- Integrated suites and procurement concentration to vendors and consulting companies is the primary message coming from IT analysts and consulting firms.
- Now that integrated suites have failed to deliver, what does this mean for that advice?
The failure of the integrated suite does not stop IT analysts and consulting firms from recommending them. There is just too much $$$ to be made.
This article addresses the problems with the integrated suite approach to software purchases and recommends a rule which can be followed for software procurement.
The Pattern of Large Software Vendors
The development pattern of large software vendors is a particular problem for the idea of purchasing integrated suites.
All of the tech giants are really built around one item.
- SAP has one dominant item, the ERP system, and then a bunch of wasteful development and acquisitions around it.
- Oracle has the database, and then a bunch of wasteful development and acquisitions around it.
- Microsoft has Windows/Office, and etc…
- Amazon has two competent businesses — the Amazon Store and AWS. But strangely AMZN only makes money from AWS.
- Google has competent items in Google Docs, Google Maps and Google Cloud, but makes 84% of its revenues from the search engine.
These examples work against the idea of using a single vendor for a substantial percentage of one’s IT spend.
The Rule of One
Perhaps applying a heuristic to purchasing enterprise software. Which is that you never buy more than one item from any vendor. The reason being that each vendor probably only has one good item. This does not apply to say a cloud services provider as they are more a retailer (selling mostly other people’s stuff” than a software vendor.
If companies had followed this rule, they could have kept out of a lot of trouble. If SAP customers had stopped at ERP, they would have been far ahead of the game. If Oracle customers had never purchased anything but the Oracle database, they would have been far ahead of the game. If customers had never purchased anything from Microsoft but Windows/Office, they would have been far ahead of the game.
This is for two reasons.
- One, it reduces the account control of that vendor.
- Two, each vendor only has only really strong item. As soon as you move outside of that item, their effectiveness declines.
The Thinking Process Behind This Approach
Financial Bias Disclosure
Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.
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ERP applications require MRP parameters to be optimized externally to the ERP system. Having analyzed many ERP systems, we developed the Brightwork MRP & S&OP Explorer. It is free to access until it sees “serious usage” and is free for students and academics. Click the image to find out more.