Mixmasters find an alternative to all-in-one ERP software

There are bottom-line benefits in linking best-of-breed modules for disparate business functions--if you can resist the allure of preintegrated, enterprisewide packages.
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In this article:
Emergence of the middle(ware) class
Smaller firms take the one-vendor ERP route
Lessons learned in creating hybrid ERP systems
The sellers of enterprise resource planning software can hawk their unified, seamless, one-stop mega-products all they want; General Motors Corp. isn't buying.

From its Detroit headquarters, the world's largest automaker is assembling a hybrid ERP infrastructure by mixing and matching modules purchased from different suppliers.

AT A GLANCE: General Motors

The company: General Motors Corp., based in Detroit, is the world's largest automaker.

The problem: How to implement enterprise resource planning software while relying on software providers that GM feels have the best capabilities for the automotive industry.

The solution: GM is building its own hybrid ERP system, relying on financials and "indirect materials" modules from SAP AG and the human-resources and employee-administration portions of PeopleSoft Inc.'s ERP package, according to GM.

The IT infrastructure: GM built links between the SAP and PeopleSoft software using Mercator integration software from TSI International Software Ltd. When the SAP procurement system needs to look up rules in the PeopleSoft HR system, for example, it enters the PeopleSoft module via the GM link.

Instead of buying compatibility out of the box, GM is creating its own compatibility, installing its own software-integration links at the points where separate systems need to exchange information.

"GM's strategy is a best-of-breed strategy," says Al Stolpe, director of enterprise applications for GM's information systems and services operation. "We want to align ourselves with the software providers that we feel have the best capabilities for the automotive industry." That means sticking with software that GM knows will work for the automaker.

A minority approach

Companies that are willing to buck the single-system approach remain a minority (see stories, "Sonoco does the ERP packaging itself" and sidebar "Smaller firms take the one-vendor ERP route"). Roger Walters, vice president and CIO of Booz Allen & Hamilton, a management-consulting firm based in McLean, Va., says more organizations buy ERP software from a single vendor than go best-of-breed. That's because the bottom-line allure of integrated packages is pretty powerful. Buy all of your business software in a multiple-module suite from a single vendor, the pitch goes, and your previously self-sufficient business functions will be able to communicate with one another and use one another's information, with no special software connections required. You'll be able to save money on warehousing, for example, because an order for raw materials can be placed as soon as the inventory system becomes aware that manufacturing will require it.

Many companies opt to go with a single ERP vendor primarily to avoid the well-known issues associated with integrating disparate software systems: the cost and complexity of the integrations themselves, the cost and complexity of maintaining and updating the integrations as applications change, and hassles like building IT expertise to cover multiple systems.

"Even if an ERP solution delivers less than 80% of what you want (functionally), it's still better to go with one vendor," Walters maintains. "You have cheaper maintenance, a lower learning curve, and all those related benefits."

But the mavericks have good reasons for taking the integrate-it-yourself, hybrid approach. The most prominent reasons are:

  • To get the most appropriate, best-in-class software functions available across the full spectrum of system vendors;

  • To absorb fully functional ERP systems that come along as part of an acquisition or merger with another company; and

  • To add newly emerging software capabilities that aren't yet available from one-stop ERP vendors.



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