Many might argue that this is a point solution market. Indeed, much of what we hear these days is about point solutions. They are the “best of breed” solutions, have the most advanced functionality, slickest user interface and self service tools, and probably the best per function process and workflows. And while I won’t go into ROI or TCO, there is usually a significant difference in the cost model between ERP and point solutions. Maybe this does sound good, but it’s not always everything. In fact, the listed advantages are never everything.
All things holding equal, what are the advantages that go to the ERP? Well, there is always end to end processes. Anything else? Well, not really. So the list for ERP is indeed much shorter than it is for point solutions.
Here is my argument. Having great end to end processes will in many if not most cases trump any incremental gain in any other functional area. Let’s face it. No process is contained within itself with an originating event and conclusion within the same application module and HR function. Let’s take a couple simple examples:
- Job Requisitions, they start not when the manager initiates the requisition, but it all actually starts in core HR. At some point in the distant past, the compensation group set up all sorts of job codes. In an ideally integrated world, the job requisition will pull data from the job tables into the job requisition. That’s integration point number 1. Number 2 is going to be any type of position control or workforce planning tool that might automate the creation of requisitions for newly created or recently vacated positions. This is also often with core HR, but may also be housed somewhere else. Integration point number 3 is for competencies. These might be sitting in core HR, or your talent system. Hopefully you are not replicating your competency tables throughout the modules. Once these initial integration points have been completed and the requisitions have gone out, interviews completed and candidates hired, then you need to integrate into all sorts of other things. You might have a separate payroll system and timekeeping, you’d have to push data out to HR, there may also be an onboarding system or website. All of these also disperse data out to numerous other systems as well. So having said this, is it worth it to go with the point solution over the ERP? If you go with the point solution and don’t effectively integrate all functions, have you actually created additional manual work?
- Compensation Merit Reviews, they have very distinct begin and end points. And all of these are outside of the normal compensation process. Hopefully the merit process will begin by pulling performance data from the performance module. Remember that this is not the beginning of the process, but performance is also somewhere in the middle. They (perf) had actually pulled from competencies, job, learning, etc.. already. As compensation, you’re just the recipient of a recipient. Then there is the merit budgeting process. The budgets might come from core HR, they might come from finance, but they might also come from some consultant’s salary system where surveys are stored and aged. So you collect all this data and then send it along its merry way for managers to process. Once that is done, it needs to get back into core HR, and the whole process probably ends in payroll when new salaries are paid.
My point is this: don’t go out and buy any modular systems without first understanding that your process is part of a much larger organism. A breakage in your world (or getting into or out of your world) breaks the whole thing.
Integration is important. And every point solution will tell you that they have standard integration routines to all the major ERP’s. This might be true, but are those standard routines good enough? Will all the data you need to get from 5 different originating systems get in? or will you need to customize to add fields? Will all the data you need to get sent to consumer systems get out? From what I’ve seen, real, simple and comprehensive integration just isn’t there yet. We all keep talking about SOA, but the reality is it’s 3-5 years away.