Tyr·an·ny - the cruel, unreasonable, or arbitrary use of power or control.
best prac·tice - commercial or professional procedures that are accepted or prescribed as being correct or most effective.
“But [the customer] discovered a different truth after signing on with [consulting firm], finding that [a standardized best practice solution] was 'woefully unsuited' to its business and the implementation brought its operations to "a near standstill," according to the suit.”
So argues a customer of a recent enterprise software implementation.
Big Suite Software Companies (BSSC) for the enterprise have reached a nadir of effectiveness. Out of the box implementations are painful. Upgrades are painful; they can take years, if not a decade, and hundreds of millions of dollars to complete, with nary a new capability, let alone a revolutionary business model. But you say, “I am following best practices and should not be experiencing this pain. What is happening?”
Do Big Suite Software Companies now dictate corporate business innovation?Corporate business innovation stands at a turning point. BSSCs are betting on the past foretelling the future; that continuous upgrades form the path of progress for enterprise customers. Global businesses, on the other hand, need to innovate for present commercial and technology obsolescence dangers and future commercial and technology disruption, most of which are not on the upgrade agenda of corporate software. As an example, the following are the big spend needs in the banking world:
Source: American Banker 2015The top 10 tech spend areas are not strengths, nor typical components of big banking software. What are financial institutions to do when presented with two-to-ten-year upgrade paths for their enterprise software suites? Where will the resources come to tackle the emergent demands from their customers and market competitors if they have consumed 80% or 90% of their capital budgets on upgrading so-called best practice banking software for the bottom areas of this chart (e.g. core banking, commercial banking)?
BSSC built their dominance in the 1970s and 1980s during the establishment of the Financial & Government Accounting Standards Boards (FASB/GASB) by the Financial Accounting Foundation (FAF). Manufacturing similarly went through major best practice development notably driven by the Toyota Manufacturing Program, Manufacturing Resource Planning (MRP) I, MRP II, and demand-driven MRP. Enterprise Resource Planning (ERP) aggregated and normalized these practices, forming the basis for the current suite of large software packages.
The reality is that the economic incentives and strategic orientation of BSSC align to one goal: build a product that can be sold en masse and supported en masse. This necessarily requires standardization: of functionality, of the process, of implementation approaches, of pools of professional services and functional experts who can work agnostically across industries to do the same things over and over again. When it comes to 'base functionality' in the battle of tradeoffs between bespoke solutions to target the needs of the few or good enough solutions that will meet the needs of many, the latter will always win. This is, and will always be, in conflict with the needs of industries most susceptible to disruption, where agility and differentiation rule the day.
Disrupted companies, let alone new, aggressive companies accelerating in a market, cannot grow given the limitations of monolithic systems. When disrupted companies are stuck in the BSSC strategy, the software company’s thinking begins to permeate general corporate IT and business strategy, distorting a view of the possible. You are only as fast as the rollout schedule you’ve become used to, and therefore, your company can only be as agile as the existing processes. Who, then, would be surprised that BSSC themselves were blindsided by the advent of a totally new business model: cloud and software as a service?
“Microsoft will roll [Salesforce] over…they’ll get Zambonied.” — Thomas Siebel of Siebel Systems, 2003.
Unfortunately, we may have reached the point that BSSC only meets an organization’s lowest-common-denominator needs, forcing the organization to find workarounds to meet unique demands1.
Tyranny is begotten from the dictum
Best practices have become the unreasonable control over corporate innovationBest practice pronouncements are used to authenticate and credentialize software solutions, irrespective of whether they match the disrupted real world experience of companies in various marketplaces. By definition, best practices declare there are no other processes that are more effective, or they would be better. So say the BSSC enterprises claiming best practices in their implementation.
This belies a deeper, often unspoken truth: even when technology executives know bloated, BSSC may not be best for their business—especially in times of accelerating market place disruption—a lack of familiarity of emergent digital practices by the board and business executives clouds and constrains their judgement. But then, no one gets fired for hiring major analysts to advise, nor for implementing household BSSC names. Companies have great impediments to change.
This issue isn’t just true in software. It’s also true in the design world, for example in packaging design for consumer goods:
...experience ... that effective packaging has three dimensions that need to be equally considered: Beauty, Functionality, and Responsibility. Traditional 'best practice' emphasizes the functional aspect over all others, which is why most packaging is ugly, both aesthetically and environmentally.
Functionality is a price of entry and should be a given.
Beauty attracts the eye and shows respect for the consumer.2
If your products must be innovative, your supporting systems must be innovative. Innovation must start at the end-customer's viewpoint, not at the manufacturing source. Manufacturing innovation provides you with efficiency, but not product or business model innovation. Business model or product innovation cannot flourish within an organization contained and encumbered by manufacturing or financial best practices.
Innovation is the key to unlocking a best practice cultureBest practices in enterprise software can and should form IT’s policy foundation based on legal and financial principles, regulations, and laws. These interminable rules and strengths are the appropriate place for best practices, especially those that change slowly over time. These practices have built up over years and decades, and are rarely completely rewritten, eliminated, or replaced. But best practices can be misunderstood to be innovation or contemplated instead of innovation. You need a process to innovate that builds upon these strengths.
Can business innovation come with big suite software upgrades?
Big suite software hit by the innovator’s dilemma
BSSC has noticed their innovation gap—the gap between their legacy architecture and modern, agile, cloud-native, connected and intelligent architectures of the present and future. The difference may be not merely a gap, but a gulf.
