The Rise of the Open Software Platform

Brian Zrimsek is Industry Principal at MRI Software.

Many software companies today talk up the virtues of buying all the components of a primary business software platform from a single vendor. On the surface, this sounds like a reasonable approach. After all, with the entire solution coming from a single vendor one would expect that each component should integrate well with the overall platform and, if there is a problem, IT has that “one throat to choke.”

In some situations, buying the entire solution from a single vendor probably does make sense: If IT is looking for software to meet a relatively straightforward need, such as video conferencing or file sharing, an out-of-the-box, single vendor solution is typically a smart choice.

But if the organization is dealing with a complex problem – like running a real estate business or managing a global supply chain – there is no single silver bullet. Each organization needs a solution that meets its unique needs and, to achieve that, they need a platform that can incorporate innovation no matter who is producing it. In today’s fast-paced business environment, innovation gives organizations a serious competitive advantage and an open system is the only way to fully take advantage of it.

My Advice: Open Up

Even within the same industry, organizations with complex operations all run their businesses differently because, somewhere along the line, they’re dealing with different situations. For example, a commercial real estate (CRE) organization with mostly shopping malls as assets will have very different processes from another CRE company whose holdings are concentrated in office parks. It’s unrealistic to expect a one-size-fits-all, single-stack solution to address all the needs that each of these businesses face.

An open, flexible software platform embraces many different functional areas – even those that compete with the vendor’s own components. If done right, you can achieve a software infrastructure that’s perfectly tailored to meet your organization’s individual needs. No single vendor could possibly create a software platform that meets the dizzying array of demands facing organizations managing any complex operation. And if a single vendor tries to be everything to everyone, many of its functional areas simply aren’t going to make the grade, because the company lacks the domain expertise of a more focused software developer.

Along the same lines, a single vendor platform also slows innovation. Eventually, some innovative capabilities will make their way into the core product, but only after a long time has passed. Can you wait that long? If your competitors have adopted an open platform that enables them to integrate new capabilities from new vendors easily, your competition could have years to take advantage of a technology you lack, simply because you’re tied to a closed platform.

Take an everyday example: if you travel with an iPhone, you likely understand the disadvantages of a single stack from personal experience. How often have you tapped on an address, Apple Maps appears, and you roll your eyes in annoyance? Sure, occasionally I’ll stick with Apple Maps because it’s more convenient, but I usually select the address and paste it into Google Maps, which is much more likely to actually lead me where I want to go. Do you know anyone who willingly uses Apple Maps?

The Single Stack Decathlete

Let’s look at it another way. Ashton Eaton of the United States won the gold medal in the decathlon at both the 2012 London and the 2016 Rio de Janeiro Olympic games. He is the current world record and Olympic world record holder. By any measure, he is an astonishingly good competitor. That said, he set the Olympic record for the decathlon in 2016 finishing first in just two of the ten individual events and, in another two, he didn’t even crack the top ten. In fact, when you compare his performance to that of the Olympians competing in individual events in Rio, he looks downright mediocre. His best finish in an individual event would have been in the long jump, where he’d have placed tenth. In all the others, he would not have even qualified.

Please understand, I’m not knocking Eaton. He’s clearly one of history’s greatest athletes. But he’s only one person with a limited amount of time and energy, and he has to train for ten different events. His goal is not to be the best at any individual event, but rather to perform better, on average, across all ten events than everyone else. He can have weaknesses relative to the competition and still win.

A great, closed shop enterprise software company is a lot like a decathlete. The software vendor is doing the best it can across many different functional areas, but it will never be the best at all of them. As a result, customers get mixed application performance across all capabilities.

Often, these vendors will concede that they may not be the best at any individual capability, but they claim can still beat other competitors on integration, pricing and support. That’s almost certainly not the case. Older, legacy products may not interoperate with the current platform, and, if the vendor has made acquisitions, it’s even less likely these solutions will play well together.

As for pricing, many vendors actually charge more for additional solutions than their competitors, because they know that once they have a customer on their platform, there’s nowhere else for the customer to go without replacing the entire suite, which can be prohibitively expensive and operationally crippling.

Finally, an open vendor’s support should be every bit as strong as that of those who sell a “single stack.” For vendors, a complete commitment to open platform means standing behind partner integrations as if they were their own. You should expect the support experience to be just as good — if not better – than a closed system.

The Future is Open

The open platform approach aligns very well with what Gartner has called “post-modern ERP.” The idea is that a post-modern ERP (enterprise resource planning) platform unites both administrative and operational functions through integrations with other software to deliver business flexibility and agility.

Certainly, Gartner sees the open, flexible platform as the future of enterprise software. I agree with them, and not just because the benefits to customers are so clear. The software vendor benefits as well.

If the vendor does it right by creating and standing behind integrations with a variety of both established vendors and upstart innovators, their open platform will become the foundation that many types of organizations will use to automate their unique array of business processes. By taking advantage of their partners’ functional areas, open platform vendors can address the widest possible market.

This increases sales not only of their own platform, but increases the number of customers to whom the platform vendor can sell their own components. Yes, customers will sometimes choose to use a partner’s software instead of the platform vendor’s, but with a wider market to address, there are more opportunities to sell the vendor’s own solutions, and, in the long run, that means more sales.

In fact, this has already happened. Take a look at Salesforce, and how it has evolved. Initially, Salesforce took advantage of its then innovative software-as-a-service (SaaS) model to take over the customer relationship management (CRM) market by 2004, crushing their older and more established competitor, Siebel. But it wasn’t SaaS that transformed Salesforce into the $65 billion company it is today.

Salesforce owes much of it success post-2005 to how easy the company has made it to integrate with Salesforce, and to the AppExchange, a marketplace that helps Salesforce’s partners sell their integrated solutions. This openness to working with other company’s software has enabled Salesforce to expand beyond CRM. Today, Salesforce has more than 1.4 million developers registered to create software that integrates with their core products, and the AppExchange features thousands of applications that have resulted in millions of installations.

Let’s face it: What you, as the buyer, care about more than anything else is solving your business problems, and rightfully so. Though the allure of a single stack may be strong, weigh the pros and cons carefully. Your organization will probably need to draw on a broader set of solutions to succeed. After all, a company succeeds when it has a great team that works together; a CEO who tries to do everything on his or her own is almost certainly going to fail.

So when you’re looking for a broad software platform to manage and automate your business, look for a solution that can help you create a great, united team made up of the best players you can find. The decathlon is fun to watch, but there’s a reason that Usain Bolt is more famous than Ashton Eaton. No one should try to run their organization like a decathlete.

Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Informa.

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