ERP and the Best-of-Breed Alternative

Abstract

Enterprise resource planning (ERP) systems are off-theshelf software systems that claim to meet the information needs of organizations. These systems are usually adopted to replace hard-to-maintain legacy systems developed by IS departments or older off-the-shelf packages that often provided only piecemeal solutions to the organization’s information needs. ERP systems evolved in the 1990s from material requirements planning (MRP) systems developed in the 1970s and manufacturing resources planning (MRPII) systems developed in the 1980s. ERP systems serve the entire organization, not just material or manufacturing planning. One advantage of ERP is that it integrates all the information for the entire organization into a single database. Implementation of ERP systems has proven expensive and time consuming. Failed and abandoned projects have been well publicized in the business press. ERP systems are “expensive and difficult to implement, often imposing their own logic on a company’s strategy and existing culture” (Pozzebon, 2000, p. 105). Most firms utilize a single software vendor for the complete ERP system throughout their organizations. The integrated nature of ERP software favors this single-vendor approach. An alternative strategy adopted by some firms is the best-of-breed approach, where the adopting organization picks and chooses ERP functional modules from the vendor whose software best supports its business processes. Organizations adopting best of breed believe that this approach will create a better fit with existing or required business processes, reduce or eliminate the need to customize a single-vendor solution, and reduce user resistance. Jones and Young (2006) found that 18% of companies used this approach to select ERP software packages. This article examines what the best-of-breed strategy is, when it is used, what advantage adopting companies seek, examples of best-of-breed implementations, and differences in implementation methods.