Best of Breed is Coming Back to Retail, but....
- ERP allowed retailers to focus more on their core competency of selling the product and customer service instead of having the headache of developing and maintaining enterprise applications. With rapid change in technology of software development and newer languages and paradigm it was increasing becoming difficult for retailers to retain top software talent in a market which was dominated by huge software companies. In addition to resource retention, maintaining the skills for software development was again a huge ongoing headache that was better done by software companies.
- ERP allowed them to reduce total cost of ownership, whereby you pay cost upfront to license the product, and thereafter maintenance fee to stay on an upgrade path provided by the vendor
- ERP provide them 80-90% of the features they needed, sometimes even less, with workaround or customization to take care of the rest. This was not the ideal whereby every whims and fancies of the user group will be satisfied but was a good workable solution. Well, in some cases retailers also got features that they didn't need, but that's was ok as they were getting more than what they bargained for!
- ERP brought in, or at least the perception created by the vendors was that they brought in best practices of the industry and therefore retailer could stay on the "bleeding edge" by leveraging experiences of other retailers built into the ERP system by the vendor on an ongoing basis.
- ERP allowed them the convenience of well integrated suite of applications that was the bane of the earlier era having point to point interface paradigm.
- ERP also allowed retailers to scale as the backend servers and middleware constantly being developed by the vendors allowed them to ride the wave of growth without having to worry about technology innovation.
- Though ERP works at the enterprise level, it was and still is architected primarily for the brick and mortar era and is increasingly not able to change fast enough to provide functionality that the retail industry needs for web and mobile commerce.
- ERP suite applications talk to each other well but don't provide hooks for applications from other vendors to talk to them. This was a boon in ERP but is increasingly becoming bane. Now an ERP not only requires to speak to one another of its own kind but also to another kind from another vendor that provides the functionality that the industry needs. That means building additional interfaces that the earlier era did not need. However, newer middleware technologies such as SOAP and web services are increasingly making it possible to build generic interfaces that only need to talk the language of the function and not the language of the application. For example, a Product Information Management (PIM) application could talk to a merchandising application exchanging product information with the SOA based connector sitting in the middle and translating the PIM speak to Merchandising System speak and vice versa. PIM could now also talk to other downstream systems such as Store POS or Warehouse Management system directly facilitated by this SOA layer.
- Now retailer could go and buy a best of breed solutions and interface it to its ERP if the latter doesn't provide the functionality it needs with the middleware taking care of the translation thereby enabling business processes and protecting investment.In the long run, they might not even want or need an ERP and let multiple BoB applications talk to each other facilitated by the middleware layer.
That said, ERPs are still in place and probably will continue to be in place to tie everything together at the enterprise level until either retailers or BoB application vendors could think enterprise and put in standardized retail processes and technology in place to integrate various applications seamlessly including with the financial accounting system.
ERP vendors need to heed that fact that best of breed applications are nibbling away from them individual functionality that the ERPs earlier provided. Unless they shun the rigidity and become more agile - in time to market with new releases and functionality that the retailers need - more best of breeds applications will be brought in lessening the need for ERPs completely. Coming out with one major release in 3 years is a call for the death knell in long run.