Best Of Breed IT Strategy: An Alternative To Enterprise Resource Planning Systems

Abstract

Enterprise Resource Planning (ERP) software has become the dominant strategic platform for supporting enterprise-wide business processes. However, single vendor ERP software systems have been criticised for not meeting specific organisation and industry requirements. An alternative approach ‘Best of Breed (BoB)’, integrates components of software from multiple standard package vendors, and in some cases custom components. The objective is to develop enterprise systems that are more closely aligned with the requirements of an organisation. Although this approach may not be common at present it is likely to grow in importance due to business needs and technology advances such as the componentisation of ERP software. A case study analysis of a BoB implementation at a global entertainment's company is used as a platform for the discussion of the issues associated with this strategy and a comparison is made with the single vendor ERP alternative. The analysis centres on the complexity of implementation, the differences in the levels of functionality and business fit and the maintenance requirements.

Full text

Best Of Breed IT Strategy: An Alternative To Enterprise Resource Planning Systems
Ben Light
Information Systems Institute, University of Salford - b.light@salford.ac.uk
Christopher P. Holland and Sue Kelly.
Manchester Business School - c.holland@fs2.mbs.ac.uk
Karl Wills
IT Consultant
*
Abstract - Enterprise Resource Planning (ERP) software has
become the dominant strategic platform for supporting
enterprise-wide business processes. However, single vendor ERP
software systems have been criticised for not meeting specific
organisation and industry requirements. An alternative approach
‘Best of Breed (BoB)’, integrates components of software from
multiple standard package vendors, and in some cases custom
components. The objective is to develop enterprise systems that
are more closely aligned with the requirements of an
organisation. Although this approach may not be common at
present it is likely to grow in importance due to business needs
and technology advances such as the componentisation of ERP
software. A case study analysis of a BoB implementation at a
global entertainment's company is used as a platform for the
discussion of the issues associated with this strategy and a
comparison is made with the single vendor ERP alternative. The
analysis centres on the complexity of implementation, the
differences in the levels of functionality and business fit and the
maintenance requirements.
I
NTRODUCTION
A radical shift in corporate IT infrastructures is taking
place. Standard package software has rapidly become
favoured in many, if not most industries, over custom
developments for core enterprise data and information
processing. The dominant choice is for single vendor
Enterprise Resource Planning (ERP) systems. ERP software
automates core corporate activities such as finance, human
resources and logistics. One of the major reasons for the shift
towards ERP/standard packages is the need to deal with
legacy systems. Historically, most international firms have
managed their IT systems on a country by country basis with a
few notable exceptions such as Hewlett Packard [1] and Ford
[2]. This was due in part to the natural historical evolution of
local nationally based strategies and systems, and also
because there was no obvious global solution. More recently
the need for companies need to manage international
operations has become the imperative and therefore, so too
has the need for international systems and strategies [3].
*
We thank the UK Engineering and Physical Sciences Research Council who
have supported the research reported in this paper under the Systems
Engineering For Business Process Change Programme of research.
Companies wishing to employ innovative supply chain based
competitive strategies such as time based competition [4], the
formation of new types of industrial structures [5][6][7] and
mass customisation [8] have encountered problems. In
general, existing systems were fragmented, difficult and costly
to maintain and could not be aligned with global business
strategies. To achieve the required level of co-ordination, it is
necessary to have some form of common IT infrastructure and
business processes in place - ERP systems fill the gap for
many organisations. The reasons for the stampede toward
ERP systems share commonalties with the systems they
evolved from - manufacturing resource planning (MRP)
systems. MRP systems were implemented to reduce
inventories, lead times and costs, improve market
responsiveness, improved control, and improve organisational
communication [9]. Many of these reasons are highlighted in
the current literature on ERP systems [10][11][12][13].
