Collaboration. A third reason that companies are banking on Web services rather than choosing a single-instance option is that Web services would allow them to connect with business partners regardless of the partners’ ERP system. That’s the case for $37 billion British American Tobacco. "The same rules apply to [your partner’s apps] as they do to your own," says Gabor Makkos, CIO of the company’s Mexican division. "I don’t have to ask my provider to change their app architecture, and I don’t have to change mine to collaborate."

British American Tobacco’s ERP is SAP R3, with best-of-breed applications for specific processes; integrating with it used to require point-to-point connections. That means that when something changed?a supplier’s application or its CRM system?the whole integration had to be redone, says Makkos. An integration layer built with XML-based messaging queries is immune to that problem.

What’s Best for You

There are no rules for which approach to integration companies should take. There are, however, some trends.

Companies with fairly straightforward business processes without a lot of specialization are good candidates for a single-instance project. So are companies that don’t consider themselves IT leaders?maintaining best-of-breed solutions takes more programming skills than doing a single-instance project.

On the flip side, companies that feel as though either best-of-breed applications or their programming skills give them a competitive advantage should consider going with (or waiting for) Web services. They should also consider going with Web services if they have business units whose processes would be difficult to conform to a traditional ERP system.

It’s worth noting, however, that no matter what path a company takes, its CIO will most likely have to do a little of both. Andrew Macey, a vice president with IT services company Sapient, compares integrating best-of-breed applications to cleaning out a closet; it’s an opportunity to decide which applications to keep and which to get rid of. Similarly, it’s unrealistic to imagine that you will be able to rely on a single ERP instance for every business need. In fact, most ERP vendors partner with smaller specialty vendors for such tasks as tax calculation. "You are going to wind up with some integration chores no matter which path you go down," says Macey.

Web services-based integration and single instance are comparably sized projects. Each will cost millions of dollars and take at least a year. The nature of your business will determine which one you choose. "There are pros and cons to both paths," says Macey. "There’s no easy answer."