I have been asked on many occasions to guide clients when choosing a business system. It is a big decision, especially when the system plays a strategic role in enabling the business.
A decision is about choice; a phrase I use a lot is “a choice of one is not a choice”, meaning that you must evaluate several options and then choose the one that fits your needs.
The first questions to ask are:
Does it make the way your customers’ experience you better? Based on convenience, professionalism, turnaround time and engagement.
Does it enable your business strategy? A system must support your business strategy. If it doesn’t, it becomes a distraction, and possibly an expensive one at that.
Does it align with your business model? For example, a manufacturing company needs systems that support manufacturing, and a service company needs systems that enhance and improve services.
Does it allow for flexibility as the business environment changes? Life is about change. Look at 2020 and 2021 as examples; the world changed. Business systems must flex with the changes.
The following considerations are about whether you should build yourself, buy it off the shelf or outsource the system.
The analogy I use is, think of moving to a brand-new house. You have a few choices: do you build a house from scratch, buy a pre-built house with future extensions as part of the plans, or buy into a housing development?
Each of these options has pros and cons.
Build from scratch; you build what you want, with complete control of the design, build and location. The downside is that it can take a long time to build, you need to plan and implement every single detail, and it can be expensive as there is no economy of scale. It is the same with a business system. If you build from scratch, you get what you want, but you need to bear the entire design, build, and maintenance cost. Additionally, you can get trapped in keeping up with technology trends, securing the system and finding and keeping critical skills.
Pre-built with extendibility, you benefit from having a fit for your current needs with the ability to extend the house when you choose. The downside is that you have to accept the architecture and location and some of the extendibility limitations. It is the same with business systems. You can choose a business platform with many features and capabilities “in the box,” such as business logic, security, support, and access to a market of skilled people. Examples of such platforms are low-code platforms, SAP, Microsoft Dynamics, Salesforce and others. The limitations are that you work within a prescribed architecture, and there is a cost of change and modification.
Buy into a development. You get a fully built house with minimal choices, possible countertops, paint, tiles, and these are primarily cosmetic. The benefit is you can move in straight away; there are pre-defined items such as security. On the other hand, you can’t choose the layout, the extensibility and possibly the services offered in the development. “Commercial off the shelf” systems (COTS) are similar, you get what you get, and the features and functions are pre-defined, with limited options to extend. The roadmap of the platform lies in the hands of the system developer. Examples of this are products like XERO, Microsoft Word and social media platforms.
For me, the choice comes down to what you need to control and the uniqueness of the business requirement that the system needs to perform. Control is not only about building but also what you are willing to outsource to others to provide.
Here are some examples:
In the case of a financial accounting system, you may buy it off the shelf, but you control the inputs and data, and you have your data and processes. You wouldn’t change the system but be able to use the existing capabilities. You would still control your use and access to the system.
In the case of a customer engagement platform, you may use a low-code or pre-existing business platform that you can customise or configure to meet your needs. You still own the business logic, extend the capabilities, and have flexibility in tailoring to your business need. You would control the use, access and configuration of the platform
In the case of building from scratch, you have complete control of every aspect of the system. Usually, it is worth going down this path if the system needs to provide something unique or creating a platform for others to use. Such was the case for Salesforce, Amazon and others.
Items where you can leverage other capabilities, where you do not need high control, you can outsource or use a pre-defined service. Examples could be payment gateways. While important, you would rely on the provider to facilitate payment or a social media platform. You would depend on the provider to allow you to engage with a global community.
With all these considerations, it is crucial to have a choice when looking for a business system and remember, “A choice of one is not a choice”.
Ryan