However, even in the light of these perceived benefits, the
recent tidal wave of single vendor ERP system
implementations have proved problematic for many and the
ERP software has also been criticised. As a result, not all
organisations have moved to the ERP model. A small, but
increasing number, are adopting a strategy which aims to
emulate the benefits of a single vendor solution, and surpass it
in some areas. This strategy has become known as Best of
Breed (BoB). The aim of this paper is to compare the
approaches of ERP and BoB. The paper first identifies the
problems associated with the ERP approach, it then defines
the BoB approach and uses a case example of a global
entertainment company to provide the backbone for the
comparative analysis. Academic work on this subject is very
limited and this paper aims to make a contribution to this
theoretically and practically rich area.
T
HE
P
ROBLEMS
O
F
A S
INGLE
V
ENDOR
ERP S
TRATEGY
Although many successful ERP implementations are
publicised such as those at Pioneer New Media Technologies
[14] and Monsanto [15], the problematic implementations
have, as is generally the case in business, largely been buried.
The major publicised failure is that of the implementation at
FoxMeyer Drug which has led to bankruptcy proceedings and
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litigation against the principal IT supplier [16]. ERP
implementation is complex due to the software's high levels of
integration and the requirement for enterprise consensus in
reengineering an organisation's core business processes in line
with those implicit within the software [17][18]. Many
managers throughout companies and industries argue that the
software's business model is not representative of their own
company's or industry's and that reengineering their business
in line within this would present major difficulties. Financial
Services and Retailing are key industries to note. It is also
argued that software functionality is often lacking [19]. A
manager of one of the organisations involved in our wider IT
study said the ERP systems are sold as 'best of practice'. He
felt it was more akin to 'best of a bad bunch'. IT and business
managers also argue that ERP vendors tend only to have one
'best in class' application within their integrated suite of
applications. Peoplesoft is linked with a good Human
Resources module and Oracle with Financials for example.
Furthermore, there is concern that a single ERP system will
become a straight jacket. That is, rather than being able to
implement new functionality in order to take advantage of
business opportunities and remain competitive, some
managers in our study are worried that they may be left
waiting for the next upgrade from their ERP software vendor.
A growing number of companies have therefore decided to
develop their own customised suite of enterprise applications.
T
HE
B
EST
O
F
B
REED
A
PPROACH
The BoB approach is based on the integration of standard
software from a variety of vendors. For example, General
Motors has linked the SAP financial and Peoplesoft human
resource applications using integration software [20]. Some
companies, such as the case reported in this paper, have also
developed custom components due to the absence of best in
class standard software. The strengths of the BoB approach
centre on the ability of organisations to benefit from the most
appropriate, best in class software functions available [21].
The approach also provides an infrastructure that
accommodates the implementation of new or improved
applications thereby providing companies with a constant
state of the art capability. This philosophy is also relevant to
the integration of systems on an inter-organisational basis
following merger/acquisition activity or e-commerce
initiatives for example [22]. The key enabler of the move
towards this approach relates to the middleware that integrates
applications chosen to support the business processes. To
integrate two applications at the data level, developers
traditionally needed to write low-level applications program
interfaces (API's) to read data from the first application.
Further code then had to be written to transform the data to
prepare it for transportation to the receiving application.
Finally, more code had to be written to write the data out to a
file in the second vendors format. A different API had to be
written for each connection made between different vendor's
applications. A BoB approach involving several vendor
applications meant complex and costly interfaces that were
difficult to maintain in the light of upgrades and further
system development efforts such as new application
introduction. New middleware has the ability to make these
connections and perform the data transfer without the need for
low-level API's. Some products are data oriented - that is, they
support integration by sharing data sources, others bypass the
need for an intermediary shared data source and use
messaging to support direct data-sharing and a final group are
based upon a central integration engine in a hub.
It is important to make the distinction between a BoB
approach and the emergent strategy of different systems and
platforms throughout an organisation. A BoB approach is a
stated strategy. The aim is for enterprise integration whereas
the emergent strategy of various systems and platforms is
often technically and organisationally fragmented. In this
mode, functional silos are reinforced in contrast to a BoB
approach were a cross functional process orientation is usually
the ultimate aim.
