a fourth dimension is added to the evaluation in deciding to extend ERP.
The third dimension is the added complexity of integration, resulting in the following questions which need to be answered.
1. How tightly must the functions be integrated?
2. How much data must be shared or replicated?
3. How much duplication of functions exists between ERP and the extensions?
4. If data must be shared by two or more applications, which application "owns" the data?
5. Do the architectures of your ERP and any extensions being considered easily support integration and interoperability?
The fourth dimension is the potential impact on upgrades and migrations to new releases.
Recommendations for Action
Chapter One: Issue at Hand
- With added modules and extensions, ERP vendors are steadily encroaching on what used to be the exclusive domain of pure play or Best of Breed vendors offering point solutions with more comprehensive functionality Key Takeaways
- The majority of ERP extensions today are purchased from ERP vendors
- Customization, although viewed as a viable option by many, can be a barrier to ERP evolving with the business.
Aberdeen's 2006 ERP in Manufacturing Benchmark Report explored how ERP (Enterprise Resource Planning) strategies are evolving as enterprises strive to
A derive more and better business value from their implementations. That often means driving the use of ERP deeper into their organizations or broader across more of the enterprise. It means utilizing more functionality, extending the footprint beyond the core ERP functionality and making decisions between ERP vendors and pure play or "Best of Breed" solutions.
The trade-off between Best of Breed functionality and ease of integration is no longer as simple as it once was. Over the generations, Enterprise Resource Planning has continued to expand, blurring the boundaries of core ERP functionality. At the same time, the consolidation within the software industry is having a broader effect than just on ERP itself. ERP companies have also been gobbling up pure play or Best of Breed vendors that offer extensions to core ERP functionality. This is having a profound effect on the enterprise application vendor landscape and also on how ERP versus "Best of Breed" decisions are fundamentally made. More and more companies are exploring the limits of these boundaries and weighing decisions that balance integration efforts against extended features, functions and advanced technology.
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