The Great Debate: ERP vs. BOB

ERP suites feature substantial best-of-breed functionality, especially in performance management and the financial value chain. But BOB vs. ERP purchasing decisions remain complex.

At first glance, United Asset Coverage, a $30 million-a-year provider of telecommunications maintenance services, doesn't look like an organization that would be interested in the offerings of large enterprise resource planning (ERP) software vendors. When the fast-growing Naperville, Ill.-based company needed a new financial system last year, its most pivotal requirement was contract management functionality -- a quintessentially

best-of-breed (BOB) capability. Yet the search for that feature led United Asset to Oracle. "We're probably not the most likely candidate to seek out an Oracle solution," says CFO Mario Christopher. "We sought out a key component, contract management, and we anticipate that we will soon be at a size where we will leverage Oracle's full suite in a big way."

Manulife Financial Corp., the $10.5 billion-a-year financial services giant, might seem a more typical ERP customer. Yet when the Toronto-based company chose to upgrade its Lawson Financials enterprise suite to Lawson's Series 8 in February 2002, it did so, in part, because of the ease with which some BOB applications can be knitted into that system.

What's going on here?

ERP vendors are working hard to lift a page -- or several pages -- from their BOB competition's playbook. Some of their marketing efforts sound increasingly like those of BOB vendors, and their products are encroaching on traditional BOB functionality. But the shift is a cagey strategic move rather than a reinvention. ERP executives still chant their mantra of "seamless integration" and remain as vigilant as ever in pointing out the limitations that they say plague the best-of-breed approach.

What's more, ERP offerings have evolved significantly in the past 12 months. Development has been most pronounced in interenterprise collaboration functionality. And through new performance management features, ERP vendors' latest offerings address two issues that are high on CFOs' list of concerns: Sarbanes-Oxley compliance and the weak economy.