R
ESEARCH
M
ETHOD
The case was compiled on the basis of material from two
person interviews with the key personnel of a BoB project in a
global entertainment's company. This strategy was employed
as the area is contemporary and developing an understanding
of it raises context, content and process questions that deal
with operational links over time [23][24][25]. Interviews
lasted between two and three hours and took place over a
period of two years. The interview data were supplemented by
documentary evidence including IT and business plans and
annual accounts. The approach of collecting data from a
variety of sources acted as a method of triangulation which
strengthened the internal validity of the data [26][27].
However, the case is not presented as the results of a
longitudinal study. Rather, selected case data is presented at a
macro level with its function being to support the idea that an
alternative to ERP systems exists and to allow comparisons
between ERP systems and the BoB approach. A specification
of a-priori constructs was also developed to structure enquiry
[28]. This facilitated accurate and efficient data collection and
is shown in Fig 1. The framework also provides a structure for
analysing the data and understanding the inter-relationships
between the constructs. A brief description of each of the
constructs is now provided. The
business legacy
is an
extension of the idea of a cultural web [29]. It is the
characteristics of an organisation such as its structure, culture,
business processes and strategy. The
IT legacy
is the existing
IT infrastructure that may affect organisational operations and
performance due to a combination of factors such as their
value, age, size and complexity [30][31]. The
business
pressures
can be viewed as the forces of globalisation,
deregulation, information technology and competition [32].
The legacy systems and business pressures influence the
implementation process which incorporates four constructs –
IT Strategic Review, Project Management Strategy, BPR
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Strategy and IT Strategy. The
IT strategic review
is based
upon the notion of strategic choice and involves generating,
evaluating and selecting strategic options [33][34]. The
project management strategy
details the philosophy for the
project [35]. The
BPR strategy
outlines the nature of the
business process change involved in the project [36][37][38].
The
IT strategy
is the IT chosen to be implemented [39].
Options include the adoption of standard packages,
component based strategies such as BoB, ringfencing,
business process strategies, bespoke development and the
maintenance of existing systems. The framework shows that
the outcomes of the implementation ultimately form the basis
of an organisations future legacy systems.
A C
ASE
S
TUDY
O
F
G
LOBAL
E
NTERTAINMENT
The case details the implementation of a BoB system in the
operations division of a global entertainment group's record
company - 'Global Entertainment'. The company’s turnover is
in the region of US$3 billion and it holds over 10,000
different stock keeping units.
Business Pressures
Global Entertainment operates in a global market and
competition largely revolves around the artists 'on its books'.
There has been a dramatic shift in the dynamics of the
business over the past decade. Retailers of Global
Entertainment's products have increased the sophistication of
inventory management. They want less stock, more often in
contrast with the old model of bulk buying. The
characteristics of the market have also changed. The lifecycle
of products has reduced and a range of niche markets have
emerged such as those for Jazz, Indie and Dance music.
Global Entertainment found themselves in the position of
having to manufacture to order rather than ship from stock.
Whilst the operations of the business were, and still are not,
seen as the core competence of the business, senior
management recognised that the present infrastructure played
an important role but it could not support a manufacture to
order global strategy in its existing state.
Business And IT Legacy
Global Entertainment has a physical presence in around
eighty countries and most of these sites incorporate a
distribution centre. The organisation structure of Global
Entertainment is split into two divisions - Record Marketing
and Operations. The Record Marketing arm of the business is
concerned with managing the product. That is the signing of
artists and marketing the resulting 'hard' products such as
compact disks. Functional areas include Artiste and
Repertoire, Sales and Marketing, Order Processing and
Secondary Distribution. The Operations division is concerned
with getting these 'hard' products into the hands of the
consumer. The operations division consists of core functional
areas that follow the product flow: release planning, logistics
and manufacturing. These are supported by the service
Business
Pressures
IT Legacy
Business Legacy
IT Strategic
Review
Project
Management
Strategy
BPR
Strategy
IT
Strategy
Implementation Process
Influences
Fig 1. The Research Framework
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functions of Finance, Human Resource and Organisation and
Information Technology. The supply chain impacts of each of
the divisions is shown in Fig 2.
