HI Sreekanth
What Ankit has mentioned and as per the link it should be a good enough reason for understanding why Extended classic should be selected and why Classic .. based on what the user requirment is ..
for your understanding read below :
Classic : There is a very tight integration with the SAP R/3 system. The Leading Purchase Order document is created in the R/3 system. A number of organizations have chosen this implementation scenario as it provides the advantage of having the least impact on your existing backend processing. You can utilize the functionality in EBP to allow users to shop in an online mode with use of eCatalogs and once the shopping is completed you can leave your existing backend processing as it is, ie. PO Transmission, GR, Invoice processing can all stay the same as it was. Plus, for enterprise reporting purposes, all documents can reside in R/3 as before.
EXT CLASSIC : Although there are not a lot of organizations utilizing this implementation scenario, nevertheless it is very useful. SAP did not support this scenario until EBP release 3.0 and therefore you don't see a lot of organizations using this. Here the leading Purchase Order Document is created and saved in the Enterprise Buyer System itself. And a copy of the original document is sent into the backend SAP R/3 system. This could be useful for your org, if you wanted to complete all purchasing activities with the EBP system itself but still wanted to send the eventual PO document to SAP R/3. Here the transmission of the PO and other documents received from the vendor are conducted from EBP system. So that could mean some additional work as you'd have to re-do any EDI/XML transmissions you might be doing from R/3 in EBP.
Determination of Classic and Extended Classic Scenario primarily depends on the settings you make in IMG (Define backend system for product category). At the same time you can use BBP_EXTLOCALPO_BADI to have additional parameters in determining Classic or Extended classic scenario for your processes
Hope this helps ..
