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With ERP, integrated platform doesn't always mean integrated data

One city adopted Infor to integrate HR and finance, but an expert warns that buying several modules from one ERP vendor might not have the desired result.

Seamless data integration between all business units is the ideal that often drives technology buyers to choose an integrated platform over a so-called best-of-breed approach. But one expert says this goal is often harder to achieve than users expect.

Better integration was the motivating factor behind the city of Boise's adoption of Infor ERP software for financial, HR and supply chain management. Chief information officer (CIO) Garry Beaty said while the implementation is still a work in progress, he thinks buying all the modules from Infor was the right decision.

"I've always said I'd favor integration over functionality," he said. "The best-of-breed approach is interesting, but it's hard to do right, as I think a lot of people have proven."

But John Sumser, principal analyst at HRxAnalysts, based in Bodega Bay, Calif., pointed out that even if every module comes from the same vendor, they might not integrate well since software suites are often a conglomeration of acquired products. With this in mind, he offered tips on how to approach a single-vendor implementation, and when specialized software might be the wiser option.

Integrated platform brings disruptive change

When Beaty started as Boise's CIO eight years ago, one of his first tasks was to "fix PeopleSoft." Due to a poor implementation, he said, the accounting and HR functions were siloed. After conducting a cost analysis, he decided that implementing a new system was the less expensive option, and the one that would lead to greater productivity.

During the request for proposals (RFP) process, the choice was narrowed to Lawson, MUNIS and Innoprise. Beaty's team, comprised of employees from HR, accounting and IT, ultimately decided on Lawson in early 2011. Infor acquired the vendor later that year.

"We thought it was a much simpler system to use, and one of the goals of the project was not just to have a very few power users, but we wanted it [in use] more broadly across the organization," he said. The software's price and positive recommendations from colleagues also played into the decision.

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The HR component went live in January 2012, and the accounting module followed in October. Beaty praised the system's ease of use and said that it has approximately 300 users.

Since the city is still in the early deployment stage, he said it's difficult to quantify the results of the integrated platform yet. "We're looking to save money, and I think we're beginning to see that," he said. "From a functionality standpoint it's hard to tell right now, but there's no doubt in my mind it's going to be better."

But while the idea of purchasing an integrated platform is good in theory, Sumser said the reality is often much different. "Most of the vendors who offer multiple functional areas have purchased the pieces and put an interface layer over the top, which means the integration happens on the desks of business analysts converting information from one place to another," he said. "It might be as integrated as two cars latched together with a leash."

Beaty said he experienced this very pain point with the city's former PeopleSoft implementation. "We came from a system that had the same label on it, but wasn't integrated," he said.

To avoid integration issues, Sumser recommended choosing a vendor that has built its modules rather than acquired them. He explained that this ensures the data flowing between components is structurally consistent, so IT can spend less time trying to get the data to "talk" and direct more of its focus on strategic projects. 

Sumser also warned of the disruptive change that comes with implementing an integrated platform. Since silos between functions have been broken down, disparate business units are forced together, which can cause friction.

Although Beaty did not report any integration hurdles with Infor, he did say getting accounting and HR to work together more has been a challenge. "Right now there's still some consternation, [but] we're paying a lot of attention to everybody sitting in the same room," he said. "We've established a couple user groups we didn't have before." The organization also changed a handful of key processes before implementing the new software, such as streamlining the purchasing approvals process, regulating the payroll cycle and adopting a new time and attendance system.

Sumser suggested that business leaders interested in purchasing an integrated platform look for one with a large customer constituency in their vertical industry. "Get [the vendor] to tell you what percentage of the base customers [in your industry] are today and what percentage they are forecasted to be in five years," he said. "You want the company that's serving your community, not the one who has the best software ever."

Most of the vendors who offer multiple functional areas have purchased the pieces and put an interface layer over the top … It might be as integrated as two cars latched together with a leash.

John Sumser, principal analyst at HRxAnalysts

He said this can be a counterintuitive way to approach purchasing decisions, since the vendor best serving a particular industry may not meet all of a company's functional requirements. "If they don't have the one function you really wish they had, it's still a better bet," he said. "They'll get to the function since they're in your industry."

Buy-in from top executives key to integrated platform success

Still, Sumser said if a company had reason to differentiate its financials or its HR system, a best-of-breed approach would be preferable. He used the example of Tesla Motors, a company that sells electric cars at malls. "Selling cars at the mall is counterintuitive, so they need just the right people to be on the sales floor," he said. "Recruiting is essential to their business model, so they would want to go with the best of breed; but if you're just another retail outlet, [a vendor] who understands the business you're in is preferable."

Beaty said a factor that contributed to the successful implementation of Infor was the support from both the chief financial officer (CFO) and the head of HR. "Recognizing that change management is a huge part of what you're doing, the old cliché about support from the top is definitely true," he said. He also said it's critical to appoint the right project managers.

After the implementation dust settles and the city's departments are in alignment, Beaty said he's looking forward to rolling out some new initiatives externally.

"I'd say the past focused on baseline systems, but now we want to turn our attention to the citizens," he said. "This ERP implementation will last 10 or 15 years. We've changed things up internally, and now we want to turn [our focus] outward."

Emma Snider is the associate site editor for Follow her on Twitter: @emmajs24.

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What's the better choice: Best of breed or integrated platform? Why?