Background

In my 20+ year career helping middle market companies select and implement business software systems, I often come to client situations where an executive makes the declaration: “We are going Best-of-Breed with our software solution!”.  I understand the appeal and logic.  It seems smart and will provide for a range of options.  In the background, my client believes the following arguments: 

1. I will get the best software in that class so I will end up with the best practices in my business.
2. I won’t get vendor lock-in because I am mixing and matching systems.  If one vendor gives me a problem, I will take that portion of the system out and replace it with another.

We all like to look smart and no one likes to be pinned down in a situation.  But I urge you to develop different criteria for making decisions around your business system investments.   I offer that Best-of-Breed thinking is really a marketing lie designed to sell more software.  Under the allure of making you feel clever as you believe you are minimizing risk you are led into a trap that becomes later expensive to untangle.  I suggest that there is a more powerful orientation for selecting business software:  Select your software based on 

1. Its capacity to organize work.
2. Its ability to help you synthesize information for decision making.
3. Its mechanisms to allow you to act quickly and consistently with customers and partners.

Let me debunk the background arguments for the Best-of-Breed approach:

1. Business Practices: Software opens and closes your capacity to produce a practice.  But it does not make the practice.  You will have to design, craft, and learn your desired practice and that is a human endeavor, not a software undertaking.  It’s more demanding to envision a practice first and then select the software that most closely meets your future process.  Simply assuming the software is used by many others (i.e., “so it has to be good”) is a recipe for unpleasant surprises and sub-optimal workarounds.
2. Vendor Lock-in: Once you adopt business software, you are locked-in primarily because of the investment effort to get off it.  All software migrations are demanding especially if you want to adopt them in the least disruptive manner.  I generally don’t believe that a software company is “out-to-get-you”.  In my assessment, most software vendors are behaving ethically.  Part of the software selection process should be about the vendor’s reputation and their commitment to serve its customers’ marketplace.

What about Total Cost of Ownership?

Of course, your future software should meet your requirements for producing a return on investment.  I choose not to labor this point because many have traveled the Total Cost of Ownership (TCO) discussion and I think it does not reveal other important concerns.  I have seen many cost of ownership analysis and I assess they mainly miss the soft, qualitative aspects of the investment; or they don’t see all the other functions that won’t be solved in the point solution – to look beyond immediate or qualitative concerns is more demanding and it may be difficult to measure and it often is ignored.  I argue that there are larger opportunities to adopting a business system than solving the most immediate pain point.

Best of Breed Example

Salesforce.com is the premier best-of-breed marketer in the systems marketplace.  It is a “point solution” in that it tries to solve a type of problem in the business.  Today, Salesforce.com is the Customer Relationship Management (CRM) leader.  As of December 2009, Salesforce.com touts well over 67,500 implementations and over 2,000,000 subscribers.   If the software doesn’t do what you need it to do, you are urged to visit their Force.com community to find applications that are pre-integrated to Salesforce.com.  Salesforce.com is the hub in this spoke and wheel environment.  Wow, what an array of applications you can choose from!  You can also develop software on the platform to make it fit your requirements as well.  On the surface, you feel positively overwhelmed with options; just like what it feels like to go to a Super Retailer and have a large variety of products to choose from.

It feels good to know that so many others have traveled this path.  You can’t go wrong because somebody out there must have an answer to your business problem in the Salesforce.com / Force.com community.  But here is the rub — it only gets you a partial (point) solution and you lock-in Salesforce.com in the middle of your overall systems strategy. Does that serve you well?  Maybe.  But it definitely serves Salesforce.com well.  Your business systems solution will now be organized around an elaborate contact manager and Salesforce.com knows that the more applications you adopt along the spoke, the more you will remain loyal to the hub.

But that’s okay, you say, because you don’t have time to solve all the other problems in the business and you can just get started now.  This syle of “need to act quickly” thinking is commonplace in the small-to-mid-tier.  This line of thinking definitely helps sell point-solution software – And I can’t say it will make a big difference in your business because for the problems it solves, an array of new issues emerges.

