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Unless of course they have already been through the best of breed skirmishes of earlier corporate IT visions. If their career stretches back to the 80′s, boy I’m really dating myself now, they will look at the series of bridges they need to take one at a time and wonder if they lead anywhere useful and promising. What’s the final destination? Confusion? Spaghetti code that no one understands? Wasted resources running in circles trying to find the cause of a problem that might be in one of four systems, or worse the code that connects them? It’s not an inspiring vision.
The newly minted corporate leader doesn’t have any of the old, jagged scars from the best of breed era. They show up at Dreamforce 2011 and it never occurs to them that while the CRM may be robust, the connections to the rest of the their organization’s systems are as fragile and fraught with issues as ever. If you stretch out your IT resources that far to link disparate systems, will the line hold? For how long?
The question that must be asked is “What’s another way to win here?” Not yet possessing the will to go all in for the whole organization, and with vague memories of the IT department broken into tribes – each devoted to their own application, the experienced leader trains the eye on a division, a smaller unit where you can place a big important bet and watch how it works up close and in detail. This is a wise move. Instead of fighting the last IT war of best of breed giving way to the integrated suite, start with the victor and move forward. The integrated suite won, let’s be honest. But the on-premise suite does have a price: It’s complex and difficult to install and implement. It also carries large annual maintenance fees, and the talent you need to acquire in order to keep it operational is significant.
Now the question becomes “Is SaaS a better way to run the company on a suite?” The best way to find out may be to implement it for a division and monitor the process closely. Some of the question you’ll want answered: How long to implement? How wide was the gap between our process requirements and the delivered suite? Were we able to customize and plug the gap? How did employee training go? Was the UI intuitive? Do the departments communicate well in the suite, like sales to operations and operations to finance? Does it provide the metrics we need to understand and control our business? If we need to link it to another app, is it possible? Is it open to vendors, customers, partners, other employee users outside the mainstream heavy users? Does it make sense financially?
You can guess at all of the questions, or a highly paid software analyst can guess for you, but you probably did not come to your current position because you ignore or avoid risk. You learned to manage risk, and using a division to prove the SaaS suite, one way or the other, is an excellent risk stategy.
Well, we were able to replace A/P, G/L and the whole Human Resource Management System, including Payroll. However, when it came to the Order Management, Billing and A/R systems Oracle fell on its face, frankly. And when it came to running the parent’s many overseas subsidiaries it was a ‘one and never again’ proposition. After the Netherlands office of 25 users went live after almost a year of effort, the parent pulled back, and with good reason.
Just to put the whole experience into some perspective, about half way through the project, Oracle released the first klugy version of the 10.7 three tier architecture in which the application rendered in a sort of browser window. This eliminated the need for patches to be installed at the client and the server. We thought it was cool. But Oracle’s main marketing strategy at that time was the integrated suite on the universal database. The goal was to run a global company on a single database with a single instance of the integrated applications. Your entire business management software from a single company. Not many people thought it was possible. Fewer thought it was wise.
So now here we are in 2011 and the software landscape has changed tremendously. SAP and Oracle are now the legacy apps. Most of the on-premise application vendors have been consolidated under a few large corporate flags because consolidation is what happens when growth come to a screeching halt. The real growth is in software as a service, SaaS. We hear a lot about the cloud, social and mobile as well.
Yet, there are still a lot of voices talking about the integrated suite. That this is still a topic of discussion is interesting. You would have thought that the point had been settled a while ago. Who wants to manage several different applications and try to marry them together into a coherent picture of the company. Well, apparently a lot of people do, because there are a lot of new SaaS vendors in the world and many of them offer applications for a very narrow market.
As an example, there are a couple of companies that offer subscription billing services to companies that sell a monthly service. NetSuite offers it’s own subscription billing module, but the fact that there are two major, and several minor, players in this market tells us that best of breed is not going away any time soon. In fact, BoB seems to be making a resurgence. But why?
There are a lot of reasons for this. One important one is that business models are diverse and are probably becoming more so in today’s marketplace. Companies look everywhere for competitive advantage, and they only find the depth of functionality they need to manage their advantages in best of breed.
Another important reason is that SaaS has opened up the software market in amazing new ways. Developing in the cloud means that there are recognized standards that developers follow, like web services for integration, and there are also now web native software integration services.
