Integration vs Best-of-breed

Today I shall dive into the waters of two different implementation philosophies or “schools” if you prefer: What is the best solution for enterprise-wide Software? One integrated system that “does it all” or a selection of systems/modules, each of which is (or tries to be) the industry leader in its sector?
It is not an easy answer and I’ll give you a hint right from the start: It also depends on local market habits.

First, I’d like to share a couple of experiences that totally changed the way I (as a software supplier) see things:
  • During my company’s research of the automotive industry in USA and its effort to establish its presence there (in the US), I shockingly found out that there are car dealers out there that use 3 or more systems to do their job: A dedicated system for the car sales, a system for the repair shop, one more for the parts management and nothing regarding Accounting (this is something that their accountant is doing in a “black box”). My first reaction was: “are these people living in the previous century?”, but no. It’s nothing like that. These people have selected the logic of “best-of-breed”. And, rest assured, they have good reason for it…
  • Now, if we look at the Greek practice (and perhaps the south European, too) we see an entirely different image: If you want to claim that you have a “good” DMS (Dealer Management System) you need at least these modules: Car Sales, Inventory Management (parts and cars), Repair shop, Basics of CRM, Basics of Accounting. More advanced systems would offer advanced CRM, integration with email, SMS, full accounting systems, payment interfaces, financing module, time-keeping module for the repair shop etc. Even small vendors are able to provide out-of-the-box some level of functionality in all these areas!

    Why are these two worlds so different? Who is right and who is wrong? Let’s have a look at the reasons that one would decide to go to this or that direction and maybe you’ll be able to decide for yourselves:

  • Enterprise-wide coverage of business functions:
    This is main reason why one should choose a “all-ion-one” system. On the other hand, by definition, a BOB system will not cover all business functions.

  • Completeness of each module:
    An Integrated system requires a lot of effort and investment on behalf of the supplier in order to reach “max” degree of completeness. And this cost will probably be reflected on the product’s price. It is safe to assume that no integrated system will have reached the completeness of a BOB system.

  • Integration, sharing of data across modules:
    It is safe to assume that an Integrated system will follow the logic of “data entry once, share data across”, while in a BOB system data redundancy will exist. The user will need to re-enter data from one system to another. One could go about this problem if one has implemented the appropriate interfaces. But this will also inflict extra costs.

  • Ease of use, learning curve:
    Any user would be happy to learn one system and do it all from it. Also, the look’n’feel would be the same, system-wide. Customer-centric or, in general, entity-centric logic would be expected from such a system.
    Different systems will inevitably raise questions like “this one has a worse customer screen than the other. I just can’t get used to it”. Also, you can’t avoid the establishment of different user habits in different systems. Finally, the entire relationship of your enterprise with your customer will be almost impossible to picture. This will cause you a lot of pain in the CRM area.

  • Extroversion:
    If we assume that an Integrated system also includes CRM, then a degree of extroversion should be expected. If this is a web system, then email and possibly SMS functionality may also be expected.
    A best-of-breed is more likely to have implemented “interfaces” with other systems that are important for the business function that the BOB system is serving. E.g. a F&I system will most probably have ready-made interfaces with large Finance Institutions.

  • Ease of Maintenance:
    The integrated system has one database and is running on one (?) server. The vendor of this system is just one. On the other hand, of the system fails, then you experience down-time across the enterprise!

  • Relationship with S/W supplier:
    If you have bought an Integrated system, then you are a relatively bigger part of your supplier’s revenue and he is the one to answer all questions and tackle all issues. The relationship becomes stronger and in the future you may be eligible for some kind of discount!
    On the other hand, BOB systems are easier and cheaper. Therefore, the supplier seeks to sell more “pieces” than the Integrated System supplier. It is not probable that you will ever reach a relationship as close as the other case.

  • Security:
    In an Integrated system, issues are expected to be somewhat more complicated, although I wouldn’t expect a big hassle.

  • Expandability:
    Functionality extensions would be more difficult to implement in an Integrated system, due to overall system complexity. For example, if you add a new field called “birth date” in the customer screen, who is authorized to see and who’s not? For whom is this field mandatory? You get the idea?
    In a BOB system, functionality extensions would be easier to implement, although the degree of innovation should be expected to be lower that the integrated system.

  • Interfaces:
    A BOB system is more likely to have a number of “targeted” interfaces out-of-the-box.

  • Total Cost of Ownership:
    It’s hard to say, but in general when buying an Integrated system you pay a somewhat higher initial cost but you “take it all”. Plus the fact that the annual maintenance fee is very well defined and probably less than the sum of the fees of the other BOB systems.
    With the BOB solutions, the TCO is likely to rise also due to the fact that you will need more servers to host these (technically diverse) systems. Plus the system software licenses. What happens if one systems runs on Windows and another in OS/400? One uses Oracle DB and the other IBM DB2?

  • Consulting needs on behalf of the Buyer:
    An integrated system is expected to be more complicated. The need for an external consultant or periodic reviews is higher while in the BOB scheme specialized consultants will offer their services and it is more than likely that, over time, they will have made a lot more research in their field of expertise, thus providing you with more educated answers to your questions. Of course, shiny examples like E-ON INTEGRATION, do exist!

    From the above it is clear that the balance is not clearly in favor of the one or the other practice. Look deeper at yourselves and your enterprise and decide…
  • Comments

    1. A very interesting issue, specially for the greek companies, that usually assign every project to the "Financial Manager"! or even worse "Accountant". I would strongly suggest to solve Back-Office issues with Standard Solutions and mission-critical areas with Tailor made solutions, that totally match the company's needs.

      erp software companies


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