Best-of-Breed Case Example

I have a recent Distribution industry client that is making a significant investment in information technology to help it reach its next level of growth.  We were asked to help in a special area of their business related to operations and information technology; but not to help with the overall strategy which was set some time ago.   We have been brought in to work with the client on a strategy to bring these components together:

1. Microsoft Dynamics NAV for ERP (Inventory, Accounting)
2. Magento (Open Source eCommerce Platform)
3. Salesforce.com (Sales forecasting, Customer Support and Marketing Automation)
4. Vertical Response (Outbound eMail Marketing)
5. Drupal (Content Management)
6. SurveyGizmo (Survey Tools)
7. Lucene (Search Engine)

There are other components to the solution mix but you should get the picture.  This punch list of applications is not at all unusual.  There is a mixture of Cloud Computing, Open Source, and Traditional Mid-Tier software systems within the mix.  I applaud them for having a roadmap for the major components that will be needed to produce the overall functionality.  In my career, I have done a number of systems strategies that outline components like the ones above.  I can draw pictures to help people see how it comes all together.  The client is too far down the investment road to turn back so it is best to help them navigate this future well.

Guess what I can reasonably predict?

1. They will have to invest in software integration.
2. They will have to develop expertise in each of these packages.
3. They will have to develop relationships, at some level, with each of these vendors.
4. They will have to eventually develop their own data warehouse to get good reporting.
5. They will have to get custom software development help where requirements do not quite fit the native software.

Are they prepared for this?  At some level they are. But in many ways they aren’t.  They really don’t want to develop IT competency.  They want to focus on getting their products to market.  Someone will need to own this configuration as it will need care.

How Does The Best-of-Breed Solution Score?

Let’s see how well this Case Example solution noted above will do in our criteria evaluation?

1. Its capacity to organize work:  Each department will have to learn the special nuances of the software at hand.  Until the integration is working really well, there will be latency and errors in the information as we copy and paste (if at all) between environments.  In my assessment, this approach does not really organize work well although for specific departments, it will be an improvement.
2. Its ability to help you synthesize information for decision making: Very little.  Information will be scattered in various systems and it will be difficult to aggregate until the data warehouse is built and operational.  There will be analysts that will resort to spreadsheets to massage data into actionable information.  Costly, slow and error-prone.
3. Its mechanisms to allow you to act quickly and consistently with customers and partners:  This depends on how much customers and partners interact with the organization.  The more the customer interacts with various company functions, the higher the likelihood they will have an inconsistent experience.  There will be more propensities to handoff customers to others in the organization and time will be required to “research” information that is managed by others in different applications.

I suspect these points will be valuable to the CEO and COO who are trying to build more trust, develop greater customer loyalty, steer the company toward better offers, all while trying to build an overall leaner organization.

Are There Best-of-Breed Alternatives?

Is there an alternative?  Well, up until a few years ago, for the small to mid-tier market, this was pretty much the situation.  You were forced to “roll your own” solution because the marketplace did not have many alternative offers.  Back then, I helped companies develop these types of strategies. Those companies that made the integration investments and built the skills were competitive — and consequently IT grew and became increasingly heavier and slow to act.

SAP and Oracle Applications are two well-known platforms that had a compelling vision:  a single instance (database) solution for the entire organization.  While not perfect, they could deliver a rich set of applications to take care of large organizations’ complex needs.  Consequently, they own the business software marketplace for the large-tier (e.g., Fortune 500).

The more visionary mid-tier organizations saw the power of this large-tier offer.  However, they struggled in their implementations of Oracle and SAP as they were heavy:  Most were not ready for the expensive software licensing, significant supporting infrastructure investment, complex configuration options, demanding implementation and operational skill requirements, and significant training for user adoption. Consequently, most organizations failed in their attempts to capture the single-database promise.

One Fully-Integrated Solution

I am pleased that there is finally an offer that comes close to delivering the vision of a full-integrated application for the small and mid-tier.  That solution is NetSuite.  In the above simple case example, NetSuite can deliver most of the functionality today in a Cloud Based service offering.

