The evergreen Best-of-breed vs. Integrated All-in-One Suite debate is back again. This will be a somewhat long post, so let’s sit back and start with some entertainment first.
Episode 2, “Suites Are Sour” is from the mini-series SuiteMates, which I admit I find hilariously entertaining, albeit rather pointless. Why? It’s run by supply chain solution provider Kinaxis, but I don’t see much direct benefit to them. I’m reminded the Bill Gates – Seinfeld commercials: what’s the point? But hey, we’re being entertained:-)
Now, back to those Suites.. are all Suites really Sour? Fellow Enterprise Irregular Brian Summer clearly does not think so, his money is on the Suites, here’s why:
One of the biggest value drivers behind a customer’s move to SaaS is the reduced internal IT support cost a company has when using SaaS products. In the SaaS world, the vendor maintains the application not the customer. But, in a best of breed SaaS world, the customer is back to maintaining interfaces and integration aspects across a number of (SaaS) applications.
If the argument sounds familiar, it is – it was the same in the good old on-premise world, but much of it holds true in the Cloud, too. Besides, this isn’t simply Brian’s own opinion, he has conducted a poll of large corporate CIO’s and most expressed strong preference for integrated business solutions, a.k.a. “one throat to choke” (well, not exactly with those words…).
Call me “old school”, but I also believe in the value of having one tightly integrated system for most business needs, and I believe it’s true not only for large corporations but much smaller businesses. I don’t have CIO’s to back it up, but that’s exactly the point: I am talking about small businesses that don’t have CIO’s at all – in fact they likely don’t even have full time IT stuff ( a good reason for SaaS in the first place), so they clearly lack the bandwidth to deal with integration issues and multiple system providers.
This is not a popular view, after all the Millenial World View is all about open standards and APIs where best-of-breed cloud services that can seamlessly integrate and work together well. I’m all for innovation, and hope we will get there one day – but for now the existing examples are all one-off, individual integrations between specific systems, or at best, ecosystem “satellites” centered around force.com, the Google Apps Marketplace and the like. These are great solutions, but not enough to run a complete business on them. In the meantime businesses are looking for available (Cloud-based) solutions NOW. So yes, I admit, my view is less visionary, more constrained by market realities today.
Brian cites WorkDay as a potential SaaS Suite provider: they have the right DNA, coming from the Founder who built once-successful PeopleSoft, and they are building truly Millenial Software from the grounds up as Phil Wainwright eloquently points out – but for now they still have a Human Resources / Finance focus only. Far from a complete solution, just like the other successful SaaS players in the Enterprise arena, like SuccessFactors, RightNow, ServiceNow, and the like.
Yes, I hear you… I missed a big name: Salesforce.com, the GrandDaddy of SaaS or the Cloud or whatever the next fashionable name will be. An amazingly successful company, and true innovators – having started as CRM company, moving on to as Platform provider, and who knows, tomorrow it may be a Media company? 🙂 As long as the keep on moving to hot new areas, always picking the low-hanging fruit, the company and it’s stock price will remain hot. Again, a great company from an Investor’s point of view. Just not a Complete Business Solution.
One and a half SaaS Suite players
I can count the number of SaaS Business Suites that actually reached significant traction on one hand. In fact the exact number is 1.5. Yes, one and a half – and for now they mostly cater for the SMB segment, with undeniable ambitions to “grow up”.
The “One” in that 1.5 is NetSuite. Having started as NetLedger, the company has developed an integrated All-in-One solution, encompassing ERP, CRM, e-Commerce .. you name it. Those acronyms are becoming quite useless – in that respect I agree with Dennis Howlett who says we should “dump the disciplines formerly known as CRM/SCRM/SCM/ERP/3PL/HR/HCM/E2.0….etc” – hence I stick to the term All-in-One. Or Business Suite:-) It’s been a long (and winding?) road for NetSuite: developing a full suite of apps you can run a business on is by far more complex than throwing out point applications.
The company also learned the hard way that with business complexity (please note, I am not talking about Software, but Business complexity) comes a more difficult, stretched out sales process. The fact is, as much as I am a fan of the click-to-try-click-to-buy pull model, the more business areas (and stakeholders) are involved, the less feasible the fully pull model becomes. A Business Suite is not something you simply pick up from an App Store:-)
So NetSuite experimented with more direct sales model first, gradually building towards a more channel-based model, to the recently announced SP100 program in which partner VARs get the entire first year subscription revenue. Along the way they grew functional richness as well as market penetration, to the point that they often compete with Enterprise giant SAP directly. Now, let’s quickly qualify that: NetSuite is not comparable to the SAP Business Suite, but it is often an ideal satellite solution for smaller divisions of large companies, many of which just got acquired and are facing the choice of a long SAP implementation vs. a SaaS solution from NetSuite (see Ray Wang’s post on two-tier ERP strategy)
I should probably mention that way back, before their IPO and the fame that came with it (from the times of NetWho?) I was an early NetSuite customer, picking it over the market leading CRM (and I mean that as a stock symbol), simply because it had a better process flow, even for Sales, which I was heading at the time. (Yes, we got p***ed learning we’d have to
create Sales Orders outside the other syst
em, even though we had quotes in the system, only to come back and re-enter the data manually). NetSuite was simply a better CRM system, even before considering other business areas.
