Industry-Specific vs Off-The-Shelf ERP: Which one wins?

Choosing the right software for your business can seem like a daunting task, especially when the software in question plays a significant role in day-to-day operations. Enterprise Resource Planning (ERP) is one such software that organizations use for smooth functioning of daily operations.

If your organization is looking to implement a new ERP system, would you go with a generic ERP system that comes with a ‘one-size-fits-all’ functionality or would you look at an industry-specific ERP system? While generic software can be cheaper up-front, industry-specific solutions is a worthy investment in your organization’s future, offering all the features that meet your specific requirements.

What Is an Industry-Specific ERP System?

As the name suggest, an industry-specific ERP system is built to offer customized functionality for a niche market and so has a relatively shorter time to value. Such a system typically has more applicable functionality because it has been designed around specific requirements with a deep understanding of processes of a particular industry.

How Industry-Specific ERP Scores Over Off-the-shelf ERP?

Many off-the-shelf ERP platforms are generic in nature allowing organizations across a wide range of industries to use them. Such generic systems allow organizations to start using the software right away. However, one-size-fits-all functionality has its limitations and often requires several customizations to meet the requirements of a particular industry.

The generic ERP system has the deepest functionality for accounting, finance and general business management, but it provides basic functionality for operations. Thus, organizations with complex operational goals will need to add extensive modifications and add-ons to facilitate their day-to-day tasks. This makes the system pricier and more labor-intensive.

In contrast, industry-specific systems are developed based on the unique needs of a specific business vertical. It wraps them all into one solution that typically doesn’t require extensive customization or costly add-ons.

Eight Benefits of Industry-Specific ERP System:

1. Easy Configuration:?Industry-specific ERP is pre-built with the specific functionalities to enable you to integrate the solution and start reaping the benefits relatively quickly as compared to generic ERP, which needs customizations.
2. Lower Total Cost of Ownership (TCO):?Generic ERP systems often come at a lower initial price point. However, they aren’t designed to meet the demands of a given industry and thus require modifications, which add to the cost in the long run. Industry-specific ERP helps to avoid costs of customization and add-ons leading to lower TCO.
3. Access to Industry Know-how:?Industry-specific ERP systems have built-in functionalities to address the requirements of a specific industry, which enables access to industry best practices and standards. This helps in an organization’s long-term success.
4. Faster Issue Resolution:?In case of an industry-specific ERP system, you’re partnering with a vendor that has deep expertise in the industry that your business operates in. This enables them to address issues and offer resolutions relatively quicker than a generic solution provider.
5. Enhanced Convenience:?Over and above the regular tools, an industry-specific ERP offers tools for specific operational requirements pertaining to an industry. This, in turn, provides convenience to the workforce. For instance, Production Planner with an industry-specific ERP system can use integrated batch scheduling functionality to assist them in planning and scheduling production. To perform the same task using a generic ERP, one would need to integrate an add-on or a third-party software product.
6. Shorter Time to Value:?Industry-specific solutions have more applicable functionality because they have been designed around specific requirements with a deep understanding of processes related to the particular industry. Hence, they have a much shorter time to value.
7. Better Adaptability:?Due to the industry-specific updates to the system, businesses can streamline the adoption of advanced technologies and new capabilities.
8. Support for Industry-specific Regulatory Requirements:?Let’s understand this with an example. Food and Beverage (F&B) manufacturers need to comply to certain regulations set by the regulatory body in order to ensure food safety. An F&B-specific ERP solution will include tools that meet these regulatory requirements leading to better compliance.

Wrapping up: Which ERP wins?

There is no clear winner. Choosing an ERP solution can be a long and demanding journey. If you opt for a generic solution, you will not necessarily fail. However, you may not thrive as you would with an industry-specific option. While opting for an industry-specific solution has many benefits, your decision should ultimately be based on your business needs and goals. Every business will have different operational and administrative goals as well as requirements. Similarly, the regulatory needs of every industry will also vary. You need to carefully look at the business processes and assess which type of system will provide you with not only the basic functionality but also the specialized capabilities. You will have to lean towards a system that can help your organization to simplify processes, enhance operations and improve productivity.

As written by Shrikant Navelkar, Director, Clover Infotech