GROUP – 9A

Gopinath Subramaniam | Puneet Mathur

Saurav Gupta | Sumesh Gopurathingal | Utsav Bhatt
 ERP vs. Best-of-Breed
for a Logistics Company
…A Comparative Analysis
ENTERPRISE RESOURCE
PLANNING
(ERP)
 Enterprise Resource Planning System is a system which covers all
core functions of an enterprise
 Software package which covers at least 2 or more systems
 Instances: Supply Chain Management (Purchasing, Manufacturing
& Distribution) HR system, Accounting system, Financials, Product
Lifecycle Management System, Customer Relationship
Management
 ERP gets all functional departments to be in one integrated system
– making it cross functional and enterprise wide
 Example of ERP vendors are Oracle, SAP, IBM and etc
 $47 million turnover company
 Had been using homegrown system – for 10 years
 Old system has hindered the growth of company
 Try building a new integrated system but failed
 Chose ERP solution by People Soft – 17 modules
 Finished the whole project within 2 years – For a

$2 million dollar investment

 $ 47 million turnover company

BEST OF BREEDS
Had been using homegrown system – for 10 years


 Old system has hindered the growth of company

 Try building a new integrated system but failed

(BOB)
Chose ERP solution by People Soft – 17 modules
 Finished the whole project within 2 years – For a $ 2million dollar

investment
 Specialized software solutions for specific purposes
 Typically includes – Customer requirement processing, purchase order

processing, inventory management, warehouse management and supplier

management
 More focused in scope and generally caters to a specific business area like

supply chain, customer relationship, manufacturing, warehousing, human

resources etc.
 Usually provides additional functionality and expertise when compared to ERP
 Very widely used during 1990s as compared to ERP offerings for supply chain

but less popular now

 Manhattan Associates, i2 Technologies, Logility etc.
 Turnover - $700 million in 1996

 Manual supply chain processes

 Chose best-of-breed solutions for automation

 Integrated 9 separate components including solutions from

Manugistics Inc., Oracle Corp.

 Implementation completed in more than 3 years

 Cost v/s content
 Cost cited as most important factor for deciding upon

new business application

 Inclination towards
 Reducing number of vendors and license issues

 Keep TCO calculation simple

 Building long term relationships

 Standardization
 Moving towards standards based approach
 Open Source implementations

 SaaS
 Use of SaaS as a medium for integration

 Emergence of SOA
 Reduces integration challenges
 Helps retain modularity of application development
 E.g. Red Prairie
 $ 47 million turnover company
 Had been using homegrown system – for 10 years
 EVALUATION
Old system has hindered the growth of company
 Try building a new integrated system but failed
 Chose ERP solution by People Soft – 17 modules
 Finished the whole project within 2 years – For a $ 2million dollar

investment
   BOB ERP
Length 2 - 4 years 1 - 2 years

Flexibility Higher Lower

Cost Higher Lower

Complexity Higher Lower

Quality of
Higher Lower
Solution

Staff Training Longer Shorter

Future modules take

New version of BOB may pose
Upgrading care of compatibility
problems
issues

“ERP system may act as a hedge against obsolescence of stand alone

BOB system provider”
 How integral is Supply Chain for Business success?

It
depends ! BOB

High, Low High, High

How complex is
the SCM
requirement?
Low, Low Low, High

It
ERP
depends !
BOB - 4 BOB - 5 - WMS BOB - 6

Standardized ERP Solution

BOB - 1 BOB - 2 BOB - 3

ERP Best Of Breeds
Positives
 Integration of system - SCM, CRM, HR, Finance, Purchase etc. all in one
 Reduces operating costs
 Removes the risk of duplicating data, software, storage etc.
 Provides pertinent information of the entire organization

Negatives
 Quality of solution is lower
 Customization level is limited
 Underutilization of ERP system
Positives
 Fit to enterprise - A best-of-breed system is more specific in scope and
thus provides more accurate solutions to the problems at hand. An
organization can thus purchase the best fit solution as per their
requirements.

 Offers better quality solutions – For organizations that experience a

complex warehouse management structure, an ERP solution might be
unable to meet its advanced requirements and a best-of-breed solution
would be the most suitable choice to fill in the gaps.

 Higher flexibility – The best-of-breed solution offers flexibility in terms of

configuration and customization to suit buyer’s requirements.
Negatives
 Involves higher costs – A stand alone best-of-breed supply chain solution
would need to be integrated with other stand alone systems and thus
involve higher costs for implementation as compared to an ERP system
which comprises of several integrated sub modules.

 Implementation cycle – The implementation cycle is longer for a best-of-

breed as it is more complex in design than ERP solutions.

 Issues with data integration - Integrating the b-o-b system with other
modules like financial, CRM etc. is a highly complex and time consuming
process and is prone to errors.

 Training - The best-of-breed solutions take longer time to be trained upon

when compared to ERP systems.