Horizontal, vertical, or custom integration of organizational IT software

As a longtime IT solutions vendor, one thing I've learned is, when it comes to choosing the optimal business management solution for your organization, having all the options upfront leads to better, smarter decision-making. Choosing a business management solution means a long-term commitment to a vendor, so in addition to ticking all your present boxes, the solution should also be able to adapt to future challenges and changes. So, how do you know which solution is the best to support you on your long-term journey?

Whether you're shopping for a startup, SME, or enterprise, from a vendor's perspective, all organizations face similar challenges, from replacing legacy systems to enhancing efficiency, increasing ROI, and growing their business. While all ERP vendors will promise to ease your pains, before forging ahead and investing time and resources, you need to decide on the 'direction' of your ERP. Should it be a horizontal, vertical, or transverse mix of a strong horizontal platform complemented by built-in, vertical-specific functionalities?

Generic business management solutions with vertical functionality

Choosing a generic platform is a pretty risk-free option. With verticalization, you can customize the software to suit your needs like a glove. Niche-specific customization is very tempting: it's made-to-measure development, especially for you. But you've probably already guessed the problem here: it only fits you. That means that development, maintenance, and updates will be very expensive.

Another consideration is, what happens when the system updates? You may find yourself helpless waiting for your integrator to bring your system up to speed. Creating a time lag that could hinder your progress. A broad solution with vertical functionality has its limits. not all vertical functionalities can be integrated into a horizontal system. For you may find it difficult to adapt the system to answer the dynamic and complex operational needs of industries such as Food & Beverage, Pharma, or Medical Device manufacturers.

Vertical, industry-specific solution

Specifically designed to meet the needs of a particular industry sector, a vertical solution supports clearly defined business processes, with functionalities adapted to an industry sector or user. In turn, you get business software that is specific to what you do, coupled with your vendor's vast market experience in your backyard.

This type of management software automatically incorporates all the critical parameters, without add-ons that could bog the system down.

Vertical systems, such as PLM for the Food & Beverage and Pharmaceutical industries, for example, include specific lot traceability and inventory management. Other popular verticals are retail, telecom, healthcare, and educational and financial institutions.

As a tailored solution, vertical platforms usually carry high price tags, and while the implementation process may be easier than that of a horizontal system, if procedures and workflows aren't clearly defined from the get-go, and require additional levels of customization, achieving significant ROI can be a bumpy road.

If you're keen on a vertical ERP, make sure it includes an API to integrate your system with other products or apps and a report generator. Make sure your system admin can independently update your workflows, and check if your organization supports multiple companies or product lines, will you need disparate financial systems, or can the system handle consolidations? Even if it seems like a good choice today, as your business grows, you'll have to comply with accounting, reporting, and other critical regulations.

Vertical management software offers significant room for maneuver in development. You can still customize an industry-specific solution while making sure you'll be able to develop it in line with the changes in your company's workflows and processes.

A vertical ERP guarantees us the specialization of the software, its continuous improvement, and the use of a natural “language” between software and users.

A horizontal ERP – can one size possibly fit all?

A horizontal ERP is the traditional business management system–a comprehensive solution that integrates and automates business processes and finances in response to an organization's day-to-day needs. One of the key benefits of a horizontal solution is its simplicity and ease of use. Popular horizontal ERP modules include CRM, Project/Document Management, BPM, Reporting & BI, and more. While these horizontals can span numerous industries, many require customizations to support specific industries' needs, and that comes at a price.

If your organization is a barrage of business processes rather than clearly defined workflows, then horizontal ERP is a far better fit, where it will integrate, automate and optimize your operations.

If a horizontal ERP is in the cards, the implementation might become a lengthy and arduous process. While patience is a virtue, you must ensure that your vendor is well-versed in your industry and that the software can address your specific needs, without requiring mile-long and costly development and customizations.

By default, this one size fits all approach assumes your needs are the same as everyone else. Like a sturdy ship, a horizontal platform is trickier to maneuver. If any tweaks need to be made, they have to be implemented across the entire system and for all departments–and that's a long, complicated and tedious job.

A horizontal solution provides us with a more extensive experience, but less specialized, with a multitude of modules, and lower costs. it does, however, run the risk of evolution towards sectors that are increasingly divergent from yours.

Endgame

The decision will certainly not be easy as there is no one right answer.

From where I sit, choosing the best of both worlds, the Enterprise Resource Platform is the way forward. Today's competitive dynamics and the rapid pace of change make most companies conscious of their inability to predict their near-future business model. With business management as a platform, you can grow your business as you see fit, without drastically changing your ERP system. After all, in an agile business world, you need an agile business platform.