By Lee Thompson, Sales Director, Exact Abacus Ltd
Software…you can’t live with or without it. Whilst most business leaders recognise that effective IT solutions are key to competitive advantage and sustainability, many still view software projects as intangible and a ‘necessary evil’. Investments are made on the back of a sales persons promise and perceived need….we know this is mis-guided, but fall into the trap time and time again!
Perhaps too many direct marketers have been ill-served by elevated promises over the years, but cynicism threatens to overshadow some major technological shifts within the software industry, which may change the way we view IT forever.
Traditionally mail order companies have implemented end-to-end licensed software products with strong focus on order processing and stock control. In many ways this makes sense – a turnkey provider is better able to support the whole solution and the ongoing administration overhead should be minimised. The trade-off is compromised functionality in non-core areas such as product management, analytics and marketing.
At a recent Catalogue Exchange forum, the general consensus was that back office system implementations did generate a return on investment, but only met between 70 and 80% of the total business requirement. Many peripheral system users felt disenfranchised by system projects on delivery as the functionality did not meet their needs.
This begs the question: is the 20% compromise a price worth paying?
Forward thinking companies must surely be targeting an IT environment that is 100% effective across all activities and user groups. This ambition requires a shift in thinking as no single supplier could ordinarily deliver 100%.
Software companies large and small have long-since recognised that they cannot be ‘all things, to all men’. Even the best-resourced organisations such as Microsoft are beginning to strain under the weight of expectation. Indeed there is speculation that there may never be a direct replacement for the recently-launched Vista operating system due to the diverse demands placed on it. Speculation suggests that Microsoft will concentrate on maintaining core functionality with ‘plugin’ services from an array of vendors enhancing and bespoking the operating system for specific purposes.
It has taken a while for any consistent invention to be created from the necessity and, as expected, the industry has developed another acronym to confuse even the most educated IT brain. Service Oriented Architecture or ‘SOA’ is a software implementation theme, which creates the conditions that allow organisations to build a business system ‘brick-by-brick’, using applications from a host of ‘best-of-breed’ suppliers. These applications may be boxed and licensed products, however, I believe that in the longer term they will be delivered as on demand ‘services’ via the internet – software increasingly being viewed as a utility, with greater freedom of choice and costs linked to usage.
Importantly, by breaking down IT into its constituent parts we can start to think of it in terms of real benefit, rather than a necessity. After all, who will upgrade to Microsoft Vista expecting any quantifiable benefits in terms of productivity? The beauty of ‘SOA’ is that it pushes a standard data framework that enables disparate applications to ‘talk’, delivering a tailored user experience, whilst meeting the overall business objective. Importantly, businesses are able to build an ‘SOA’ incrementally by retaining key functionality whilst replacing weaker functions piecemeal over time. For instance you may be relatively happy with the sales order processing module of your current system, but deeply unhappy with its reporting capabilities. An ‘SOA’ approach would be to integrate a best-of-breed reporting product with existing functionality rather than wholesale system replacement. This method is more efficient in terms of time/ money and significantly reduces risk, as the mission- critical operations of the business are unaffected.
This concept is gaining traction and therefore affects the IT decisions you are making today. Should you race to replace your back office system due to its peripheral weaknesses? Could it not be pared back to its core competencies, integrating with focussed applications in other areas? Of course these questions cannot be answered purely on the basis of functionality. System changes are driven by other factors such as lifetime costs and supplier relationships. But in most cases, the root of system change is functionality vs business requirement.
SOA will not be driven initially by users. As a principle it needs to be proven in the marketplace with both large and small enterprises to gain credibility. Vendors will drive the change and need to commit to a landscape in which traditional competitors work together, recognising each others’ strengths and weaknesses, bringing together complementary skills and technologies.
In closing, I would urge all direct marketing businesses to get serious with IT and ensure their approach is always objective-focussed. SOA is a standard which all software companies are taking seriously as it offers significant revenue opportunities. It is happening and will affect your business in the longer-term. Those who make the strategy changes in the short-term will sooner reap the rewards of ‘no compromise’ computing.