The pros and cons of third-party applications outside ERP systems

ERPs are cumbersome, but great. They can usually handle everything from finance to HR, manufacturing and supply chain via a single interface. But like everything else that tries to do a lot at once, they cannot possibly be good at everything. That usually either means you have to pay huge amounts of money to have the ERP provider customize tailored modules, or looking outside for solutions that can fill the voids.

There are pros and cons to this. Let’s explore.

Pros of using Third-Party Applications

1. Highly specialized functionality

One of the primary advantages of third-party applications is how they are usually designed with verh specialized functionality in mind; very often designed specifically to address business needs that ERP systems may not fully cover. Some of those features might be advanced analytics, customer relationship management (CRM) or industry segment-specific work flows or procedures that isn’t even on the radar for many blanket-approach ERP providers.

Smartcube Solutions’ I-SPIR solution is an example of this, where we have created a fully ERP-compatible way of streamlining spare parts management processes for asset heavy industries.

2. Flex and stretch

In order to provide thousands of users with a one-size-fits-most solution, ERP providers usually do not have too much flexibility in terms of individual customization or configuration options. If they do, it is very often both costly and time-consuming. For growing business with changing demands, that might be an issue. As businesses grow and evolve, their needs change. Third-party solutions can be more easily adapted or replaced compared to the often rigid structure of ERP systems; an adaptability that will help ensure that they can stay agile and responsive to market changes.

3. Reduced budget pressure

Big systems means big money, and running costs for a fully implemented ERP system can stack up fast, at least if you opt for the full feature package, either to “be safe” or because you don’t have a choice. In such cases third-party applications can be a cost-effective solution for specific needs. Rather than investing in a complete system overhaul, companies can select and integrate applications that address their immediate requirements, which in turn can lead to significant savings, particularly for SMEs with typical budget restraints.

4. Quick pivots and on-demand innovation

Sometimes bigger is better, but few major IT and tech companies have the ability to more or less instantly pivot on command to accommodate ad hoc requirements for individual users. Very often, third-party software developers do. They’re on a growth path themselves, and need to focus on innovation, technological advancements and spurred user demands to stay relevant. It’s a great incetive for your company to get those user-specific features you might need.

There are numerous benefits to using third-party ERP integrations, but it's not without caveats. At least if you're not proactive on the planning side.

It's not all roses, thought. Like every other product or solution you might buy from smaller vendors, there are inherent risks and considerations to be made before embracing systems that are not part of your main platform choice.

1. Integration Challenges

One of challenges of using third-party applications is how easy it is to integrate. Even thought the ERP might be a blanket solution, more or less the same for every client, the setup and complexities can vary greatly. Finding the right way to integrate third party solutions into all this might be a daunting task, and poor integration can lead to data silos, inconsistencies and errors, which can affect overall business efficiency and decision-making.

There are ways to counter this, however. The two best ways is to invest in robust integration platforms that facilitate smooth data exchange between systems, and utilize middleware solutions and APIs can streamline integration processes. Involving key IT people in your organization for the planning and implementation phases can also help prevent potential issues and develop strategies to address them.

Here at Smartcube Solutions, we offer exactly that. All our solutions are 100% ERP compliant, using APIs and configured data excange points for all thing supply chain related, and we always work closely with IT managers to ensure that all hooks and connections are set up properly.

Want to know more about how we perform ERP integrations?
Drop us a line at post@smartcube.no.

2. Security Risks

Like any new tool, adding third-party applications to an ERP system can increase security vulnerabilities. Each additional integration is a can in theory act as a potential cyber threat access point, and ensuring that third-party applications comply with your set security standards and protocols is crucial. That can be a vastly resource-intensive task.

Again, planning is crucial. By conducting thorough security assessments of third-party vendors and their applications before starting the integration process is important, and the checklist should include key elements like strong encryption, regular security audits and monitoring and the option to use MFA.  Not to mention a requirement for clear data access and sharing protocols.

3. More tools, more maintenance

IT overhead is usually high enough as is, and adding even more systems to the mix is usually not high on the wish list for any company. Each third-party application may require separate maintenance, updates, and support, adding to the workload of the IT department. If not handled right on the vendor side, this can lead to a complication of troubleshooting processes and extended downtime, which is bad news for productivity.

The best way to adress this is for you to opt for third-party applications that offer comprehensive support and maintenance packages; in other words: Proven, great support functions. This can include things like centralized support through a single PoC or an integrated service desk , but making sure that the vendor has good training materials ready for your own peopke to troubleshoot is also a key element.

4. Vendor Dependency

Depending on outside forces is hardly ever a good thing, and even though you’re already doing that through your ERP provider, adding another party to the mix doesn’t make it easier. It means you might find yourself at the mercy of the vendor’s roadmap for updates and support, and if a third-party vendor goes out of business or discontinues a product, you might be in trouble.

There are ways to mitigate this too, however. Eastalishing clear service level agreements (SLAs) with third-party vendors, detailing expectations for support and updates, is good start. So is regular assessments and performance reviews to ensure that you are both in this for the long term, and that the vendor will continue to meet your needs. Still: Having contingency plans and alternative solutions ready is always a good idea.

ERPs are powerful tools, but they are rarely designed for industry-specific needs. A strategic and well-considered integration of third-party applications can complement an ERP system, enhancing overall business performance and efficiency.

Smartcube Solutions is a third party vendor, and that’s exctly what we do: Offering non-intrusive niche features that no ERP offers out of the box. We know the pitfalls, but we also know the great benefits we offer through our universally ERP-compatible solutions, and we have the tools and documentation at the ready for all of the challenges listed above.

Would you like to know more about the features we offer and how we address the challenges listed above? Check out https://smartcube.no or drop us a line at post@smartcube.no.

We'd also love to hear your thoughts in the comments!

#ERP #Digitaltransformation #supplychainmanagement #SaaS