The Innovator’s Dilemma, the axiom where highly successful companies focus only on continuous improvement of their product, lead by their biggest paying customers who only want incremental improvement, has a stranglehold on BSSC. Therefore, there are layers of conflicts within BSSC. It is an oxymoron to expect this strategy to help your business leapfrog the competition, enter new business models, or respond to disruption.
BSSC recognizes this—their Innovator’s Dilemma problem. So what do they do? They buy smaller companies. In fact, the largest software companies (Microsoft, SAP, Oracle, IBM, CA, Manhattan Software and so on) are on a buying spree. Microsoft, for example, has been doing this since 1987 when it bought the company that created the original Powerpoint. Microsoft in one 13-year timeframe purchased 149 companies3.
What about big suite software’s 'One Version of the Truth' viewpoint?“Your ERP system already holds a vast chunk of your product information. So why not use ERP as your main and complete product content database system? No extra software needed, and no data duplication due to adding another database system to deal with.4”
This may sound purposeful and fulfilling on paper, but then do you have a coherent architecture anymore? The sales pitch of BSSC is 'One Version of the Truth', the appellation given to a monolithic marketing architecture, aka marketechture. This is a viewpoint that all corporate data should reside in or be migrated into one coherent database. This viewpoint says it is incoherent, messy, and inefficient if a company buys a few software systems of record using a best of breed innovation strategy. It also denigrates personalized enterprise software as too costly to implement, incoherent and lacking architectural rigor.
This is all a fantasy. BSSC now has multiple architectures, multiple databases, multiple master data catalogs. Additionally, their legacy architecture is not cloud native nor multiple-tenant, a mandatory requirement for cloud systems to efficiently allow multiple customers to use the same infrastructure. The 'One Version of the Truth' architecture died a few years ago.
When BSSC acquire existing cloud Software-as-a-Service companies such as RightNow Technologies, Concur, NetSuite, SuccessFactors, Ariba, Taleo, Skype, and so on, then relabel their websites, but the complete SaaS stack stays intact, then the BSSC are doing best-of-breed integration. We are back to the beginning of loosely integrating innovation to meet needs. However, in this case, the BSSC made the choice for internal reasons and not necessarily for your business innovation requirements.
The best practice ideology is intact—and your company’s innovation dilemmas are not being addressed.
What is needed then is a single version of the facts strategy. What is this? The world’s equity (stock, bond and so on) market trading systems are an example of this. There is not one database of stock quotes. It is an integrated, global trading infrastructure that is a loosely coupled and efficient network of systems, using predefined protocols and schemas that aggregate into a single version of the stock’s price, or the ‘facts’.
This is the future: business innovation delivered by an integrated digital infrastructure coordinated using multiple systems across a network.
Evolutionary thinking is the strategic key to business innovationTaking the reins of business innovation back requires a refocus on your needs; your business model innovation, your customer-centered innovation agenda. You cannot change all your systems of record or all your business processes tomorrow. But guided by and starting with your innovation agenda, you can step onto an evolutionary thinking path for change using evolutionary architecture.
There are two key ideas to this term. The first: Evolution as a mandate in itself, an evolution away from monolithic marketing architecture. The second part is architecture, specifically a parallel and personalized architecture that directly supports your innovation agenda.
Evolutionary architecture assumes an incremental change in an architecture as a first principle. Also key is the ability to respond to disruption: the need to experiment as the process to reduce risk.
Platform thinking is the technology key to evolutionary thinkingYou may be thinking, “Yes, evolutionary thinking sounds appropriate, but I’m concerned we don’t know what or where or how to apply this thinking. Our organization is a mature, humming machine, even though it may be humming its way into stasis or obsolescence.”
The BSSC have jumped into the fray of change as well. If they are promoting agile and lean concepts though, many of those evolutionary and innovative strategies lead away from BSSC thinking and concepts.
Organizations acknowledge the challenging issue of how and where to change their tech infrastructure and applications. The maturity of an organization can explain why it is tied together in knots. You need to untie those knots.
We say your innovation agenda provides the use cases to untie these knots: it provides the guidance, which then points to which systems to evolve.
You'll use evolutionary thinking for those systems. The evolving architecture will require a new platform upon which to build it. This is called platform thinking. Your use cases plus platform thinking helps untangle corporate knots and free your organization to be more innovative, without adding additional debt such as a new basket of BSSC licenses, additional business processes, and staff.
Platform thinking has three core tenets:
- Removing Friction from delivery teams by focusing on high quality, self-service access to foundational technology.
- Exposing core assets. Creating an ecosystem of technology and business capabilities. Using domain-driven principles, carefully-factored business capability interfaces (APIs) are critical components of an effective, modern Service Oriented Architecture (SOA) strategy.
- Delivery Early and Often. Explicitly investing in a foundation for experimentation, which ensures every delivery team has access to tools to make testing new ideas and validating learnings easy.
Digital Platform StrategyWe have incorporated the above three tenets into a repeatable, platform-focused strategy to ensure your organization buys in to these tenets. We use this strategy to help you define and maximize the value of your core business capabilities and data assets by lean, iterative development of your new evolutionary architecture. This strategy also engages your business and technology stakeholders to prioritize building the most valuable capabilities into your evolutionary architecture, to address your critical technology and business disruption challenges.
Armed with a lean, digital platform strategy, your organization can now evolve past outdated BSSC best practices. Keep those practices at bay as a part of your legacy core, but accelerate past disruptions into a future of re-stimulated innovation, with a scalable, evolving core supporting new opportunities of growth.
Resources1. ^ Young, Joanna. "AUDIO | Best-of-Breed vs. ERP: What’s Best for Higher Ed Today?". The EvoLLLution. Retrieved July 14, 2015.
Thanks to Holden Bale for his contribution to this article.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.