PRO: Enterprise application suite over best-of-breed
Enterprises that choose to integrate a set of disparate applications instead of deploying a complete suite from one vendor are heading down the expensive, inefficient path, according to representatives from two of the largest suite vendors.
Oracle Australia’s director of technology and business solutions Roland Slee said the task of integrating a set of best-of-breed applications is similar to the task of assembling a kit car or a kit aeroplane.
“The primary difference between assembling a kit car or plane and assembling best-of-breed applications is that the car comes with instructions!” Slee said.
“The software kit comes with no instructions supplied. The question of how to integrate a specific set of applications has to be answered each time, based on the needs, priorities and environment of the specific customer.”
According to Oracle, best-of-breed costs more because of higher application costs, fragmented buying power, and, above all, the cost of integration.
Slee said best-of-breed is also less reliable due to the high cost of testing and less predictable because each user has a unique implementation. “As a result [of a unique implementation], when customers try to upgrade one of the applications, say by putting in a new version of their HR system, all the interfaces built to the old HR system break,” Slee said.
“They have to be re-built and re-tested. As a result, best-of-breed environments are inflexible. This inability to upgrade does great damage to a business when the commercial and regulatory environment is changing so quickly. In contrast to this, application suites can be upgraded easily and frequently.”
Slee cited Westpac as an example of a company having upgraded its Oracle implementation some five times since first implemented in 1997. “Best-of-breed will never go away and integration will always be needed but it should be avoided whenever possible,” he said. “The market is well populated with vendors working hard to offer suites. That’s the way the market is evolving.”
SAP Australia and New Zealand’s marketing and alliances director Len Augustine said duplication of technology is also a problem with the best-of-breed approach.
“Picking one best-of-breed application can be OK but picking five will be challenging,” Augustine said.
“For example, let’s start with HR. A suite’s workflow engine can take advantage of that system but each [best-of-breed] application comes with its own technology stack so a customer might end up with five workflow engines.”
Augustine said for every technology that lives under applications there are issues that increase TCO. “The payback for something 5 percent more [expensive] needs to be good as businesses can also end up ‘integrating the integration tools’,” he said.
“Skillsets are also a big problem for day-to-day things. Also, suites have a consistent look and feel across applications.” According to Augustine, SAP is fairly straight with everyone when it comes to ISVs developing specialty applications for the company’s enterprise suite.
“We get opinions on whether an enhancement is worthwhile and have an elaborate program for complementary solutions,” he said. “Enterprise application suites don’t necessarily mean lock in and are not a deterrent to new things.”
Augustine said growth for an application vendor is through helping customers reduce in-house written code.
“A software vendor grows in different ways, including vertically and horizontally,” he said. “New categories pop up with niche vendors. That is the trick in being an ISV and the way to stay in business.”
CON: Best versus the rest finds middle ground
Organisations looking to deploy applications are less interested in features, more interested in delivery time and should avoid infrastructure lock-ins at all costs, according to two leading analyst firms.
Meta Group vice president Michael Barnes argued IT managers are hunting around to standardise and reduce the number of applications they have to deal with to reduce costs and integration hassles.
"Organisations are benefiting by moving towards a suite approach because they tend to accept more standard, out-of-the-box processes. It is accepting less than optimal processes, but increasing the likelihood those processes will get adopted. It’s a trade-off - but ultimately it benefits [the enterprise] because the reality is that most [enterprise] processes are not as unique as they think they are," Barnes said.
Part of this trend, spearheaded by the likes of Oracle, SAP and PeopleSoft, is that standardized business processes allow vendors more opportunity to flex value muscle across a given organisation.
"Vendors have a vested interest in making processes as standard as possible. It allows them to shorten initial implementation time and more quickly deepen their presence and footprint in the account," Barnes said.
However, Barnes warns mid-market enterprises must be wary of large players attempting to sell "cut-down" versions of large and complex ERP systems they deliver to the top end of town.
"These solutions were designed for an extremely complex set of problems. To retrofit them to a limited scope of problems is not an easy process to go through. Even a cut down version of a tier-one ERP application, from an underlying technical standpoint, means you might get a cut-down view of functionality but may still need to implement the entire technology platform to get that functionality. That is a huge issue," Barnes said.
Suite shoppers also need to keep their eyes sharply peeled for large vendors pushing proprietary lock-ins, Barnes says. "Oracle or SAP is not only selling the application, but selling the full infrastructure around the application. [They have] a vested interest in selling that infrastructure," he said.
Meanwhile, Frost and Sullivan senior industry analyst for technology, Foad Fadaghi argues mid-tier enterprises and departments in larger organisations now have their eyes wide open to lock-in tricks and are willing to pay more to road test so-called rented applications before buying them.
"A lot of companies have been burnt by being locked into legacy systems in the past. If you can turn something off, without a significant loss of money, that's a clear advantage. More [applications vendors] will head down that path.
"Rental models are commonplace in a lot of areas of mid-market businesses, not just software. These businesses understand a rental model and they can expense it in a different way in terms of accounting. It's a serious area," Fadaghi said.
Cautioning against stereotypes, Fadaghi notes that customers looking for best of breed functions in applications are now trending towards shorter-cycle rollouts that deliver fast benefits to projects with a strictly set timeframe. Many of these, he says, are organisations looking to deliver independent projects or campaigns where data and results can be quickly integrated with larger enterprise systems, without large integration overheads. These, Fadaghi points out, often favour a hosted or rented application model.
"You have seen it with SalesForce.com and you will see it with Siebel later this year. They have finally integrated the UpShot CRM package and they will come out with an on-demand offering," Fadaghi said.