Operations
Record
Management
Companies
National
Distribution
Centres
Logistics Manufacturing
Central
Warehouse
Retailers
physical product flow
main information flow
Fig 2. The Supply Chain Of Global Entertainment
The operations division was cost rather than service driven.
Consequently, a 'stove pipe' environment had emerged
whereby teams worked in functional silos. The general
philosophy was that of 'as long as my function is operating
efficiently, everything is okay'. A senior director commented
that Global Entertainment was not managed in a top down
manner and that there were powerful barons rather than a
king. The individualistic approach throughout the organisation
was acutely reflected in the IT infrastructure. Many different
software applications and platforms were in existence - the
characteristics of which were inextricably linked with the
historical preferences and needs of the respective functions.
Coupled with this, was a lack of project management and
systems development standards throughout the IT function.
The result was five disparate IT units and strategies. It was
clear that a radical re-thinking of IT support for Global
Entertainment was necessary.
The IT Strategic Review
The senior management of the company quickly realised
that re-engineering the IT infrastructure of the operations
division was only part of the work required to improve
operations. Change would also have to take place within the
business and alignment of both the business and IT strategies
was critical. Management wanted to encourage a group focus
within the business and overcome the historical tendency for
individualism. The group focus was to be augmented by the
development of a process view of the organisation. This
would have the reciprocal effect of nurturing the group focus
in addition to improving service levels and cost efficiency.
Furthermore, senior management wanted to improve the
business processes of the operations division. More specific
business drivers for changes to the IT infrastructure are shown
in Table 1.
Main Business Strategy Drivers

Visibility and control over all steps of the supply chain managed by Operations

One factory, multi-site. The same processes and system across the factories

Central Inventory. Ship from stock in a box and unit quantities rather than make to order for specific product ranges

Improve the forecasting of demand and separate predicable from non-predictable product behaviour

Improve the efficiency and effectiveness of all areas of the organisation

Implement the supply chain plan of volume, product and component planning to improve service consistency and reduce supply variability
T
ABLE
1. T
HE
M
AIN
B
USINESS
D
RIVERS
F
OR
C
HANGING
T
HE
I
T
I
NFRASTRUCTURE
Global Entertainment decided they needed an integrated
common system that would support a process oriented global
operations strategy on an intra and inter organisational basis.
The challenges were to reorganise the five IT departments
into one and begin to standardise hardware, software and
development methods. The intention was to reduce the large
number of hardware platforms and software applications with
two or three platforms and standardised software packages.
This would form the common infrastructure for the
organisational changes required The company implemented a
BoB strategy because each business function had high
demands in terms of functionality. Single vendor systems
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were considered preferable, and evaluated, but they could not
offer the required functionality. The ERP systems were
perceived as being aimed at specific functions/processes
which had been expanded to enterprise systems. Global
Entertainment felt that they were weak in the ‘expanded’
areas. The IT Director stated that:
"although ERP systems are good, you would have
to build around them in order to provide the
demanding functionality that our business would
require".
He also felt it would be easier to generate consensus to
migrate to a specific package if it was perceived as best
fulfilling the requirements of the individual business area.
The Project Management Strategy
The Project Director recognised early in the review process
that the approach to the management and implementation of
the system and the associated organisational change would
have to be carefully orchestrated given the legacy conditions.
It was decided to carefully balance the use of external and
internal expertise. To keep costs to a reasonable level and to
ensure that a skills base for future project management and
implementation could be developed in-house, the project
director decided against using consultants from the big
accountancy firms. The additional technical skill for
implementing the various BoB components was sourced from
the respective component vendors. This ensured familiarity
with the software and alleviated some of the problems the
Project Director had observed in single vendor ERP
implementations where consultants often had little product
experience. A small number of contract programmers were
also used on the project. Organisational change was managed
by internal personnel as they knew the business and its
organisational culture. The project was sold to the various
‘barons’ on the basis that it would fulfil 80-90% of their
requirements. Additional MIS developments would fulfil the
remaining 10-20% of their requirements. The profile of the
project was raised and promoted under the banner that the
success of the system was essentially down to the managers
and employees using the systems, that is, ensuring data quality
and exploiting synergies for instance. This was tempered with
assurances that the IT function would provide support. These
actions aimed to create user buy-in and commitment to the
project.
