One of the oldest debates in corporate IT is whether to adopt a single vendor application suite or deploy best-of-breed packages. CIOs and business users have argued over the years about which approach delivers the ideal balance of user features, time to value, cost management and business benefits. It seems like there’s never been a black-and-white answer — until now.
There is a strong and compelling case for best of breed applications. Cloud computing has made it financially and operationally viable for a company to pick the world’s best application for every need, every user, and every business case. Companies no longer have to sacrifice functionality for the sake of integration. You can have your cake and eat it too.
After more than a decade of software industry consolidation and the dominance of “all-in-one” software suites, it is becoming increasingly difficult to justify a suite purchase. Business users were previously forced to accept inferior products in the interest of “seamless integration and simplicity”…that never materialized. Instead, all too often the attempts to install monolithic software suites from the likes of SAP and Oracle Corp. ended in projects that ran well over budget, took months or years longer than planned and left business users with legacy options, if the projects ever went live at all!
The cloud with its open, flexible SOA-based application architecture means that integration is far easier and cheaper to manage today. This dramatically weakens the primary – and in some cases only – reason that customers were buying applications from the suite vendors.
Cloud software is built with integration and information exchange in mind. As cloud computing has matured, so has the “API economy.” SaaS vendors can now extend their application’s usefulness through releasing APIs to developers, who in turn then offer rich, complementary functionality back to joint customers.
Progressive cloud vendors specializing in financial services, telephony and communication services and talent management, among others, are handling the integration work through pre-built connections to other leading applications and developing ecosystems of application partners.
It wasn’t long ago when IT departments were stuck with the reality of implementing modules from one vendor that worked together pretty well, yet didn’t satisfy the needs of every department. Choosing an ERP system with strong financials meant the likelihood of weakness in other areas such as HR and CRM. Manufacturing companies often choose SAP, yet their finance department probably pined for Oracle.
However, if the company embarked on a best-of-breed path to satisfy diverse needs across business units, there were also significant added costs and headaches with highly orchestrated customizations and integration projects that could cost millions of dollars and years to realize. These integrations would often have to be redone around new releases of the respective applications, which meant IT departments were often forced to delay and/or skip new versions to keep the related systems functional.
Now, a company can have the suite they always wanted in weeks, not years.
In the cloud, the Internet becomes the middleware. A company can pick and choose applications from many different vendors, integrate them through APIs or third-party cloud integration services and have the suite they always wanted in weeks, not years.
As of late, we’ve seen the rise of “low code” or “no code” technologies. Often APIs provide amazing developer experience (DX) and offload smaller tasks so engineers can focus on more complex problem sets with the help of companies like Twilio and Auth0. No code solutions also give knowledge workers powerful functionality without requiring engineering resources. This includes easy automation, such as Zapier and UiPath, and business apps within the Salesforce and Workday ecosystem.
The API economy ensures that various business systems work together, organizations are able to drive forward key imperatives, and the costs weren’t prohibitive in terms of time and resources spent.
With subscription-based pricing, costs of a cloud-based business product combination are also lower and more aligned with actual demand. Costly consultants, hardware purchases, and expensive service agreements are no longer needed. Individual departments are happy and IT is not spending excessive time and money maintaining connections and managing updates.
A business can then become nimble and responsive again, with their IT systems as a competitive advantage. When new functionality is needed, IT departments can sign a contract with another vendor and get the new software up and running in hours or days.
It’s now the vendor’s job to show how they can integrate their product with a company’s other systems; integration is no longer the shackles that threaten a CIO’s livelihood.
As the cloud wave continues to roll through the entire software landscape, public SaaS giants emerged and have continued to dominate, such as Adobe, Atlassian, Cornerstone OnDemand, and Salesforce. Best of breed SaaS companies are thriving, and are now forcing the legacy vendors like Oracle, SAP, and Microsoft to fend off attacks from all sides.
Of course, best of breed in the cloud isn’t perfect itself. Many large companies have legacy systems that they must maintain for a variety of reasons and integrating those inflexible systems with cloud systems requires some work and expense. Thankfully, connecting an open cloud system with an on-premise legacy system is still easier than the cumbersome process of linking legacy to legacy apps, but it is something to plan for nonetheless.
The cloud market itself is also evolving, and we will likely see increased M&A activity as the legacy software suite vendors attempt to buy their way into cloud computing by acquiring some of the best of breed leaders. We are also seeing the leading SaaS providers themselves looking to build and buy their way into adjacent product areas to expand their offerings, as we’ve seen with Salesforce’s entry into marketing and support. Workday enjoyed an extremely successful IPO in 2012 and moved beyond their initial segment of core HR into offering financial applications for the very large enterprises.
An integrated suite alone will no longer be sufficient to sell through an inferior product.
Yet these SaaS suite vendors won’t address all of the application needs of an enterprise and will need to go much deeper in their core application areas to be competitive with the best of breed alternatives. The notion of an integrated suite alone will no longer be sufficient to sell through an inferior product. These vendors will need to be thoughtful when carving out vertical slices and rely more on ecosystem partners to fill in the gaps. Even with these emerging, cloud-based “suite” business models, best-of-breed has a prominent role.
For the lion’s share of companies that desire choice, flexibility and freedom to create their own suite of best-in-class technologies from multiple vendors, the cloud is a dream come true. And for software entrepreneurs, there’s no time like the present to capture their own sweet slice of the cloud market. May the best cloud innovator, in every possible vertical, win.