Best of breed vs. trusted partner

A battle royal is shaping up over two distinct IT/business strategies

Best of breed vs. trusted partner — it’s the perfect example of why the execution of a business strategy cannot be disentangled from the implementation of IT operations.

To make good on the trusted-partner model, as defined by Ray Repic, chief technical architect at Coca-Cola Enterprises (CCE), a company must establish meaningful relationships with a tight group of technology vendors and transform those associations into strategic business partnerships. In this scenario, each side must give up something: The enterprise must reveal its closely held strategic goals; the vendor must unveil its technology road maps. Obviously, the goal of the enterprise is to determine how best to use the vendor’s technology to deliver on its business objectives.

There are unspoken commitments once this exchange of closely held information is made. The enterprise promises that when a new business need arises, it will go to these partners first to see how they can fulfill the need.

“If the partner can provide for ‘mandatory’ or basic requirements, then the enterprise says it will look no further, assuming financials are all in alignment,” Repic says.

The vendor also has to make a commitment to the enterprise, allowing it to participate — co-develop — in the process of bringing new functionality to the market. SAP calls this “co-innovation.” Obviously, by being the first to understand how the new functionality works, the enterprise gains a competitive advantage.

This is, by the way, in contrast to what Josh Greenbaum, principal at Enterprise Applications Consulting, says is the more typical “predatory commercial relations” with a customer, in which the customer exists to make the vendor’s quarterly numbers.

“I don’t envision CCE moving away from its ERP decisions anytime soon,” CCE’s Repic says. But in saying why his company will remain with the trusted-partner model, Repic reveals a significant reason as to why many enterprises go the best-of-breed route.

Repic says companies that choose the trusted-partner model are typically those that “do not require ‘bleeding-edge’ technologies to support required business operations.”

But how many companies can say they don’t require the latest and greatest? Would your company prefer to deploy software that has only the “mandatory” requirements until their trusted vendor catches up?

Today’s enterprises depend on the latest enabling technologies — those not in the core ERP package so to speak — to differentiate themselves in their markets or to support internal growth initiatives. Whereas disparate application integration used to translate into expensive propositions, we now have SOA, XML interfaces, and SaaS (software as a service), all of which help ease the pain of integration.

Rick Collison, director of solutions at Ariba, one of those best-of-breed application vendors, in this case for spend management, warns that if you need a new solution and you wait for your “trusted partner” to come through, it’s like “the blind leading the blind.”

Collison’s point is that best-of-breed vendors, such as Ariba, have more depth. These best-of-breeders offer end-to-end solutions that optimize every aspect of spend or supply-chain management, for example, rather than just lightly touching a product category outside core ERP.

I spoke with Shai Agassi, a former SAP board member. Although Agassi no longer works for SAP, he still sees ERP as the “core” of the enterprise. Here’s an excerpt from Agassi’s blog:

“Without a strong core ERP you cannot scale a company and you lose scale even on successful strategy. … [T]he more applications you have designed separately, the less you can afford any change and the more you invest in the gaps between them.” Agassi writes. Agassi makes a good point, but I’ll give the final word to Marc Benioff, CEO and chairman of Salesforce.com, one of those best-of-breed SaaS upstarts that offers a noncore application that has been “designed separately.”

In a recent video interview, I asked Benioff whether he wanted Salesforce.com to become the new platform, or new core, around which Web 2.0 and SaaS applications would plug in to. Benioff would have none of it. He simply answered, “There is no core.”

An interesting proposition, and like everything in high tech, where things change rapidly, CIOs and CEOs will have to confront this issue sooner rather than later.