For competitive edge, think best of breed

Gaining competitive advantage through 'best-of-breed' IT solutions is a tempting option, but until recently, integrating a point solution with a company's ERP suite would have ruled out such a step for all but the most ambitious. However, over the last few years, integration has become substantially easier, and in some circumstances the business benefit to be gained by plumping for best-of-breed can be worth the pain. In particular, companies that have tried to innovate to differentiate themselves from their competitors may actually have been constrained by what has often been a swiftly-implemented ERP system, believes Darren While, senior consultant at systems integrator gedas UK. "A lot of organisations haven't moved on in terms of improving their processes. They didn't re-engineer the best processes for the business, so instead of being seen as an enabler, ERP is often seen as a chore." But technology moves on. Niche software vendors are innovating all the time, and increasingly good standards for interoperability mean that integration of their products with an ERP backbone should no longer be automatically ruled out. Meanwhile, increasing competition in the business arena means companies have to try harder than ever to add that extra value to stand them apart from their competitors. As Robin Edmonds, managing director of consultancy IMS puts it: "Monolithic systems do a great job at most things but don't offer you a competitive advantage." Further, conventional supplier and customer relationships are changing. "Over the last 10 years we have seen the market change in terms of collaboration, and you need systems that enable communication with suppliers, customers, partners and even competitors," says While. What this adds up to is the realisation that a monolithic ERP system implementing someone else's view of standardised best practice is not necessarily the ideal IT environment, nor always flexible enough to innovate and compete. Indeed, there are some very specific areas where a best-of-breed solution confers significant benefits. For example: "In areas like planning and forecasting, shop floor control and statistical process systems, there are lots of processes that aren't necessarily answered by a large ERP system today," says While. Tangible benefits, like lower levels of inventory and work in progress, can also flow from using specialist forecasting tools that go beyond what you'd expect to find in an ERP system. Quality is another area, says Edmonds: "One customer uses the SAP quality module, for example, for a lot of their quality data, but a best-of-breed tool for one specific area." Specialist or non Other areas where best-of-breed solutions stand out are in supply chain management (SCM), advanced planning and scheduling (APS) and collaborative product development. Warehouse management can also sometimes benefit from specialist solutions, says Peter Anderson, managing consultant in the supply chain strategy group at IBM Business Consulting Services. "If you are using a shared warehouse, and need to flex your space usage up and down, you may well need a specialist WMS." The list goes on. Before considering any IT solution, it's essential to understand where you compete, and which areas of the business confer competitive advantage. Simon Bragg, European research director with analyst ARC, says that material affects your choice. "If, for example, you're looking for distinctive operational excellence capabilities, it might be worth going for the best-of-breed in the supply chain. But if customer intimacy is where you excel then maybe you should look at a CRM [customer relationship management] system from a best-of-breed vendor, and rely on ERP for the supply chain." Anderson suggests that if you're not going to one of the top five ERP suppliers, and require APS, then you might well need a best-of-breed solution. Conversely, mid-tier ERP vendors all excel in one area or another, so even specialist needs may be met by selecting the right software supplier. For example, Langmead Farms is an agricultural grower of salad crops that are shipped to retail customers, including a major supermarket chain. "Wherever possible we package in the field, and the product is shipped out within hours of reaching the warehouse, or at most a day," explains Tina Perry, finance and project manager. For maximum business benefit, Langmead wanted a system that provided salespeople with live stock information. The right solution was available from Ross Systems, and has delivered significant benefits. "We have stock on the shelves for less time, and we have noticeably less wastage – that has been a very key benefit," says Perry. By opting for a package that focussed on food process manufacturing, Langmead has met its specialist requirements in the warehousing area, while avoiding integration costs. But life isn't always that easy. Many smaller companies find that a mid-tier ERP solution won't cover their needs fully, and they're forced to go best-of-breed in some areas. Unfortunately, outside the tier one ERP vendors integration becomes more problematic. Major best-of-breed vendors live and die by their ability to integrate to the big five ERP packages. "They're good at it, they've done it before, and they know what they're doing," observes Bragg. Indeed, in a recent survey of 84 manufacturers carried out by ARC, of which 56% had implemented a best-of-breed supply-chain solution compared to 44% that had settled for an integrated ERP suite, the challenges of integration were ranked a long way behind the problems of implementing new processes. However, "integration problems tended to arise with the smaller best-of-breed suppliers," says Bragg. Thus smaller manufacturers are more likely to need to turn to best-of-breed suppliers because smaller ERP solutions aren't up to the job, but the integration problems they face are likely to be greater than for those using big ERP solutions. Fortunately, integration challenges are being transformed by technologies like XML. Cosalt is one manufacturer whose export documentation needs weren't met by what was otherwise the ideal ERP system from IFS. The firm's Industrial Services Division manufactures and supplies protective clothing and safety and protection equipment for the marine, motor, rail and defence industries, as well as for the emergency services and utilities. Jason Belcher, IT manager with Cosalt Safety and Protection, says: "We are in the process of integrating a best-of-breed export documentation system [Spex from TradePoint] with IFS. We're about half-way through the project, but because it's all done via XML it really hasn't been a problem, and it hasn't cost much." Whether or not the integration costs and effort outweigh the benefit will depend entirely on circumstances. But there is a general feeling that for smaller companies, integration costs may well still be more than they want to bear – although Cosalt illustrates what an impact standards like XML can have. Another worry is not just the initial integration, but the ongoing costs of supporting and upgrading two different systems – although here too, the signs are it's really not that bad. "In other studies I've asked about upgrading and the cost of ownership because of the extra integration involved with best-of-breed, and it doesn't seem to be a big issue, for two reasons," says Bragg. "Firstly, integration is not a particularly big deal, and secondly, while there might be some rework, there is only a slight additional cost." Finally, Bragg warns that there is one unexpected area where a best-of-breed solution faces a possible uphill struggle. "If you go for a suite, you tend to get more management commitment – a best-of-breed solution can be seen as more of a departmental project, making it less easy to get top management behind it." And that depends upon you.