Applications Unleashed #1 – All In A Catalog
The cloud brings a brand new generation of Software-as-a-Service (Saas) solutions. These solutions are typically not only cost-effective and feature the latest in user experience, they also contain industry best practices in terms of functionality and sector insights. Enterprises can greatly benefit from these catalogs of applications. For example, they can replace their existing solutions, possibly bespoke or highly customized solutions, from these catalogs. Also, they can quickly add powerful new business functions that the enterprise needs for its growth purposes. However, constructing something from what is in a catalog is different from the traditional solution lifecycle.
If an organization’s application landscape is a reflection of its business, then there is 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 enterprises will cultivate multiple instances of ERP that are highly customized and not much common 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, since 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).
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. This is why it's time to drastically move to good old ‘vanilla’ that uses 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.
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 capital expenditure area – and a much shorter time to market.
SaaS champions such as Salesforce, NetSuite and Workday (but also their incumbent competitors such as Oracle, SAP, Microsoft and IBM) feature quickly growing catalogs of ready-to-use business solutions. But what is arguably even more interesting, are the marketplaces of 3rd party solutions that are built on the underlying cloud platforms. Salesforce’s AppExchange catalog only features thousands of different horizontal and vertical applications that cover areas such as human resources, finance & administration and ERP but also industry-specific areas such as Utilities, Manufacturing, Retail and Government.
It takes some time to get used to the new reality of catalog power. After all, we don’t shop at IKEA expecting to find the exact furniture that we initially envisioned and described in detail in specification documents. Instead, we browse through the catalog, wander around, and get inspired by the art of the possible. If enterprises realize that the case for catalog-based SaaS solutions is much like IKEA (good design, high quality, sharp prices, ready to take with you and use immediately), they should adapt their IT practices accordingly.
They need to appreciate the basic taste of vanilla as a highly cost-effective, low-maintenance foundation for both their processes and supporting 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. A European investment bank replaced all of its custom-built core investment banking software by a SaaS solution (deployed on the Amazon Web Services cloud) and as a result not only considerably decreased its IT costs but also could create and run more agile, more insightful processes than its major competitors.
It’s up to individual enterprises to take a good look at their value scenarios and customer journeys (no detailed requirements, remember) and validate how well these industry best practices would work for them. Once done, then focus on the deltas on what needs to be adjusted and what risks need to be mitigated.
This reverses the usual process and makes 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-generation SaaS solutions that drive business growth.
On top of a catalog-based applications landscape there are - of course - many ways to build solutions that helps 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.’
The keys to application landscape modernization are out there already. And most of them might be in a catalog.
Your expert: Ron Tolido
Part of Capgemini's TechnoVision 2015 update series. See the overview here.