ERP: Integrate or interface?
As a midrange company looking to implement an enterprise resource planning solution, you will come to a choice with important implications: Should you opt for a fully integrated solution, or should you go for one which requires interfaces with third party applications to achieve a complete, company-wide system?
The answer to that question isn't a simple one. However, when weighing up the possible advantages of using a variety of add-on products versus opting for a fully integrated solution, consider the realities of software upgrades and system changes which may be necessary to adapt to new ways of doing business. And consider that in light of the fact that with complex systems, changing one element may well have an impact on other elements down the line. In turn, this can drive up the total cost of ownership of the complete system – and it can do so unexpectedly.
While most ERP vendors make every effort to deliver systems which are no more complex than they have to be, the reality is that this software is by nature complex. That's a fact because business is itself complex. There is a requirement to execute processes which have many touch points and which must themselves interface with different modules across a system. Processing a simple order, for example, can have multiple touch points in the ERP system. It creates ripples up and down the value chain; it may require checking on stock (warehousing), kick off an order to procurement for raw materials, send a request to manufacturing, create entries to the general ledger, initiate a logistics process, create an invoice, and initiate a credit or collections process. That's before any other processes, such as those relating to customer relationship management of business intelligence are weighed in.
Should any of these various features not be native to the selected ERP system, or should the native module be replaced with a 'best of breed' third-party application, the necessary and inevitable complexity of the system is multiplied.
What are the upshots of such interfaces? Immediately after implementation is where the first impact is seen. User acceptance, change management and user training are all complicated when there are multiple products and technologies in place.
Once operating, the interfaced system starts to face real challenges. No vendor synchronises with another in terms of software upgrade schedules, security and other patches, and feature enhancements. When there are several vendors which make up the complete system, the IT manager faces the ongoing challenge that when one releases a patch, he has to test its effect across the entire system. It can, and does, get ugly, not only taking up time, but also potentially creating security issues (as a patch can't be implemented until it is tested) or limiting the introduction of new features or functionality.
That said, there may be some advantages to a best-of-breed approach, such as highly specialised features or functionality which is specific to one vendor. However, such an approach should not be taken lightly, but rather weighed up against the benefits of a fully integrated solution which acts in complete concert to deliver a lower total cost of ownership, greater efficiencies and easier management.