Best-of-Breed
Best-of-breed is an IT strategy in which a company chooses the strongest specialist solution for each functional area and connects them through interfaces into a single landscape – instead of relying on one integrated suite.
Best-of-breed ("the best of its kind") is an approach to building a company's IT in which the most capable specialist solution is deliberately selected for each functional area – such as inventory management, accounting, warehouse management, CRM, or the online shop. These individual systems are then connected through interfaces so that data flows between them and an end-to-end process emerges. The opposite is the integrated suite, in which a single vendor delivers as many functions as possible from one source.
The underlying idea: no single vendor is equally strong in every discipline. Whoever deploys the specialized tool in each sub-area gets maximum functional depth at every point. The price for this is integration effort – the systems have to work together technically and organizationally. Best-of-breed is therefore not a product but an architecture and procurement strategy that is weighed fundamentally against the suite approach when selecting an ERP.
At a glance
- The best specialist solution for each area instead of one all-in-one suite
- Individual systems are connected via interfaces (APIs, middleware)
- Advantage: maximum functional depth and flexibility per functional area
- Disadvantage: higher integration, maintenance, and coordination effort
- Counter-model to the integrated ERP suite; hybrid forms are common
How does a best-of-breed approach work?
In the best-of-breed approach, the IT landscape is made up of several independent systems, each covering one domain particularly well. A typical combination pairs a lean ERP for inventory management and order processing, a specialized financial accounting system, a dedicated warehouse management system (WMS), a CRM for sales, and a shop or marketplace connection for selling. Each of these systems can come from the strongest vendor in its category.
For this to become a coherent process, the systems have to exchange data: a new order in the shop creates a transaction in the ERP, which in turn hands the picking order to the WMS and the invoice to accounting. This data flow runs through interfaces – usually via an API, often supplemented by middleware or an iPaaS platform that acts as an intermediary between the systems, translates data formats, and orchestrates processes.
The role of interfaces and middleware
Interfaces are the backbone of every best-of-breed architecture. Through an API, the systems make their functions and data machine-readable so that other programs can read and write orders, items, or stock levels. When many systems are involved, a central middleware that bundles all connections is preferable to numerous point-to-point links. It reduces the number of couplings, makes data flows traceable, and makes it easier to replace individual building blocks later on.
Best-of-breed vs. ERP suite
The key distinction runs between best-of-breed and the integrated ERP suite. A suite covers many functions – inventory management, finance, CRM, production – in a single system with a shared data foundation. All data sits consistently in one place, processes are pre-integrated, and there is one party responsible for the overall system. The price is that individual functional areas can be less deep than a highly specialized single solution.
Best-of-breed reverses this trade-off: more functional depth per area, but distributed responsibility and the effort of integrating the parts and keeping them in sync. In practice the boundaries are fluid – many companies take a hybrid course: an ERP suite as a stable core, supplemented by a few specialized best-of-breed systems where the standard is not enough. This combination pairs the data consistency of the suite with the specialization of individual specialist solutions.
Advantages and disadvantages at a glance
In favor of best-of-breed are maximum functional depth, high flexibility in replacing individual systems, and lower dependence on a single vendor. Against it stand higher integration and maintenance effort, potential data redundancies and synchronization errors, multiple points of contact when something goes wrong, and often higher overall operating costs. Which side prevails depends on process complexity, IT resources, and the willingness to maintain interfaces on a lasting basis.
Why best-of-breed is relevant for many companies
Best-of-breed has gained considerable importance as specialized cloud services have grown. In e-commerce and multichannel retail in particular, the standard functions of a suite are often not enough: for marketplace connections, shipping fulfillment, product data management, or automated marketing there are highly specialized tools that surpass an all-rounder in depth and speed. Whoever wants to lead the competition at a particular point deliberately reaches for the best specialist solution there.
On top of that, modern systems offer open APIs and integration platforms have made coupling considerably easier. Connections that used to require costly custom development are today often available as ready-made connectors. This lowers the entry barrier for best-of-breed – yet the fundamental trade-off between integration depth and specialization remains and has to be made anew for each company.
Best-of-breed in the ERP context
In the ERP world, best-of-breed describes the decision to deliberately keep the ERP lean and outsource peripheral areas to specialist systems, instead of sourcing every module from the ERP vendor. The ERP then takes on the central role as a data hub for master and transaction data – items, customers, orders, and stock – while surrounding systems such as WMS, shop, CRM, or financial accounting dock onto this center. Clearly defined responsibilities for each data record are crucial here so that no conflicting data states arise.
A related variant is the two-tier approach, in which the corporate headquarters and subsidiaries use different but coordinated systems. That too is best-of-breed in a broader sense, at the level of entire ERP systems. To evaluate such an architecture, a TCO analysis is indispensable: the license and operating costs of several systems plus ongoing interface maintenance must be weighed against the functional added value.
DACH specifics and practice
In the DACH region, compliance plays a special role in best-of-breed. If accounting is spread across several systems, all tax-relevant data must nevertheless be archived in a GoBD-compliant, unalterable, and traceable way. Often a specialized accounting system – for example with a direct DATEV connection for collaboration with the tax advisor – is precisely the reason companies in the DACH region separate financial accounting from the ERP and run it as a best-of-breed building block.
In practice, best-of-breed therefore means documenting the data flow seamlessly across all systems and clearly assigning responsibility for each process step. The more systems involved, the more important a clean master data concept, clear interface contracts, and monitoring that immediately surfaces failed transfers become.
Example
Case study: online retailer builds a best-of-breed landscape
A growing e-commerce retailer with around 40 employees sells through its own shop and several marketplaces. Instead of a single suite, the company deliberately combines specialist solutions: a lean ERP for inventory management and order processing, a separate WMS for automated picking in the warehouse, a PIM for product data, and specialized financial accounting with DATEV export for the tax advisor.
The systems are connected through middleware: an order in the shop lands in the ERP, which passes the warehouse order to the WMS and the invoice data to accounting. This gives each area the best tool – the warehouse works with a real WMS instead of ERP standard functions. The price for this is the ongoing maintenance of the interfaces, which is why the company regularly reviews the total costs in a TCO calculation.
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