Of course, it depends on the industry segment for this statement to be true.  But what is exciting about NetSuite is that we finally have arrived.  In my mind, the marketplace standard has now been set higher.  I would not be surprised that over time, there will be a handful of cloud-based fully-integrated applications that will be known in specific industry segments.  Point-solutions will have trouble making compelling offers to savvy business managers who seek to transform the organization by making it leaner, smarter, and adaptable.

In our case example above, if our client selected NetSuite as its business platform, I can reasonably predict the following:

1. Work will become coordinated.  Every employee will see the same information because there is only one version of the truth.  One department’s work will impact another department’s so it will require tighter coordination between employees.  Hence, culture will become more collaborative as the systems encourage that behavior.
2. Information will be aggregated and real-time.  Decision making will be augmented because reporting, data warehousing, and business intelligence are a by-product of a single database.  Our client will get this automatically as a consequence of choosing this application approach.   Management will have a superior capacity to make meaningful business performance assessments because information will be reliable and available on demand or pushed via email as it happens.
3. Assuming good training and design practices, customers will have a seamless experience when interacting with all areas of the business because the same records, display methods, and information access will be used.  Employees will possess greater ability for department skill cross-over because the same software system is used in all departments (screen layout, lookup, input, validation, etc).  For example, if a customer changes his billing address on an online web form, employees, without even knowing it, will automatically be working with the latest address information from that point on.

NetSuite is by no-means perfect.  There will be investment to realize the power of this application.  But I can confidently say that the investments will be lower and you will get there quicker than the Best-of-Breed approach.  Due to single database architecture, your investment is going to be about working out the issues with people in different departments now needing to work more closely because each one will be impacting the work of others.   The conversation is going to be about how you can keep adopting more functionality to better serve customers and partners.  There will likely be opportunities where you will want to enhance the application to meet your more unique (and hopefully competitive) requirements: fortunately, the platform is extensible using standard development approaches and open architectures.

Pricing

The NetSuite system is modular.  It is priced to be competitive in the mid-tier marketplace.  It is deliberately priced to not appeal to very small organizations.  The platform is not toy.  It really starts to make sense when you have 20 or more employees on the platform.

NetSuite modules can be turned on-and-off.  For example, many customers may elect to go with NetSuite to solve their immediate CRM requirements (versus Salesforce.com) with intention to migrate their legacy ERP systems later.  The pricing model, for the most part, allows for this.  As a Technology Strategist, I look for ways to sequence new capacities with existing and future business strategies; every company has its own special concerns and it takes some conversation to see a good implementation approach.

Invitation

I invite more conversation.  If you are considering a new business system, let’s talk so we can assess if NetSuite is a candidate platform.  I suspect that you will find NetSuite compelling once we look at your strategic concerns for scalable and low cost growth.

The trial balance is a fundamental information sharing structure when working with tax accountants.  NetSuite’s default trial balance is not well organized for tax work.  It groups and sorts accounts in a peculiar fashion.

Fortunately, the NetSuite Report Writer is quite up to the task.  Below are screen shots that can help you quickly get a clean trial balance that only your tax accountant will appreciate — and let’s hope it keeps your tax bill down so they do more important analysis work versus wasting time massaging data.

NetSuite Trial Balance Field Output

NetSuite Trial Balance Sort Sequence

.

In my discussion, Developing Brand Awareness through Outlook and NetSuite, I discussed the need to categorize Outlook contacts so they would be used to target in email campaign work once they sync with NetSuite.

A free tool that I found to be indispensible for producing the practice is called Categorize Plus.  Outlook’s native Category Master list is buried in a pop-up window when you click the Categories buttion on an Outlook Form. While this works on a one-by-one basis, it is simply too cumbersome when you need to categorize a list of contacts (batch update contacts).

Categorize Plus docks a window of your master categories into Outlook. Anything selected within Outlook that can reference categories can now be tagged by quickly clicking relevant checkboxes. It works on multiple records at once and supports keyboard shortcut keys.

This tool makes it easy to assign or re-categorize a large number of items at one time. 

Outlook Categorize Plus Function

outlook-to-netsuite-sync-contacts-function

In our post, Developing Brand Awareness through Outlook and NetSuite, we needed a way to synchronize our Outlook Contacts to NetSuite using Outlook Categories while also managing the challenges of bounced emails from our email campaigning work within NetSuite. We are pleased to announce our Outlook to NetSuite Sync program (beta) to take care of these concerns to dramatically lower marketing automation costs.

