Applications Unleashed #1 – All In A Catalog
The cloud brings a brand new generation of Software-as-a-Service (SaaS) solutions. These solutions are not only cost-effective and feature the latest in user experience, they also contain industry best-practices in terms of domain or sector functionality. Enterprises can greatly benefit from catalogs, first of all to radically renew their existing, aging applications landscape. Also, it’s the quickest way to add powerful digital business functions that the organization need to grows. However, constructing something from a catalog is different from building traditional solutions: it requires an ‘IKEA mindset’.
If an organization’s application landscape is a reflection of its business, then there are a surprising number of unique organizations in one and the same sector.
Although you would expect striking similarities between processes and the systems that support them, many enterprises will cultivate multiple, high-customized instances of ERP. This makes it risky to upgrade to new versions of the application. In other cases, custom-built software further suggests that their processes and functional requirements are so special that no standard solution can support them.
Being ‘special’ comes with a price however, since the core part of the applications landscape — without differentiating any value — consumes the better part of the IT budget (more in our Application Landscape Report).
Many core applications — both custom-built and package-based — used to provide 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 around mobile, social, BPM, and Big Data. This is why it’s time for a drastic 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. Forward looking CIOs such as Canon's Caroline Serfass cherish the business principle of minimizing the number and scale of any customizations.
In the era of Software-as-a-Service (SaaS) we are quickly moving towards catalog-based applications that are essentially multi-tenant: used by many different organizations in the same way with certain configuration options. Multi-tenancy drives economies of scale, lower costs — particularly in the capital expenditure area — and a much shorter time-to-market.
SaaS champions such as Salesforce, NetSuite, and Workday (also, their incumbent competitors such as Oracle, SAP, Microsoft, and IBM) feature quickly growing catalogs of ready-to-use business solutions.
And the catalog effect extends beyond applications, as advanced analytics and smart cognitive solutions are way easier to buy off-the-shelf, ready-to-use than built in house by purple unicorn teams of data scientists and open source software engineers.
What’s arguably even more interesting, are the marketplaces of third- party solutions built on the underlying cloud platforms. Salesforce’s AppExchange catalog only features thousands of different horizontal and vertical applications that not only cover human resources, finance and administration, and ERP, but also industry-specific areas like Utilities, Manufacturing, Retail, and Government. And IBM - among others - does pretty neat too.
It takes some time though to get used to the new reality of catalog power. 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’s (good design, high quality, sharp prices, ready to take with you, use immediately), they should adapt their solution development 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 renewal and innovation are out there. Just open up that catalog.
Expert: Ron Tolido
Part of Capgemini's TechnoVision 2016 update series. See the overview here.