Supply Chain Technology Outlook: Best of Breed vs. ERP—Both good canidates for replacement
John Fontanella and Eric Klein -- Supply Chain Management Review, 4/1/2008
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Best of Breed vs. ERP—Both good canidates for replacement
Companies who participated in our spending survey are evenly divided on what vendors they look to for replacement technology and new applications. In the U.S., the majority view demand planning and inventory optimization as being the province of their Enterprise Resource Planning (ERP) vendors, likely because of the integration with other modules they either influence or are influenced by. As far as other major functions, ERP is still battling uphill to win share of market against best of breed and, in many cases, applications either built internally or heavily modified applications delivered by third parties. In fact, custom-built applications are still widely used in areas such as warehouse management; international trade compliance and documentation; transportation management; and supply chain network design (see Exhibit 2). These are areas that the ERP vendors have only recently begun to invest in to meet the performance standards set by best of breed vendors.
ERP vendors lag behind in areas that extend beyond the enterprise—where cost effective integration methods are a requirement to collect and disseminate information with a trading community. Given the aggressive SOA strategies of ERP vendors along with the investments made to upgrade functionality to compete with best of breed, this picture will change in the future. That said, U.S. survey respondents told us that domination of the supply chain technology market by a handful of ERP companies is a distant, if impossible, scenario. European results show a slightly more optimistic picture for ERP vendors, with nearly every supply chain application category approaching or surpassing 50 percent of users choosing their ERP vendor over best of breed or custom built applications for replacement and new technologies.
European companies do report a much higher number of custom built applications to manage their supply chains than their U.S. counterparts. Half of the categories listed had at least 20 percent of applications that were neither ERP nor commercial off-the-shelf software. Given the rapid changes in European supply chain networks, customer demands and technology platforms, these applications, many undoubtedly aged, will be ripe for replacement over the next several years.
>> Next: Market Share Winners and Losers
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Best of Breed vs. ERP—Both good canidates for replacement
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In which of the categories of solutions in the diagram do you place PLM?
Christine Lowry - 2008-16-4 11:06:00 EDT
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