The Business Process Reengineering Strategy
Global Entertainment coined the phrase ‘one factory, multi
site’. The aim was to develop a process orientation based
upon a common and improved business process map across a
global business. Underpinning this, was the idea that wherever
package software was implemented, the company would
reengineer its processes in line with the software as required.
As a result of the complexity of the BoB project and the
associated organisational change, the company took the
decision to change the organisation from within in an
incremental way rather than attempt to transform the company
overnight. Changes were made on a site by site basis rather
than simultaneously across the whole organisation.
The IT Strategy
The Project Director agreed an 80/20 rule approach with
senior business mangers in order to create buy-in to the
project and ensure a good business fit with the resulting IT
infrastructure. That is, package software would be
implemented at every possible opportunity and that when this
was the case, at least 80% of desired functionality would be
met by the software. The remaining 20% would be met by
additional MIS developments outside of the package. The
Project Director strongly believed that modifications to any
package-based components must be kept to a minimum. The
components that comprise the BoB system, (shown in Table
2), were integrated where necessary, based on the messaging
model explained earlier, using IBM's MQ series.
Business Function Application Component
Product Data + Release management Custom
Order Processing Ratio (JBA)
Planning & Scheduling Rhythm (i2)
Assembly & Manufacturing Ratio (JBA)
Finance & Procurement Lawson
Invoicing Custom
Copyright & Royalties Custom
EDI MQ series (IBM) and Custom
T
ABLE
2. T
HE
C
OMPONENTS
O
F
T
HE
B
O
B S
YSTEM
The Implementation Process
The implementation process began in January 1995 with an
organisational analysis exercise aimed at providing a business
process map against which prospective component systems
could be evaluated. This was to ensure that components were
aligned with business needs given the 80/20 approach.
Business processes were documented based upon the
functional areas as listed in Table 2 and were then categorised
as either business or system functions. The organisational
analysis exercise identified unique and complex areas such as
product data and release management, copyright and royalties
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and the invoicing procedures. Packages were selected
following detailed process analysis and documentation.
Software suppliers were invited to tender and were asked to
differentiate mandatory functionality. Reference site visits
were then carried out at other sites where the software was
installed and fully functional. Once the appropriate software
had been selected, conference room pilots were set up to
“test” the software against the business processes. Interfacing
requirements were then identified. It became clear that some
areas would have to be supported by custom components -
namely the unique and complex areas as shown in Table 2.
The application development and implementation began in
1996. Each functional area was treated as a single project and
the implementation of applications were phased by site. Due
to business constraints, the project could only run for eight
months of every year. The project has actually taken around
36 months to date.
As multiple suppliers were involved, multiple graphical
user interfaces were present and this necessitated a large
amount of user training. IT staff also experienced a steep
learning curve. However, it is expected that the requirement
for IT staff will shift from programmers to business analysts.
The Project Director stated:
"The business analysts are building up a wide
understanding of how the whole business process cycle
operates. This allows them to add considerable value
in new projects and also allows them to challenge user
requirements from a stronger, more informed,
knowledge base."
Global Entertainment ensured that no modifications were
made to the package software now constituting the majority of
the systems makeup. Package vendors have been contracted
to maintain and upgrade the systems as necessary and a small
group of programmers have been retained to service the
custom developments with external contractors to be used as
necessary. An 80% plus fit was achieved for each framework
element and because several different components were used,
the company is not dependent on one supplier. Global
Entertainment also fast-tracked implementation. The senior
Director stated that this was facilitated by the component
approach allowing the company to treat a large ERP project as
a number of small, tightly focused projects. The overall
implementation timeframe is comparable with that of a
similarly sized full functionality implementation of a single
vendor ERP system. This approach caused less upheaval due
to its incremental nature and because the users were confident
they were getting an application that fully met their needs.
