Over the past decade, the demand for integrated HR solutions has spurred HR software companies to develop new ways to address the problems that crop up when integrating modules from multiple vendors. One of the trends we’re seeing is a push for better, faster, more cost effective integration, whether that’s through a best of breed solution or a single database system.
As both the economy and the talent landscape shift over time, many companies need solutions that will provide better value at lower cost. The question they must ask with regard to their software is: Are we getting the best value for our investment?
Best of Breed
Best of breed software gives companies the best available solution for every module, often providing deeper functionality and greater flexibility for individual elements without locking users into a single vendor for every need. In addition, they often utilize more evolved technology and easier implementation for individual components. Three of the most commonly cited drawbacks associated with best of breed software include cost of integration, data integrity, and vendor management. Let’s take a look at each one:
- Cost of integration—Because it incorporates multiple vendors and implementation processes, best of breed software usually comes with a high cost of integration. Cloud software has made it possible to lower those costs, however, and as the technology matures providers are optimistic that more affordable solutions will become available.
- Data integrity—Data integrity isn’t just an integration issue. Integrity problems can happen for many reasons including faulty data collection or data entry, weak algorithms, and lack of standardized processes. Integration does play a role, however, as data must be standardized across multiple modules and vendors. Reputable SaaS providers work hard to eliminate integration problems among their extensive partner lists, making integrity breaches as a result of faulty integration rare.
- Vendor management—When you work with multiple vendors, you will have more relationships to manage, which requires a greater investment of time and resources. That investment can be worth it, however, when it leads to better quality of service and more efficient software.
Daniel Dean, Senior Product Marketing Manager at BambooHR, encourages companies to know their needs and understand the value offered by a best of breed solution. “What we’re seeing is that customers want a solution that not only integrates data across modules, but also delivers the highest performance. And, while the cost of integration is still a very real barrier in terms of adopting a best of breed approach, the goal should always be to help customers find the best solution.” said Dean.
The advent of cloud computing has made it easier than ever for best of breed providers to meet that goal by delivering a high-value software solution while also managing costs.
Single-Source ERP
Single-source ERP solutions emerged as companies increasingly demanded integrated software at lower cost. ERP systems facilitate information flow across modules with the goal of increasing efficiency, decreasing costs, and maintaining integrity across HR functions. They also provide efficient employee management using a centralized solution and consistent user interface. However, they aren’t without drawbacks:
- Loss of flexibility—Single-source solutions don’t give users the flexibility to choose a vendor that specializes in their specific needs. If the ERP is weak in one area, companies may still have to purchase an add-on module to access deeper functions that the ERP can’t provide. However, ERP providers work hard to ensure that their solutions do meet pressing client needs while still offering the ability to customize according to company culture and processes.
- The Suck Threshold—In business terms, the “suck threshold” is the point at which a solution loses value or quality because it’s trying to do too much. As the scope of offerings increases, quality may decrease. The good news, however, is that reputable ERP providers emphasize both depth of functionality and broad scope. Their goal is to give clients a unified solution that will perform consistently.
- Technology constrictions—When you invest in an ERP, you automatically limit your technology options. If your business approach is technology agnostic, you may be dissatisfied with a single technology source. However, if you are less concerned about seeking out the latest technology and place greater value on a solution that integrates and flows seamlessly, an ERP system may be the best option.
One example of a comprehensive ERP solution is Ultimate Software’s UltiPro. UltiPro seeks to offer broad HCM functionality at low cost. By offering payroll, recruiting, benefits administration, time management, onboarding, and more all in one place, UltiPro can provide a consistent user experience and global system of record, making it easy to track all of the numerous elements of employee management.
Which Option is Right for You?
As you consider which software to purchase for your business, you’ll need to take a long, hard look at the your company needs and values. Ask specific questions about usability issues, functionality needs, and business processes to define the specific requirements you’re looking for in a software solution. When you have your requirements list in hand, the software selection tool at CompareHRIS.com will help you compare and contrast available software systems that match your requirements.
Best of breed and ERP systems each have unique benefits to offer. Your decision will ultimately depend on where your pain points are and which system best addresses those needs.