Gary Sanders: ERPs Vs. Best-Of-Breed

Seasoned expert Gary Sanders has partnered together with MuniBilling to help give readers an in-depth look into the world of Utility Billing Systems.

For today's Ask The Expert blog we'll be focusing on the pros and cons of an ERP Utility Billing System versus a Best of Breed Billing System.

Q: What are some things to consider when purchasing new utility billing software?

A: Two important considerations to make when choosing a new utility billing software are do you want an ERP or Best-of-Breed system and do you want an on-premise or hosted system?

Q: What is an ERP system?

A: An Enterprise Resource Planning (ERP) system "is the integrated management of main business processes, often in real-time and mediated by software and technology", according to Wikipedia.

ERP systems offer the full range of applications – utility billing, payroll, general ledger, accounts payable, purchasing, and inventory control – that a utility needs to function, all from the same vendor.

Q: So what exactly is a best-of-breed system?

A: A best-of-breed system would include the best utility billing software in each category – utility billing, payroll, and financials – chosen for their features and functionality.

Best of breed systems are often from different vendors.

Q: What would you say are the pros and cons of ERPs and Best-of-Breed systems?

A: ERP systems, being from the same vendor, have the same look and feel across the full spectrum of applications. Best of breed systems, on the other hand, may have a completely different look and feel when moving from one application to another.

This isn’t a concern for users who only use one utility billing software application, but for users who work in multiple applications, it may mean having to learn multiple user interfaces.

However, ERP software vendors have a multitude of applications to develop and maintain. A couple of these may be standout applications, but the likelihood that they are all top-notch is very small.

Chances are some of the applications don’t get the attention they need, and they aren’t nearly as functional as a similar application from a best-of-breed vendor.

Additionally, with an ERP system all applications are integrated, so a change to one application may require changes to other applications for them all to stay compatible and remain integrated.

For example, an ERP system with inventory control software integrated with utility billing service orders may require the vendor to make changes to the utility billing system if changes to the inventory application impact service orders.

With a Best-of-Breed system, different vendors support the various applications. As the name implies, this allows a utility to pick the best solution in each category – often one vendor for utility billing, another for financial software, and possibly another for payroll.

The thought process here is, that by selecting the best software in each functional area, the utility gets the most features for the best price in each area.

Q: How should an organization decide between the two then?

A: Before you go looking for a new utility billing software, take some time to define what you find lacking with your current system. It’s also a good idea to make a list of the things you really like about your current system to ensure you don’t lose that functionality in a new system.

Be wary of utility billing software vendors who claim to have the best solution without first understanding your needs. Any reputable utility billing software vendor should be willing to take the time to have an in-depth conversation about your needs to determine if their utility billing software will be a good fit.

Ideally, this discovery will include someone other than the salesperson, generally a subject matter expert (SME) who has more in-depth knowledge of the utility billing software than the average salesperson.

As part of defining your needs, one of the questions to ask yourself is does your organization need a suite of applications where everything is integrated?

Or could you function just as well with individual applications from different vendors that can automatically exchange key information, such as journal entries for general ledger posting, without necessarily being supplied and supported by the same vendor?

Q: Allow me to ask you this, which is better - Hosted or On-Premise?

A: As the industry evolves, cloud-based, or hosted, systems are becoming more and more popular. Especially for small to mid-sized organizations that are beginning to see the advantages and flexibility of hosted systems.

If dealing with COVID and the resulting office closures taught us anything, it highlighted how important flexibility and the ability to work remotely were. Hosted systems are ready-made for the remote workforce.

All that’s needed to work remotely is a computer and an internet connection. On the other hand, premise-based systems require a virtual private network (VPN) or some other software connection to work remotely.

On-premise systems also require an investment in a server and all the related responsibilities – backing it up, applying updates and patches, and ensuring that it is virus-free. Many small to mid-size organizations simply don’t have the staff or the budget to attend to all of these details.

This is where a hosted system is ideal – the utility billing software vendor ensures the server stays up-to-date and is backed up and relieves the customer of expensive technical labor-driven responsibilities in this area.

Q: What direction would you say the industry Is moving towards or away from?

A: From my perspective, I see the industry definitely moving away from on-premise to hosted systems. As far as ERP or best-of-breed systems, unless your organization has a specific need for multiple applications to tightly integrate with each other under the same user interface, you probably have the benefit of being able to consider both ERP and Best-of-Breed systems.

Long gone are the days of proprietary hardware and software interfaces that required specialized programming for systems to talk to each other. In today’s environment, application programming interfaces (API) allow disparate systems to talk directly to each other in real-time.

If real-time integration isn’t required, file export and import specification exist for exchanging data between systems

Operational Analysis

Gary's 40+ years of experience in the industry has granted him valuable knowledge for any billing entity. With the wealth of his knowledge you can request an Operational Analysis for your organization from him!

You may be wondering, what exactly is an Operational Analysis? Well, it essentially is when Gary looks through ALL of your systems, and interviews your team, to figure out how best you can improve your billing operations.

Here are a few of your organization's systems that Gary will assess:

• Billing System
• Accounting System
• Metering System
• Service Delivery System

The end goal with this analysis is to figure out how to best save your organization time and money. This could also mean suggesting another company's platform if it's the better fit for YOU.

Gary has hosted his own blog for the past ten years. Some of his more notable credentials is that he has designed, built, implemented, and supported both ERPs and Utility Billing systems. Thankfully, he's only a hop, skip, and jump away.