Why Modular ERP is COMPLETE BS

ERP software marketers and digital transformation consultancies have promoted the term 'modular ERP' for a few years now and indeed many CIOs and ERP buyers have been wooed by the glossy branding and concept. 

But the truth is, 'modular ERP' is really nothing new, but an effort by the ERP software industry as a whole to reshape, recut and resell something which has existed pretty much since the beginnings of ERP software. 

In this post, we'll explore modular ERP, some examples and why we think it's BS.

What is Modular ERP?

Modular ERP is kind of what it says on the tin. It's an ERP system, but broken down into smaller pieces i.e. modules. If you're new to the concept, read our overview of what is ERP. The idea is that rather than implementing an entire ERP system for your business, you can break it down into mini implementations, taking it one step at a time, implementing finance or CRM first, then adding more functionality as you go. 

The idea is simple to understand - implementing one step at a time makes it easier to implement an ERP system by breaking it down into chunks. This reduces the risk of failure, the upfront expense and the sense of dread that an ERP project induces.

Why 'Modular ERP' is Ridiculous

The problem with modular ERP is that it's just a marketing spin.

It's a repackaging of a well known concept in ERP software known as a phased ERP implementation - the opposite of a 'big bang' or all at once ERP implementation. Phased ERP implementations have been going on pretty much forever. 

If you look at the top results for 'modular ERP' you'll see companies like Vault ERP talk about modular ERP as though it's a technical innovation, a new type of ERP - the next generation of enterprise resource planning software. 

That is not true. You can pretty much call any ERP a 'Modular ERP'. They all have modules. Most have API's or some kind of interface method. You can implement only the selected functionality you want to. You can integrate whatever part of your ERP system you choose to implement into the rest of your IT landscape. No ERP system will require that you implement the entire thing. 

To be clear, this applies to every ERP system we know of including NetSuite, SAP S/4HANA, Acumatica, Sage Intacct, Oracle ERP Cloud, Infor CloudSuite Industrial, Odoo, DelmiaWorks... the list goes on forever.

Why ERP Vendors & Consultants Push 'Modular ERP'

So if modular ERP is rubbish, why was it created? To be honest, we don't know, but here are our theories.

Cowing to Best of Breed Software

The first most likely reason is because ERP software vendors need a way to explain ERP software in light of the growing market share of best of breed software solutions.

20 years ago, companies like Salesforce didn't exist and the ERP software marketing narrative was not interested and did not benefit from weaving niche line of business players into their story. In those days, ERP software could be 'modular', i.e. companies used what they needed, but the idea was that your entire business ran on one chunky ERP platform.

Today, 'best of breed' software vendors have taken huge swathes of the enterprise software territory and divided and conquered the 'ERP software' category into dozens of others. Niche players exist to cover customer experience software, supply chain solutions, human resources systems and much much more. 

The ERP software industry has had to change its narrative from being one system to rule your entire business application landscape, to one that plays nicely with the other big boys in town such as Salesforce, Workday, Veeva and many many others. This shift is especially visible in cloud-based ERP solutions.

Removing Objections from ERP Buyers

ERP buyers are really scared that their ERP projects will fail. An ERP project failing can cost anywhere from a few thousand dollars to a few million or more depending on the size of your company and the scope of your project.

So what did ERP marketers do?

Tell you you could limit the scope of your project to reduce the perception of risk.

Marketers of modular ERP tell ERP buyers that modular ERP is a lower risk and lower cost than implement an entire ERP suite. This isn't neccesarily true - we'll look at that in 'The Problems with Modular ERP' though.

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The Problems with Modular ERP

Modular ERP kind of isn't really ERP

Marketers of ERP suggest you can implement modular ERP and reap huge rewards such as lower cost and lower risk. This is true. But you aren't then going to have an ERP system - you'll just have a finance and accounting system, maybe with a bit of procurement if you're lucky. 

The whole point of ERP software is that you have one application, with one data model, one database through which 90%+ of your business processes and transactions will run. So implementing just one or two modules of a so called modular ERP is not going to bring you the same benefits of an entire 'packaged ERP'. 

It's More Expensive

Those who market 'modular ERP' often claim its a cheaper alternative to implementing a full ERP system. Is it really?

Probably not. 

If you implement just one or two modules of a particular ERP system, how will you pass data from your ERP to your other business applications and vice versa? Through integrations. Are integrations expensive? Yes, they more or less always require custom integration work and regular updates, even when ERP vendors claim they support out of the box integrations.

Perhaps you've been told thats okay - you'll implement the other ERP modules one at a time and remove those costly integrations. That's okay, but then you're paying to integrate your ERP with other applications, before removing those applications and paying to implement the rest of your 'modular ERP'.

The result - it's going to be more expensive and time consuming than just implementing a complete ERP solution.