Parallel to our NetSuite implementation we introduced a Wiki, JotSpot, which just launched in those days (since acquired by Google) and soon we realized a lot of the support information for Sales could either reside in NetSuite or in the Wiki. This has been bugging me ever since:
Why do structured, process-oriented systems and unstructured collaboration tools live in different worlds?
Like I’ve said, I’m all for Suites, but the true Suite in my definition includes integrated collaboration and communication tools – I’m still waiting for that … perhaps not for long 🙂
Now, if NetSuite was the “one”, who is the “half”? It’s SAP’s very capable, but dormant Business ByDesign – which may just come to life later this year. But I’ve been torturing you long enough, so let’s leave that to another discussion.
Update: Interesting CIO interview on Best of Breed vs. Suite in the SaaS Era @ Sandhill.com.
Interesting post Ben, but I think your argument glosses over the fact that the Suite approach requires the business to make compromises in areas of the business, and only works if you can run your whole business on that one suite – as soon as you need some other specialist system, or acquire another operation that you need to integrate, you’re in trouble because Suites, by definition, are not designed to make integration easy.
The Best-of-Class approach may bring with it some integration challenges, but means not making compromises on functionality, or on the support for a specific business area. Critically, many organizations today are as much software companies as anything, having developed specific operational systems that are CRITICAL to their business and make them uniquely competitive – maybe their ordering systems, or logistics app, or website, or whatever. Many more organizations are actually made up of different businesses in different markets needing different systems, that a single suite cannot support. That is where Best-of-Class shines, and is why solutions like FinancialForce.com and CODA Financials thrive…
Force.com essentially brings cloud apps together as a Suite by offering exactly the combination of tight integration, common interface and flexibility. Many businesses can already find everything they need on the platform, even the last critical element required for a serious business system: enterprise-class finance 😉 Many companies, especially smaller ones, don’t need a full ERP suite. They need a handful of critical applications that can grow with them.
Emma, Thanks for your comment. I started to respond here, but I’ve realized I’d better “save” it for a follow-up post. I’ll say hi to Ben for you 🙂
Hi Zoli,
I have read your different posts on SaaS business suites with great interest. My first comment as a business suite provider must be that I am still waiting for a clear definition of defines a business suite. I was trying to make that point yesterday at TechCrunch Copenhagen (http://eu.techcrunch.com/2010/05/26/live-from-copenhagen-techcrunch-nordic-pitches-speakers/). The category also has a different name (even in your post): online business suite, SaaS business suite, integrated all-in-one suite. I wonder when you will be able to find a good definition on Wikipedia?
I agree with your point that customers are still left with the same problems of integration as they have always had in the on-premise world. And even when APIs allows for seamless integration you are still stuck with a number of different vendors and multiple bills which will end up being quite expensive.
You talk about small businesses being without a CIO, but argue that only NetSuite and SAP Business by design is their two alternatives to a SaaS business suite. What about all the small players like FengOffice, Moobiz, ERPLY or even my own company delivering the same functionality and often even more? It could also be worth discussing if an all-in-tool should also integrate communications tools like email or IP telephony?
If you are considering to make a comparison of all the business suite players I will gladly contribute. One metric to compare by could be the ability to take to data with you for another system you have discussed previously on CloudAve (https://www.cloudave.com/link/dear-open-source-fellas-let-us-start-acting-3-3-2010). Suites based on open source have an advantage here.
Our reply to this discussion is up on our blog:
http://www.office123.net/best-of-breed-vs-suites-why-versus.html
Siim, You’re making good points both here and in your blog post.
I’m obviously not claiming that NetSuite and SAP ByD are the only players, but they are the two heavyweights with industry recoginition, analyst and media attention …etc. In the SMB space customers won’t spend big bucks on feasibility studies, software selection projects – recognized leaders will have an advantage here.
On your point about communication, YES, YES, YES. This is why I fell in love with a European SaaS provider in 2006:
“They focus on the SMB market and offer a modular but integrated system with a breath of functionality I simply haven’t seen elsewhere: Accounting, CRM (Contacts, Lead Mgt, SFA), ERP (Supply Chain, Orders, Products), Communication, Group Scheduling, HR, Project Management, Publishing, Intranet. Essentially a NetSuite+Communication, Collaboration“.
They should have become the next NetSuite … they did not – but that’s another story. And for the record I also believe NetSuite should team up with a provider of all these communication / collaboration services ( I even know who).
Thank you, Zoli, for an invigorating discussion both here and in the blog. I am an avid follower of your posts right now and it is interesting to see what your thoughts are on this as we go along.