The seamless vs. unseemly decision or . . . there is no free launch.
Many companies have a portfolio consisting of ERP applications as well as commercial off-the-shelf (COTS) applications bought from different vendors, and perhaps integrated to the ERP backbone.
As new application requirements surface, companies must decide whether to source these applications from their ERP vendor or from a third party application vendor. From the ERP vendor’s perspective, one can call this the “seamless” vs. “unseemly” decision.
- Seamless – Buy the new application from the ERP vendor, and enjoy the same process model, data model, support, etc.
- Unseemly – Stray outside the fold, and integrate the new application back into the ERP stack.
So, when might you pick the “unseemly” choice? There are times when the COTS vendor has much better functionality than the ERP vendor. If that is the case, the decision is made. As the application decision becomes less clear, there are cases where the application vendor may have superior talent around a certain algorithm (e.g., complex pricing), a certain vertical (e.g., complex services management) or even a certain region of the world.
This could lead you to an “unseemly” decision. As you do the analysis, check with your ERP vendor around their business partner program. It just might be the case that a “certified” business partner could help get the job done. As the functionality gap shrinks between ERP and COTS, you just need to do the math:
- Integration: You will need to determine the number of integration points between the COTS application and ERP. You should estimate $25 – $50,000 per integration, with another $5,000 per year for maintenance.
- Business Intelligence: You must consider your new reporting, portal, dashboard, exception and reporting needs between the two systems, and estimate how you will create the right level of business intelligence integration.
- Support: You will require support from both vendors, and you should strive to understand how to manage problem resolution.
- Consulting: As you install the new solution, ideally you can find consulting support from the COTS vendor, the ERP vendor or third party vendor, to make this all work.
Bottom Line for applications: Making the ERP vs. COTS decision is complex. When the gap in functionality is in the “maybe” zone, it is important to do the math and figure out the best strategy for your companies. At the end of the day, there is no free launch.
