The software industry, America's showcase of technical innovation, business achievement, and wealth creation, is at it again. This time, the software industry is putting forth the message that manufacturers have to take part in a new round of investments in order to survive in the new world of e-business. These investments include new infrastructure products to link design and product development to production-planning and scheduling systems; new software to link to outside partners, suppliers, and customers; and what is becoming known as trading exchange technology in order to engage in buying, selling, collaboration, and other assorted transactions and activities.
This is not an exhaustive list, of course. Many different software providers will tell you that many new types of products will be necessary in the new age. The drum beat coming from the vendor community is constant and often confusing; there are literally hundreds of companies starting, emerging, and coming to market with innovative products. And many established companies are retooling their software products to offer e-functionality. What all of these companies are telling you does, indeed, contain a grain of truth. Software products that were designed around earlier and different computing and business models may not be optimal in an increasingly server-centric world that demands instant access, fast response, and seamless interaction among multiple players.
The technology adoption stage we are all in, however, lends itself to frenzy and confusion. Many companies seem to offer similar approaches and products in like market spaces. Generalities infuse their messages and real differentiation is hard to identify. Product categories that we all had gotten comfortable with now seem to converge and blur. Even market researchers and analysts have a hard time keeping up and telling one player from another, let alone being able to pick winners.
Whenever there's a technology shift, technology buyers, in search of innovative products that will create competitive advantage, face a double-edge sword. On one side of the blade, they have the opportunity to find real innovation that could change their business in a positive way. On the other side, they often face the daunting challenge of evaluating and selecting suppliers, many of which have not been tested for stamina and reliability.
What usually happens in this scenario is that buyers swing to a best-of-breed buying approach. Unable to justify betting too much on companies that may have interesting technology but little, if any, track record, they spread their bets, hoping to pick a winner or two. They also rely on some of their established suppliers for balance, delegating responsibilities such as integration services to them. J.D. Edwards is a good example of a vendor that has staked out a middle position here with its integrated best-of-breed approach to the market (see News From the Field). Later on, when the technology matures, experience is gained in its use, and the perception of competitive advantage diminishes, the pendulum moves to a more conservative buying approach, one usually characterized by product suites. The one prominent exception to this pattern right now is Oracle, which is advocating an integrated-suite approach to e-business, perhaps based on the sense that the pendulum will move a lot faster this time.
But one of the other major consequences of the particular technology cycle we all find ourselves in is a marked increase in both technical and business process complexity with which buyers have to grapple. Just look at what's happening in what we had called the supply chain management market. Market leader i2 Technologies has since early spring been attempting to go to market with a product offering comprised of supply chain management products, Ariba's procurement products, and IBM's services. This issue's cover story on collaborative commerce details an emerging trend to link design and product development, from both technical and process points of view, to SCM and beyond to trading exchanges.
When it comes to software, there is no limit to what can be imagined. The initiatives undertaken by i2 and many other companies make perfect sense at one level, but it is not at all clear how these products are going to work together to provide the speed-to-market and coordination advantages their proponents advocate. As any medium- to large-scale manufacturing company can tell you, the technology industry's track record in getting products from differing or competing vendors to work together is dismal at best. In most cases, the interoperability, compatibility, and integration headaches end up in the buyer's lap.
What's needed in the e-business environment, an environment I believe is unprecedented in its technical and business process scale and complexity, is a renewed commitment to fundamentals. First, before you start buying e-business technologies, invest the time and effort to develop a clear business strategy which the technologies will support. This is a message undoubtedly heard at every industry conference today but one that's so difficult to receive that it has to be repeated.
Second, don't let every division, business unit, or group buy what it wants. Third, establish some standards and oversight or else the history many have of building incompatible houses of technologies will repeat itself as surely as there will be yet another technology paradigm shift down the road.
Fourth, demand accountability from your software suppliers when they make claims that their products will work with other products, and write that accountability, with performance penalties, into software licensing agreements. If your software supplier aligns with service firms to provide integration to you, make it clear that the software supplier is accountable for what is delivered through that relationship.
And finally, be wary of complexity. Try to keep things as simple architecturally as possible. If you sense product sets are getting too extended, if you don't hear clear answers about integration from your software providers, if a colleague in one business unit didn't know that his colleague in another division bought product X, you probably have a developing complexity issue. Read the signals.
The e-business complexity issue is real. Take steps now to deal with it.
What is your view of the software complexity issue and how products ought to be purchased? Write to me at dbrousell@tpmgnet.com.