Best of Breed vs. Integrated Suites (BoB vs ERP)

INVESTMENT IN INTEGRATED APPLICATIONS REAPS THE BIGGER REWARDS

If time and money were of no consequence we'd all buy our fish from coastal fishing towns and our vegetables from the local farmers' market. But the reality is that the convenience of buying these products from one supermarket makes it the preferred option.

Similarly, best-of-breed software applications have their place in the market, but most businesses - particularly SMEs - should not set their sights on this approach. As businesses move forward, they should think about integrating their systems to get the most value from their IT investment, capitalizing on what they already have and ensuring they avoid painful integration issues as they grow.

The way to avoid growing pains is by viewing business IT as a facilitator, helping to solve problems across the organization. While best-of-breed applications might solve individual pain points, an integrated suite provides the convenience and the longevity to achieve ongoing returns.

Larger vendors offer a trustworthy network of smaller independent software vendors (ISV), which the vendor can rely on to add tailored layers to its base technology. The customer benefits from the specific vertical expertise of the ISV, the stability of ongoing R&D that is likely from a larger player, as well as the clarity of vision that should promise the ongoing support of the product.

The integrated suite approach comes into its own in its ability to cut 'fat' from your business. If used effectively, integrated applications will enable you to make your business leaner. They can streamline wasteful processes (for example, removing costly, paper-based invoicing and replacing with e-invoicing).

They can put information in the hands of the right people at the right time, allowing them to review performance and react to business functions. They can improve efficiencies by reviewing processes, using integrated applications to increase productivity and cut costs. They allow you to interact better with customers through customer insight applications, develop closer relationships with customers and meeting their needs more effectively. They also ensure employees are using the technologies to improve business processes and effect change.

A critical success factor is for organizations to invest in business applications that can be exploited to their fullest extent. Broader business requirements should be borne in mind, and IT should enable business barriers to be broken down. The familiarity and ease-of-use of an integrated suite can offer the benefits of continued R&D, enabling businesses to reap the greatest rewards from their technology investment.

DUMP THE DINOSAUR AND FIND SUPERIOR SEPARATE SYSTEMS

Memories are still fresh of dotcom-era companies with an IPO to their name, but less in the way of actual proven software. So it is understandable that FDs of companies have now gone the other way and seem anxious to purchase all their software from a set of known vendor behemoths.

Unfortunately, IT purchasers who live by the maxim 'no-one ever got fired by buying their software from dinosaur x' are throwing out the baby with the bathwater.
You simply can't buy everything you need from one vendor, even if you want to. Even SAP, the colossal German ERP software vendor, covers only 30% to 70% of a company's business model, according to its own CEO.

For the remaining 30% to 70% you need other features. But surely you should standardize on as few vendors as possible?

Or perhaps not. Software companies became successful in the first place by doing one thing very well. Oracle did it with databases, Microsoft did it with operating systems and SAP with financial software.

But it's also true that as soon as companies step outside their core competence, they are less successful. Once vendors unceremoniously drop their non-core products, customers are left to 'migrate' (for the definition of 'migrate' see 'rewrite' in the dictionary) their applications, perhaps with 'help' from the vendor (see 'pay', see also 'chutzpah').

But buying core products from large vendors isn't without risks. Takeovers can signify the end of established product lines, and recent history has shown that even the biggest vendors aren't safe from acquisition.

It is critical to inject some business judgment here. I have been working with a customer who compared my own company's software with their existing product, and found a new project could be delivered in one-fifth the time of its existing technology. This project was delivered in 60 days and had a payback period of under-two months.

With this kind of return, who cares about long-term issues? The alternative - putting up with an inferior applications that takes five times as long to do the same task - would simply be an abuse of shareholder funds.

I'm not advocating that every part of the business makes independent technology decisions. The key is to standardize aggressively on infrastructure - networks, operating systems and databases. These technologies are highly mature. However, business applications are what truly deliver value, and for these, don't constrain your company. Innovative vendors can add tremendous value in their own specific areas of core competence.