The truth about ERP bolt-ons reveals mixed results depending on the path you choose. In this post, we’ll discuss the good, the bad and the ugly risk associated with ERP bolt-on extensions, so you can make the right decision for your business.
Why Choose ERP Bolt-Ons?
Sometimes, key benefits a company wants from an ERP are not part of the purchased ERP package you selected to implement. A business can get missing capabilities and extend the value of their ERP with an additional application or module, fondly referred to as a “bolt-on.”
ERP bolt-ons provide very specific functionality or technology to complement ERP systems. CRM, advanced supply chain management, vendor relationship management and HR modules are typical examples of bolt-ons.
Tips for Understanding ERP Bolt-Ons
There are a few basic concepts to understand about ERP bolt-on extensions:
Not all ERP bolt-ons are equal. Like so many things about ERP, simplicity is elusive and things can get complicated fast if you’re not prepared.
Interfaces may be needed since the systems may not have been designed to work together in the first place. These programs physically extract, transfer, and load data between separate databases, on a less than real-time basis.
Integration implies that application programs utilize a common database, with minimal file duplication, and data updating across the system in real time. Understand what your provider means when they say their bolt-on application is “fully integrated” with the ERP system.
Know the degree of real-time information your business requires in the application area in question. For some functions, lack of real-time integration is a hindrance to usability.
Risks and Methods of Adding ERP Bolt-ons
There are basically four ways to add specific functionality with an ERP bolt-on, but each has its own level of benefits and risks. Understanding the makeup of good, bad, and potentially ugly risks for each will make your road ahead much smoother.
Implement an add-on module from your ERP provider. Risk Rating: Usually pretty good A bolt-on application developed by your ERP provider is a good choice. It will add value to their core product, likely be fully integrated, use the same platform, and have good customer support from a team you’re likely already using. To reduce implementation risk, some ERP consultants advise new customers to become competent with a core ERP package first before extending. Then, later circle back and implement a bolt-on. However, if a substantial part of your ERP justification results from a bolt-on module, you need to either implement the bolt-on at original go-live, or find an ERP package with the desired capabilities built into the core functionality.
Install a module your ERP company has acquired: Risk Rating: Not quite as good As an alternative to developing additional functionality within their base ERP offering, many vendors purchase third-party applications and sell the acquired software as a bolt-on module. During the integration period, acquired applications can be klugey; consider waiting for the dust to settle before jumping in. Beware of ERP packages constructed mainly of third-party bolt-ons. They tend to have data redundancies and integration issues. When an ERP vendor routinely uses optional bolt-ons to provide “point solutions,” it could be a sign that their solution is in a state of decline. During a software evaluation, ask vendors about this; then make your determination.
Implement a product from your ERP vendor’s partner: Risk Rating: Not too bad Reliable ERP providers and implementation consultants offer their customers bolt-ons developed by partners to help their customers get more out of their own ERP systems. This approach can be very successful for all parties when there is a harmonic convergence of platform, interface, and integration. Third-party bolt-ons can have connectivity complications, unfriendly user interfaces, and may even have conflicts with other benefits of the core ERP. In cases where bolt-ons are built on a different technology platform than the ERP software, it makes interfaces even more difficult to design, develop, test, and support. When an important interface fails, it can affect the business and users in a significant way. Always ask to speak with reference customers during evaluation.
Unsupported bolt on from a non-partner: Risk Rating: Could get ugly Think twice, and then one more time before implementing or integrating any unsupported solution!
ERP Bolt-ons can be life-saving, efficiency-boosting technologies—if implemented correctly. Ample due diligence during your evaluation period can help you avoid encountering ugly headaches later.