Cloud Line of Business Solutions versus All-in-One #ERP?

With web 2.0 apps coming out every day to run aspects of your business - this begs the question:

Do I choose line of business (LoB) solutions or bite the bullet and try to find a all-in-one solution that can run at least 80% of my entire business?

This is a very difficult question to answer in a generic sense - because it wholly depends on the circumstances of your organization, budget and desired business goals.

Advantages of LoB multi-tenant solutions.

• Generally newer and therefore more consumer orientated (easier to use) with great social media capabilities.
• Cost effective.  Time to value is very fast.  Subscription and deployment both.
• Can resolve important issues very quickly.  Such as Customer Service issues, CRM, Marketing, eCommerce and HR 
• Tend not to cause too much disruption. Or if they do, its confined to one department.
• If they fail, the impact is not huge and generally confined to a department.
• Not as sticky for a customer.  Easier to change technology if not happy with the software or service levels.

Disadvantages of LoB multi-tenant solutions.

• If integration is required across these solutions can significantly add to cost and maintenance.
• Best to stick with LoB solutions that are "naturally" segmented (see below).  Therefore the need to integrate is minimal.

Advantages of All-in-One multi-tenant ERP solutions.

• If chosen right can run at least 80% of your business on one platform.
• Significantly less integration requirements.  So if your integration requirements are complex - may well be a logical choice to reduce cost and improve efficiency.
• Great for businesses that "naturally fit" a All-in-One.  Both culturally and functionally.

Disadvantages of All-in-One multi-tenant ERP solutions.

• Generally more transactional based, more complex and therefore less user friendly - but a lot more friendlier than their on-premise counter-parts.
• Change management issues.  You are effecting everyone in your organization.
• Generally are more jack of all trades - master of none.  Which may pose issues with certain departmental requirements.
• More expensive to deploy (but less expensive if complex integration is required)
• Less available options on the market.
• Generally not socially aware without custom development
• High degree of vendor lock-in - so if your not happy with the vendor - tough luck; which is why vendor selection is key.

"Naturally fitting LoB solutions"

LoB solutions do have natural sweet spots. In other words, will require little or no integration but yet offers maximum horse power, easy to use, easy to deploy and offers the scalability you may need.

examples of such areas are:

CRM (in some cases), HR, Marketing, Customer Service Automation, Web Site/Store (CMS).  

In all these cases, they can (generally) be successfully purchased separate from the ERP.

Combination/hybrid solutions.

Most modern All-in-One solutions do not have to be enabled to run in All-in-One mode.  In other words, you can purchase a Lob solution because its segregated but also run say Order Management and Accounting in the All-in-One and not CRM or Marketing.   This has the effect of reducing the potential integration points - but also creates quick wins for your departments where LoB's naturally fit - avoiding massive disruption but potentially meeting business requirements.

Final thoughts.

These decisions need to be carefully balanced - and it really is not a software issue.  Its a business issue;  (amazing though how customers treat it as a software issue - completely wrong approach).

Questions you need to think about

What are my business objectives?  Better customer service ? More revenue?  eCommerce capability? Current processes too expensive ?  Need to do something for a particular department ?  What about the future?

What is my budget?  LoB's are fine until you get around to integration.  This can completely blow a budget to the point of project failure - a unpredictable snowball effect if you like (good for consultants though). 

What is my time to value? A critical decision point.

Does my business naturally fit a "All-in-One" ? 

The combinations and permutations of solutions are impossible to count.   One thing for sure.  You do need to make the right decision - otherwise you will end up with a very expensive mistake.

These are difficult things to think about and in most cases you will need help by a qualified professional.

To run an analogy.  Would you perform open heart surgery on a family member ?  Or have someone unqualified do it ?.  Probably not.  So why do it with your business? :-)

Comments

[Milana]

Thanks for the article. Mostly I liked adv and disadvs of ERP Solution. And currently, we`re using Simple ERP-Software which is all-in-one.