Sector as a Service #1 – Vanilla Tastes Good
Many core applications – both custom built and package based – used to have a differentiating value to the business. Now they are often consuming the bulk of available IT budget due to excessive maintenance costs, while the differentiating ‘edge’ is already found elsewhere, in other solutions around mobile, social, BPM and Big Data. Time to drastically move to good old ‘vanilla,’ using out-of-the-box, non-customized versions of standard (cloud-based) software or by step-by-step rationalization of homegrown applications to leaner, simpler versions that are easier and less costly to maintain.
If an organization’s application landscape is a reflection of its business, then there is clearly a surprising number of unique organizations in one and the same sector.
Although you would expect striking similarities between their processes and the systems that support them, many organizations will cultivate multiple instances of ERP that are highly customized, not uncommonly to an extent that it’s risky to upgrade to new versions of the application. In other cases, they will have custom-built software, even further suggesting that their processes and functional requirements are so special that no standard solution can support them. Being ‘special’ comes with a price here, as the core part of the applications landscape – really not delivering any differentiating value – consumes the better part of the IT budget (more in the 2014 edition of our Application Landscape Report).
Now, in the era of Software as a Service (SaaS) we are quickly moving towards catalog-based applications that are essentially multi-tenant: they are supposed to be used by many different organizations in the same way, although of course with certain configuration options. Multi-tenancy drives the economies of scale of SaaS and through it, lower costs – particularly in the capex area – and a much shorter time to market.
It takes some time to get used to this new reality. We need to appreciate the basic taste of vanilla as a highly cost-effective, low-maintenance foundation for both our processes and our systems. The next generation of standard, cloud-based solutions (whether in ERP, CRM, HCM or any other functional or sector domain) contains industry best practices that have proved to be able to support many different organizations across the sector.
It’s up to individual organizations to take a good look at their value scenarios and customer journeys (indeed, no detailed requirements) and validate how well these industry best practices would work for them, only afterwards focusing on the deltas: what needs to be adjusted and what risks need to be mitigated.
This reverses the usual process, making way for both more radical application rationalization strategies (de-customization, de-instantiation, ripping and replacing of legacy applications) and for the quick implementation of next-gen SaaS.
On top of a core vanilla platform there are, of course, many ways to build solutions that help an organization to be innovative and special in the market, win the hearts of their consumers, have superior operational excellence or even do new business in entirely different ways. But these will be lightweight, car and scooter applications that leverage mobility, social, Big Data, BPM and the cloud. They may even be ‘No App Apps.’
By loving the taste of vanilla – achieving the state of the commodity if you like – we create all the room for other flavors. It’s the very essence of what we describe in TechnoVision as ‘Sector as a Service.’
Standardize to be different. Quite a tasty perspective.
Part of Capgemini’s TechnoVision 2014 update series. See the overview here.