Where business processes where changed, the company felt
this had probably been easier to accomplish than would have
been the case if business processes were being changed in line
with a piece of ERP software which did not possess the
required functionality.
Global Entertainment now have a common hardware and
software application infrastructure, a high level of system
integration and increased functionality. Furthermore, the
project has facilitated the development of a more cohesive IS
organisation - they now have common standards for project
management and development exercises and a single IT
division with a shared IT strategy.
D
ISCUSSION AND
C
ONCLUSION
Single vendor ERP systems offer a simpler model of IT
infrastructure and one that promises multiple synergies. High
levels of technical integration are created and the large scale
reengineering that often accompanies implementation
improves organisational cohesion. Furthermore, vendors of
ERP software state that companies will have current
technologies through upgrades and a reduced reliance on
internal IT function as both these areas are supported by
themselves. However, as the ERP market has matured,
problems with the implementation process and the
functionality of the systems have arisen. ERP systems have
generally cost more than originally predicted and the levels of
organisational trauma have caused severe difficulties. A key
contributor to this has been the need for organisations to
perform drastic business process change, often in one step
shift exercise. Organisations are beginning to question
whether single vendor ERP systems still represent the 'best
practices' in core functional areas and perhaps more
importantly are beginning to realise that consequences of
adopting a common systems strategy. It has become clear that
organisations that have implemented single vendor systems
have broadly similar business process and IT infrastructures.
Some organisations are now implementing 'Beyond ERP'
strategies such as customer relationship management and web
enabled developments that aim to support innovation and
facilitate differentiation [40][41].
Organisations have looked for alternative ways to obtained
integrated enterprise-wide support and the BoB approach is
one such solution. Advances in enterprise integration
applications that reduce the complexity and cost of
implementation and maintenance have clouded the allure of
single vendor ERP systems. In fact single vendor ERP
systems are currently in the process of being componentised
to allow them to be more readily integrated into this form of
strategy. BoB approaches offer distinct advantages over single
vendor environments as they stand at present. Each
component in a BoB approach can be implemented as a stand-
alone application. The resultant rapid delivery of functionality
can mean a payback from the project throughout
implementation rather than at the end. The incremental
approach also subjects the organisation to smaller amounts of
change thereby reducing organisational trauma. BoB
approaches also allow more flexibility in business process
design. As demonstrated by Global Entertainment, companies
have a wider range of applications to consider when looking
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for a system which is closely aligned with their existing or
improved business process map of the organisation. Again, as
at Global Entertainment, this may impact upon the facilitation
of the implementation process. The organisation may more
readily buy into the implementation if the system meets their
needs rather than the converse as is generally the case with the
implementation of single vendor ERP systems. Moreover, the
multi-vendor approach distributes the risk associated with
long term support for the system. That is, if a vendor falls out
of the market, the whole system is not necessarily affected.
However, the organisation still has to make the decision as to
whether it will continue to support the relevant application by
outsourcing or through in-house means for example, or
whether it will implement a new component from another
vendor. The main difficulties associated with this approach
are related to the complexity of implementation and the likely
costs of future ownership in terms of the maintenance of the
links between the software. The case of Global Entertainment
highlights the implementation difficulties in terms of the
extensive training required and development of the necessary
interfaces amongst the suite of applications. Global
Entertainment have, however, seen the need for a highly
managed approach to this form of IT strategy so that an easily
maintainable infrastructure is created. They have endeavoured
to maintain the integrity of the packages they have
implemented by not modifying them and have developed
global standards and documentation.
This paper has presented a comparative analysis of two of
several IT strategies that companies are implementing to
support the shift from a local to global business and IT
strategy. It is not clear which strategy represents the best
infrastructure for the 21
st
century, and it is probably fair to say
that no one strategy is the 'best’ for all contexts. However, it is
clear that organisations adopting BoB and single vendor ERP
approaches that have matured into the Beyond ERP arena,
will have to carefully manage distributed information and
infrastructures. If systems development, implementation and
maintenance is not policed, organisations may be presented
with a set of legacy problems more complex and threatening
to the business than ever before.
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