The utility performs two primary functions:

1. Synchronize Outlook Contacts to NetSuite preserving category information
2. Update Contacts in Outlook of NetSuite Bounced Campaign Email Addresses

These two functions perform an important function missing from most CRM systems (such as salesforce.com) — handling the issues that come up with campaign communications all the way to Outlook (and BlackBerry given our usage model). With this new software solution, we solve these concerns:

a. Use BlackBerry and Outlook with Categories to seamlessly manage your contact prospecting list.
b. Keep your contacts synchronized with NetSuite to enable timely targeted communications.
c. Manage email addresses that bounce, thus lowering your communication costs and targeting efforts.

Our beta program is free of charge to those NetSuite users who need immediate value. We encourage participation so we can listen to suggestions to enhance the offering. If you are interested in the software, let us know by contacting us here.

outlook-to-netsuite-category-sync-functions

Activision, the makers of the fabulous electronic game, Guitar Hero, leverages the NetSuite platform for its eCommerce operations during the 2009 Holiday season.   See article Guitar Hero(R) Rocks Out With NetSuite posted on PR Newswire on December 9, 2009.

As quoted in the article, the management team attests to the power of built-in integration (i.e., single database platform):

The benefits have touched Guitar Hero’s entire online selling operation. Through NetSuite, Guitar Hero has greatly simplified its customer support through integrated records and a single point of contact, which has significantly improved turnaround time.  Additionally, integrated campaign analytics allow Guitar Hero to monitor and adjust the performance of its keyword marketing and promotional sales tactics. NetSuite also delivers powerful merchandising and promotional opportunities to Guitar Hero with the ability to cross-promote, alter pricing, and introduce new merchandising campaigns quickly and efficiently.

“None of the other options we considered were nearly as well integrated as NetSuite,” says Michael Pan, senior Ecommerce manager at Guitar Hero. “The NetSuite Ecommerce experience has been seamless.“

We added emphasis.  This article helps us make our point:  cloud-based full-integrated database platforms are lower cost to implement, produce greater value, and help drive greater revenue.

Do you see it the same way?

My firm advises business owners and executive management on competitive practices through information technology.  As such, I look to develop relationships with other advisors for a number of reasons.  I can list those reasons but for the purposes of this discussion, the most important is the development of new business prospects.  Let’s face it – all businesses have this concern and there is nothing to be ashamed of — especially if we act as advisors to business managers.

In my assessment, what I seek to produce as a skill within my boutique consulting firm is applicable to many professional service organizations.  Given we are technology advisors, we possess capacities that many other businesses lack; that is the capacity to produce more powerful practices utilizing information technology.   So here is the practice I am developing in our business.  First, some background:

Background

1. Microsoft Outlook is used in the day to day management of contacts, calendar and email.  As of this writing, the majority of professional service organizations in the United States use Outlook.
2. We endorse utilizing the BlackBerry Enterprise Service against Microsoft Exchange for mobile computing management.  I could go further into why this is important; but let’s say for now it is foundational to the practice because of its superior synchronization technology with Outlook / Exchange.
3. I produce a blog primarily to take a stand in the world about what I philosophically believe in.  My stand guides the services we offer and the clients we serve.  Some might call this the product strategy.
4. We utilize NetSuite in our business.  Why?  Because it fits very well with our stand: cloud computing and full system integration.  See this article for more discussion.  Bottom line: NetSuite is our business management system that takes care of our concern for Customer Relationship Management.   In this case, we are talking about the domain of Marketing.
5. We need an efficient mechanism to distribute communications to people we have relationships with.  Back to the blog discussion. What are we going to talk about?  It’s in the blog.  And we want to send email to people about conversations we are producing through the blog.
6. We need a way to track who is interested in our conversations so we can make assessments about the intimacy in our relationships and the likelihood that we may develop referrals.  Ultimately, we need to stay in the minds of all the good people we know.   In some domains, this would be called Branding.
7. In my assessment, to be good at this practice, we need to produce it at low cost and naturally.   Communications must happen regularly, purposely, and connected to all existing and anticipated marketplace action we participate in.
8. Thus fundamentally, the practice must work with Outlook because this is the primary productivity tool we use all the time.  I suspect it is for many other professionals as well; thus this conversation is relevant to anyone seeking to develop more referral business who uses Outlook.

