Jun 8, 2008

Best-of-breed vs. Integrated Systems

Best-of-breed vs. Integrated Systems

Dr. Jimmy Schwarzkopf

STKI

Selecting enterprise computer systems is a bit like planning an exotic vacation. Should I go for the "packaged tour" with an integrated system from one vendor, or plan my own itinerary, the so-called "best-of-breed" approach.

Let’s continue with the comparison…..

Several years ago we had no choice but to go to a “travel agent” and “inform him” about our vacation destination, the dates we want to travel and our budget. He would in turn offer us brochures and explain the advantages of every package tour operator. At the same time he would explain all the perils of doing the trip alone (the language, the visas needed, hotel reservations in every stop, connecting planes, taxis/buses in every city, city tours in a language we can understand, etc, etc). The most important issue he would stress would be that of cost and convenience.

Time passed and all around us young Israelis started visiting exotic places with a simple travel book, limited budgets and planning their own itinerary. Airlines started e-ticketing and hotels gave cheaper internet booking rates. The internet allows us to custom build any exotic vacation at a cost similar to the packaged tour operators. English has become the common language everywhere.

So, in 2008/9 should I go for the packaged tour or plan my own itinerary? Well, it depends. Unlike "Who Wants to be a Millionaire," there is no "final answer" to this ongoing debate.

Several years ago if you were looking for the optimal solution in each area, the best-of-breed option usually provided richer functionality, satisfying more users. But dollar savings, convenience, and efficient data sharing made the integrated approach very appealing. Integrated systems provided multiple applications with a common database and consistent user interface so that all modules had a familiar look and feel. The downside was that some applications had anemic functionality, causing users in these areas to become disgruntled. Best-of-breed systems, designed specifically to excel in just one or a few applications, also posed challenges, such as increased training and support, complex interfaces with other systems, duplicate data entry, and redundant data storage.

As the growing experience with tightly integrated ERP applications indicated, tight integration caused problems: lack of flexibility, difficulty in testing, inability to implement application modules independently, and very high version-to- version conversion costs. What at first seems beneficial, can, in the end, proved to be an anchor to future flexibility and provided a new generation of legacy systems (even before they where installed).

Time passed and all around us young Israelis in their startups defined technologies that allowed integration between legacies, packages and new software development. This collection of new technologies is called SOA. SOA allows for easier connection of applications and the interoperability of business processes. All major enterprise software developers (SAP, Oracle, IBM, HP, Microsoft, etc.) have declared their support for major SOA initiatives and so the use of best-of-breed packaged software.

SOA is a continuation of a trend toward interoperability whose ancestors lie in middleware. Companies needed to be able to bring content and processes together in a way that is meaningful to them. Previous attempts have involved diverse middleware components linked to diverse APIs, portlets, and other tools designed to provide a seamless and configurable composite service capable of meeting information and processing needs. SOA eliminates the middleware and creates discrete services that can be directly combined in composite applications to meet any business requirement. Evolution is taking place from a world of applications with prebuilt processes to a world of services supporting business processes that can be optimized to support strategic initiatives.

Now let’s look at other points:

Cost

Integrated systems, do not require costly interfaces and with easier access to shared data, the potential exists for containing costs. However, with a best-of-breed system, specialized features can create a competitive advantage which may also serve to cut costs or increase revenue. A cost justification may be supplied by the vendor to show that the system's advanced features compensate for slightly higher up-front and ongoing costs.

Leverage

Once you are an installed customer of an integrated systems company, your power in the relationship may be significantly diminished. When adding new modules, you'll have less clout in negotiating price and terms. And if you decide to "walk away," the prospect of replacing an entire enterprise system is daunting vs. replacing one or two best-of-breed systems.

Human Resources

In a best-of-breed environment, IT staff must be trained to use and support multiple systems. The shortage of IT people who can integrate and maintain disparate systems is a big advantage to the integrated approach.

Support

The old story about the hardware vendor blaming the software vendor and vice versa is magnified in a best-of-breed environment. If a system goes down, more finger pointing occurs when multiple vendors are involved. And when other trouble occurs it is easier to deal with one vendor than many different companies.

Data Sharing

Like Pacmen gobbling up fruit, many so-called integrated systems are the result of larger companies acquiring specialized best-of-breed systems. There's a good chance the systems offered by the “integrated” supplier were pieced together through acquisitions and may not be that easy to interface.

With a truly integrated system developed by one company, it is easier and faster to access shared data. However, use of a common database management system or data exchange standards (e.g. HL7 in health care) will allow the sharing of data in a best-of-breed environment. Some vendors will even certify that their system can interface with other identified systems.

Conclusion

In choosing between an integrated system or best-of-breed approach, I will come back to my initial vacation comparison.

Not everyone can handle the internet travel sites, e-ticketing and google maps. Some prefer going to archaic travel agents and have them schedule a packaged tour of 10 days in New York City. Most of us would not.

In 2009 most companies will consider best-of-breed solutions and compare them fairly with integrated ones. They might still buy the integrated one but only after looking at it as a separate best-of breed solution.

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