- 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
This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.
Repair MRP Book
What is the State of MRP?
MRP is in a sorry state in many companies. The author routinely goes into companies where many of the important master data parameters are simply not populated. This was not supposed to be the way it is over 40 years into the introduction of MRP systems.
Getting Serious About MRP Improvement
Improving MRP means both looking to systematic ways to manage the values that MRP needs, regardless of the MRP system used. It can also suggest evaluating what system is being used for MRP and how much it is or is not enabling MRP to be efficiently used. Most consulting companies are interested in implementing MRP systems but have shown little interest in tuning MRP systems to work to meet their potential.re
The Most Common Procedure for Supply and Production Planning?
While there are many alternatives to MRP, MRP, along with its outbound sister method DRP, is still the most popular method of performing supply, production planning, and deployment planning. In the experience of the author, almost every company can benefit from an MRP “tune up.” Many of the techniques that the author uses on real projects are explained in this book.
- Chapter 1: Introduction
- Chapter 2: The Opportunities to Improve MRP
- Chapter 3: Where Supply Planning Fits Within the Supply Chain
- Chapter 4: MRP Versus MRP II
- Chapter 5: MRP Explained
- Chapter 6: Net Requirements and Pegging in MRP
- Chapter 7: Where MRP is Applicable
- Chapter 8: Specific Steps for Improving MRP
- Chapter 9: Conclusion
- Appendix A: Calculating MRP
Brightwork Explorer for ERP Parameters
How to Tune ERP Systems
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.