The Practice

With all that background, we envision a simple to understand but relatively difficult to produce practice:

1. All Outlook contacts will be categorized according to the role they hold and their relationship to being a possible referral.  See this post to learn how to do this powerfully.
2. Updates to the BlackBerry will automatically keep Outlook fully in sync.  Hence BlackBerry is fundamental to allowing us to be mobile and work in a natural, yet powerful, state.  When we update BlackBerry, we must be disciplined.
3. On a regular basis, we will sync our Outlook contacts to NetSuite; this is an important goal of any CRM system. In my utopia ideal, there would be perfect synchronization between Outlook and NetSuite; similar to how well BlackBerry synchronizes.  We are not there today.  That’s an opportunity!  However, see this post about our Outlook to NetSuite Sync tool.
4. We will regularly blog about relevant and meaningful topics of interest which reinforces our identity and brand.
5. We will leverage NetSuite’s Subscription Email Campaign Manager to distribute our blog to our contacts.  NetSuite will allow us to appropriately target communications according to the Outlook Categories and based on other information that NetSuite captures.
6. As NetSuite tracks opt-in, opt-out, and bounced messages, we will update (synchronize) Outlook so we can continue to make assessments about our relationships and work to deepen and improve them.

The Challenge

This basic practice is closed loop and should be self-reinforcing.  Where is it hard?

1. The discipline to keep Outlook (and BlackBerry) current.
2. The weakness in tight synchronization (integration) tools between Outlook and NetSuite (I observe this breakdown in many of the leading CRM packages, saleforce.com included).
3. The discipline to blog frequently on meaningful and relevant topics that reflect our skills and capacities.

Fortunately, our firm possesses the capacity to overcome these obstacles.   We will write more about it as our practice evolves. 

Was this relevant and meaningful to you?  If so, let us know your thinking and perhaps we can collaborate on how we can help each other.

Update on January 1, 2010

We are getting closer on this practice. We just created a program that solves many of the costly issues in the above process. See Solution for Syncing and Bounced Emails between NetSuite and Outlook

There is some talk in the marketplace about people moving away from the single instance utopia offered by most fully-integrated business system platforms.  In the article “The Future of ERP in a Disrupted Market“, I think the most important matter to consider between being on a single instance (one database to run the business) versus sewing best-of-breed applications together is “why bother?”.  Why bother performing an integration to another system if you don’t need to?  It’s not that we should avoid all other systems.  We are full believers that a single system to support the business transaction cycle is of utmost important.  But I believe there are key questions to ask when considering the “integrate best of breed” approach:

• What time and effort is required to sew the applications together?  What will the return on investment look like and over what time horizon?
• What will be the ongoing cost to maintain those integrations?  They inevitably need care.   Is a reserve being created to take care of future issues?

But there is more.  Software applications shape the way people work.  Each application uses different language taxonomies to represent real world structures and logistical coordination.  Having different structures produce costs.  Here are some questions to consider:

• Communication between departments requires additional effort to produce meaning and proper coordination when using different names to represent the same things.  Consider one system that calls a potential customer a “prospect” and another that calls it a “lead”.  How about one system that calls inventory “items” and other that calls it “products”?  Each translation takes away from value-producing action and can lead to mistakes and misunderstandings.
• What effort will it take to consolidate and aggregate information that lives in different systems?  Doesn’t this mean we need to add a Business Intelligence (BI) application to report on information living in two or more systems?
• What about having one or two key people within the organization (or more depending on the size of the company) that know the specifics of an integrated application thoroughly which can then help all departments get what they need?   Wouldn’t that be less costly and less risky than to have no one that understands how everything works together?