But perhaps the most important development in software is that companies are starting to realize that they need to be more agile and more flexible in their business models than ever, and their mission critical software also needs to reflect the same values. When, not if, you combine social and mobile with your agile business model in selling, procuring, marketing and operations, you have to have applications that reach further than the accounting centric applications of today. You have to be able to add new functionality quickly. You can’t wait for mobile selling, or mobile warehouse management, or mobile A/P.
In a recent post on www.softwareadvice.com, several voices reiterated their support for the integrated suite. We continue to take their point. There is value in the suite, undoubtedly. Michael Fauscette opines that best of breed might yet have a life:
“The things that are next to your customer, that are integral to your business model or that bring you closer to partners, those applications should be best of breed,” says Michael Fauscette, Group Vice President at IDC. “I think those are types of applications that companies are willing to invest in more.”
We also take this point. Like the subscription billing systems we mentioned above, there are some applications where you must have a depth of functionality that only a best of breed offers. But the question then becomes where can you afford to have generic functionality? A/P is often mentioned as one of those systems where you don’t need a lot of specialized functionality. However, there are a number of SaaS offerings for all manner of A/P, from simple employee and contractor expenses to more complex procure to pay systems. Evidently, there are companies out there that need very specialized functionality.
Even NetSuite, for all of their allegiance to the integrated suite in both word and deed, has validated the best of breed approach in some of their moves. They purchased best of breed professional services management software from OpenAir and hooked it with their financials; they also offer an integration with salesforce.com.
When Oracle was making the case for the integrated apps one of its main arguments was that you could not manage by real metrics if the company’s data was spread across a wide range of applications. Who can argue with that? But the question today is not whether managers have all the data they need to make decisions but whether they have the time to sit back and reflect on the past in order to take the next step forward. Is this a luxury that today’s company can afford?
Microsoft is a company that manages growth quite well. Revenue, earnings are pretty predictable, and boring. MS has fallen off the scales when it comes to innovation. Apple on the other hand creates growth and moves forward by leaps and bounds. I’m sure that Apple has plenty of data metrics, too. But innovation in any market means moving into unknown territory where there are no metrics. This is what all true growth companies must do, and you have to wonder how much value an integrated view of the company really offers them.
By not only having a financial software company write a new version of their software on the force.com platform but by then entering into a joint venture with said company to market the newly combined CRM and Financial software product, Salesforce.com validates what we have been writing and saying these five years: To wit, it does not make sense for Small and Medium Enterprises, SMEs, to try themselves to patch together various applications when there are integrated products already on the market. Integrated apps, as in a suite, are an enormously beneficial idea for any company but especially for the SME who does not have the time, manpower or cash to build bridges from one app to another.
In our long experience it is only the largest enterprises that have the necessary resources to pull off the interfaces between applications, and even then it is usually not done well. And to be perfectly frank, integrated suites are not perfect either; I make no argument to the contrary. However, when you are making the decisions for your SME you do not have the luxury of considering a best-of-breed-applications-stitched-together-and-maintained-by-professional-IT-staff approach to your business. It is simply not in the cards. Even if it were you will have a hard time explaining to yourself, and any one else who might be listening, why so many organizations across the world and across so many industries have abandoned the best of breed approach for their core applications and gone to an integrated suite (Oracle, SAP, etc.).
When we talk to SMEs who currently have several key applications from various vendors running core functions in their company they normally run them in complete silos, using spreadsheets to paper over the disconnects. They have either abandoned their interfaces (we still have not met a company that uses the SF to QB interface successfully) or never even bothered with them. That’s reality.
Salesforce has evidently seen the light themselves. I will hazard the following prediction: Over time SF will sell their standalone CRM to very large companies who have large, direct sales forces, and they will sell an integrated suite to the SMEs of the world. They really have no other choice. They are being surrounded in the SME market by a ton of CRM competitors who have matched their functionality. Add to this NetSuite and SAP’s redesigned Business by Design due out any year now and SF really needs to both differentiate its products from the Zohos of the world and confront the integrated suites as they take market share in a world newly interested in cloud computing.
So bravo to Salesforce.com and the newly minted FinancialForce. It will be a presence in the market, I have no illusions about that. It also validates NetSuite’s long maintained position that an integrated suite is the key to running a better information system and finally a better enterprise.
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