Best-of-Breed versus Platform
The platform will, over time, prevail against best-of-breed applications. However, until platforms close most of the functionality gap, best-of-breed applications remain a viable choice. Except for some very high volume applications, we believe businesses prefer to run cloud applications. The benefits of cloud over on-premise applications are well documented and include increased agility for the business and lower total cost of ownership.
With the advent of the cloud, software selection is a less technical exercise than it once was. Business users are much more involved is choosing their applications. IT is now typically responsible for vetting the technical aspects of the cloud provider, integrating with on-premise systems and ensuring consistency with the overall IT roadmap.
For example, the sales department in Company A uses Salesforce.com for customer relationship management (CRM). The service desk needs an application to track cases and has recommended ZenDesk over Salesforce.com.
Company B is a Software-as-a-Service company and does subscription billings. Company B uses NetSuite for its financials and CRM. Although NetSuite’s latest release has closed the subscription billings functionality gap, the controller knows that Zuora has a strong presence in this area.
As an executive, do you extend a platform, Salesforce.com and NetSuite in these examples, or choose the best-of-breed applications, ZenDesk and Zuora?
Best-of-breed applications exist because there was at one point a functionality gap between the best-of-breed and platform offerings for a particular application. In my experience, when you ask a departmental user to recommend an application they will almost always select the best-of-breed solution. Involving users in requirements gathering and evaluating applications against those requirements will create more buy-in and increase the probability of a successful project.
A key focus for CIOs today is to reduce costs and complexity. The easiest way to reduce complexity in IT systems is to reduce the number of applications. Complexity grows exponentially as you increase the number of systems. Containing application sprawl will favor the platform.
The volume and importance of the data being exchanged between systems is a consideration. Transactional data will favour a platform.
Is it acceptable to go to three systems to get a complete view of a customer? Will you need a fourth system to aggregate and see the complete customer view?
The effort required to implement and maintain the integration or manual process to aggregate and exchange data is a factor. For example, the integration between a SuiteCloud App and NetSuite is maintained by the vendors. In contrast, integrations for on-premise systems are maintenance-heavy and are often painful when systems are upgraded.
Factors favoring best-of-breed and platform:
Creating Your Roadmap
Today’s choice is between two good options. As commercial business applications became prevalent in the 1980’s and 1990’s the decision was build versus buy. Eventually the benefits of “having exactly what we want” lost to commercial applications that could be maintained more rigorously. It is interesting that many companies are still running custom-built applications that they are struggling to get off. In the 2000’s the decision was around cloud versus on-premise. As bandwidth increased and executives realized that their data was probably safer in someone else’s data centre other than their own, the cloud became the technology of choice.
When developing your roadmap you should also factor in the agility the cloud gives you. The pace of innovation has increased with the prevalence of cloud vendors. Cloud developers can focus on future releases; they don’t have to worry about patches for old releases. Cloud vendors know how their customers use their applications. This helps to focus product development on the customers’ most pressing needs.
Cloud applications are easier to swap out. The switching costs to leave cloud applications are less than on-premise applications. Creating a specialized in-house team to support an application is a significant drag on change. If you currently have a best-of-breed application, you can relatively easily move that functionality to the platform when the platform functionality improves.