Linking ‘Best-of-Breed’ Products vs ERP for Construction Companies
Say your company is reviewing its software systems. You make a functionality wish list, investigate what is available and you will likely be left with two lists. “Best-of-breed” products that specialise in specific areas, and fully integrated systems that take care of many of the major functions of your business. Then you make a choice – do you link these best-of-breed products together or implement the integrated system? But, is there another alternative?
To accurately and objectively look into this topic the merits and disadvantages of both options need to be explored.
In the construction industry, best-of-breed providers might include a package specifically designed for engineering estimating, a document management, plant management, or payroll system that aligns to your particular needs.
The value delivered to your company by best-of-breed is how well these options meet your needs for that particular aspect of your business. Therefore their degree of fit is often an extremely close for your company.
Also, because they are built to accomplish their specific task alone, they are often seen to be incredibly user-friendly. Plus, if you are choosing multiple best-of-breed products to run your organisation, you can implement one at a time and spread out your costs (both upfront cash costs and also costs associated with change and training).
Finally, having best-of-breed products to run your business means you are not locked to one specific vendor for your needs.
Potential issues with having multiple best-of-breed products to run your business are numerous however. Firstly, by having multiple stand-alone products you increase the need for duplication which increases risk of error.
Secondly, while each product will capture data, often true business intelligence stems from being able to pool your data and analyse trends in this way – this is often not possible when linking best-of-breed products without significant integration effort. For example, if you have a separate payroll package from your project management package, analysing which project managers achieve greatest profitability and client satisfaction over time can be complex – whereas with an integrated product it could be done in 3 mouse clicks.
Thirdly, the total cost of ownership is generally higher than that of an integrated system. While each product can be bought and implemented relatively cost effectively, multiplying this process by the number of products you need can see costs skyrocket. Costs in this case extend beyond monetary also. For example, while learning a single best-of-breed product is usually easy, learning many different programs generally involves more training than to learn one integrated system.
Finally, a company will often take a partner style of relationship with their integrated software provider and this generally provides
Integrated software packages aim to deliver you best practice solutions for use across your business and, because of their integrated nature and removal of duplication, make your business more efficient and cut costs.
Once the integrated system is implemented successfully, you should start to see productivity improvements very fast.
Secondly, you gain the ability to get a reliable, real-time snap-shot of your business very simply. This stems from the point made earlier about having all of your data collected in one product. Also, some integrated software providers have very good reporting capabilities that allow both push of a button and completely customisable reports.
Thirdly, because the one package is used for multiple functions of your business, training is requirements are reduced.
Because the integrated package contains functionality for multiple areas of your business, it would be unlikely that the overall solution will match the compatibility / degree of fit with your business in every single area as well as choosing a singular best-of-breed product for each function would. Therefore, there is greater potential for functionality gaps.
Secondly, because integrated systems are enterprise-wide, their implementation is a big deal and takes a real effort from all involved. It usually also incurs cost in one go – opposite to that previously discussed with best-of-breed packages.
Thirdly, implementing a rigorous system can require a culture change within your organisation. A system that ensures efficiency and forces compliance needs your organisation to be big on data accuracy. If your people are used to being able to go into their systems, fix mistakes and make changes, implementing an integrated system can be a shock.
Beware of “links seamlessly”…
An option that can seem like a great answer are a software packages that are able to “link seamlessly” with other packages. An example of this might be an industry-specific project management system that “links seamlessly” to a more generic accounting package. These kinds of options can be good solutions if in fact they are able to pool and analyse all the data collected from all linked programs. This is not always the case though.
The real benefit of software systems comes from how well you can use the data collected to better inform your operations and strategy – and being able to do this fast. So if you can in fact pool the information collected in each software package, easily analyse your data for trends and projections and avoid the any duplication of effort – then your programs really might “link seamlessly” and you’re on to a winner.
The devil lies in what definition of “links seamlessly” that is used by your software vendors. Many programs that claim to “link seamlessly” are only able to have part or all of their data be read by the package they are linking to, however often you cannot make full use of the data collected by each program and analyse them fully. This can be a problem and can see opportunities for efficiency and intelligence gaining lost.
Then, imagine if your company chooses to implement multiple systems that claim to “link seamlessly”. This can result in companies having one system that talks to another but not to the third etc. without further development. Inefficiencies like this can cause significant delays in reporting and intelligence gathering and can be highly problematic. In the highly-competitive, fast-paced construction industry, this is simply not ok.
SO, WHAT’S THE ANSWER?
As the Director of a company that makes integrated software solutions for the construction industry, I would love to say that the integrated solutions are the best choice however this is not always the case.
In my experience I have learned that ensuring your competitive differentiation remains and is capitalised on needs to be your first priority and after this the focus should be on efficiency and cost savings. Therefore what I recommend, and what almost always achieves the best outcomes, is for companies reviewing their software to determine what makes them competitive and initially seek a software solution that will work best with their competitive advantage. Your company may indeed find your solution within an integrated solution like LEVESYS with one or two best-in-breed products properly connected to an integrated package.
After this is determined, seek a system that will deliver you maximum efficiency while also fitting your business quite well. Industry-specific solutions are generally the way to go with this. Depending on your needs, some providers will suit better than others. Often what it comes down to though is the team behind the software and how they will work with you to ensure your competitive advantage remains while also driving efficiency within your organisation.
If you can finish the software review process with a software package or packages that both play to your strengths and also make you significantly more efficient and profitable – you’ve got the best of both worlds.
For more information about best-in-breed versus integrated products for Australian construction companies, contact LEVESYS on +61 7 3004 6100 or at email@example.com.