In our experience, we basically see a multitude of systems in a small-to-medium business — primarily due to a lack of design and a short-term orientation to solving common business problems.   It’s generally a legacy.  In our experience, if the business is growing, they inevitably hit a “brick wall”.   What this means is that the marginal cost of adding more people to handle transaction volume is taking from profit margin in percentage terms faster.  At these points in a business lifecycle, we think it makes sense to consider a fully-integrated application versus a slew of best-of-breed systems.   Instead of spending time trying to work with different systems, producing and maintaining integrations, and learning different tools, we focus on developing the skills within the organization to adopt and leverage the capacities offered within the single system.

I just completed reading a research paper by the Aberdeen Group titled “Next Generation Web Content Management”.  It confirmed what we have been saying for some time now, “Integration is ultimately what is necessary to scale and produce competitive advantages in marketing”.

The study confirmed that companies that are able to deliver personalized web content (this also means targeted email campaigns) that do more than just mention the visitor’s name, produce 1.4 times revenue than those that do not.  The challenge is that the data to personalize the message is typically scattered.  Customer purchase history likely lives in the system for fulfillment which often times is different from the system that captured the order.  Customer interactions may be across multiple mediums (web, phone, email, chat) however these systems do not tie that interaction together to make meaningful assessments about what the customer cares about.   The challenge is that there is no unifying methodology or design to identify who the customer is across these interactions so that actionable information can be generated from all the different communication points.

We helped a client create automated, trigger-based, email campaigns.  The client is marketing oriented.  They want to reach out to their prospective and existing customers in a meaningful way.  However, they suffer from the challenges discussed by the Aberdeen Group.  Their data is located in multiple systems and the cost to get that data organized into an actionable format is often prohibitive relative to their speculation for a return.  Indeed, our efforts have produced meaningful uplift in revenue; but it was relatively painful to get there; especially when we know of other ways with an integrated front and back office system.

For sometime, we have been talking about integrated systems as a competitive advantage.  It is our philosophy.  For small to medium sized businesses, we like NetSuite.  Much of the capability that is talked about in the research paper is built-in to their platform.  Aberdeen classifies this as the integrated CRM approach.   They speak about CRM systems that have hooks into partner systems for email campaigns and web analytics.  NetSuite has this all tied together in their platform; hence it is cohesive.

Appropriately, they speak about the practices that must be developed to leverage the capacity offered in these tools.  Absolutely.  We like calling this a practice because value is created when you develop organizational habits to think about the world in this manner and then regularly act on it.  It clearly is competitive because it is demanding, uncommon, and requires investment.

I had the pleasure of seeing a demonstration of the Rootstock Software Manufacturing system designed to run within NetSuite ERP. Founder and Manufacturing Systems Veteran, Pat Garrehy, took a prospective client and me through a run of the systems capacities. It was quite impressive. Some key aspects to note:

1. Full Manufacturing Resource Planning (MRP)
2. Multi-level Bill of Materials
3. Pat and team’s background and understanding of the manufacturing industry.
4. Seamless integration with NetSuite ERP (It looks and smells like NetSuite)

We understand additional capacities are being developed for more advanced manufacturing.
A full article about the software is available for review.

We have clients that have been asking about NetSuite’s Manufacturing capacity and with Rootstock Software, it now can be delivered.

I have been a consultant helping middle market companies select and implement ERP and CRM software for over 20 years. I have also developed significant eCommerce applications processing over $1 Billion annually. In my previous career, I was a CPA for a global professional services firm.

NetSuite is a serious business application.  For many, they may be coming off QuickBooks.  But this world is signficantly different.  Because it is fully integrated, you must exercise care during an implementation. If there are any doubts in what you are doing, it will likely come back to bite you. Unchecked assumptions can lead to dissatisfaction.

In my assessment, any customer that attempts to “go it alone” is taking on considerable risk. I am bullish on the platform. I spend time in conversations with prospective clients about the need for configuration, testing and training to have a successful implementation. I look to see if they understand the commitment to be working with these types of tools. The platform is quite extensible; but it requires know-how.

I find the same theme in the MS Dynamics line of applications. Getting a financial report out of NAV is not easy. Try to get reports out of MS CRM. With a good partner however, you will get to a good solution.

I invite prospective NetSuite customers for a discussion. We think a tailored demonstration that fits the primary business transaction flow is important to see before making a purchase decision.